IMF reaches staff-level deal with Papua New Guinea, potentially unlocking about $189 million

On October 6, the International Monetary Fund (IMF) reached a staff-level agreement with Papua New Guinea regarding the review of its funding facilities, which could potentially unlock up to $189 million, according to the IMF. The agreement involves the final reviews of three arrangements: the Economic Cooperation Facility (ECF), the Extended Facility for Poverty Reduction (EFF), and the Resource Mobilization Facility (RSF).

Upon approval by the IMF's executive board, Papua New Guinea would receive approximately $82 million immediately, with an additional $107 million in climate financing. The total amount of IMF money disbursed would amount to about $1.19 billion.

The IMF forecasts a slowdown in real GDP growth to 3.1% in 2026 from 6.2% in 2025, attributed to factors such as stagnating LNG output, El Nino's impact on agriculture and mining, and heightened import costs due to the Middle East conflict. Headline inflation is projected to climb to 4.8%. The Papua New Guinea government met all but one quantitative performance criterion and fulfilled all indicative targets by the end of June 2026.

However, it failed to meet its fiscal deficit target in the first half of the year but subsequently passed a supplementary budget in September, aiming to maintain the 2026 deficit at 1.6 billion Papua New Guinea kina ($345.28 million).