Key points
- IMF staff agreed on 6 October 2026 to release up to US$189 million to Papua New Guinea. The IMF’s executive board has not yet approved it.
- The payment would be the last from a US$1.2 billion IMF loan programme that expires in December 2026. PNG met all but one of its binding targets.
- The IMF says any new programme will be considered only after PNG’s 2027 general elections.
Papua New Guinea is waiting on the last payment from its US$1.2 billion International Monetary Fund loan programme. IMF staff agreed on 6 October 2026 to release up to US$189 million, but the Fund’s executive board has not yet signed it off, and the programme expires in December.
The IMF said a possible follow-up programme “will be considered by the authorities after the 2027 general elections.” Polling is scheduled from 26 June to 9 July 2027 under the Electoral Commission’s tentative timetable, The National reported, so PNG will run its election-year budget without an IMF programme in place.
“Performance under the Fund-supported program remains broadly on track,” said Nir Klein, who led the IMF team that visited Port Moresby from 24 September to 7 October.
Three and a half years of support
The programme began on 22 March 2023, when the IMF board approved 38-month loans under its Extended Credit Facility and Extended Fund Facility, worth about US$918 million, to support vulnerable groups, ease the shortage of foreign currency and repair the budget. In December 2024 the board added a 24-month climate fund, the Resilience and Sustainability Facility, worth SDR197.4 million. SDRs, or Special Drawing Rights, are the IMF’s own currency unit; that sum is about US$267 million at the conversion the IMF’s October figures imply.
The IMF loan money arrives in instalments, each released only after the IMF checks that PNG has met agreed targets. By the IMF’s count, about US$1,012 million has been paid so far. The October deal would take the total to about US$1,193 million.
The final payment would be made up of about US$82 million in general budget support and up to about US$107 million from the climate fund.
The target PNG missed
“All but one quantitative performance criterion and all indicative targets for end-June 2026 were met,” Klein said.
The IMF’s statement did not name the missed criterion. In the same statement, it said the government’s budget deficit had overshot in the first half of 2026, despite a large windfall from resource revenue, because of unexpected spending pressures and delays in dividends from state-owned enterprises. The government responded with a supplementary budget in September and kept its 2026 deficit target of K1.6 billion, about US$345 million, or 1.0% of GDP.
Treasurer Ian Ling-Stuckey told Parliament in September that tax from mining and petroleum would beat the budget by more than K3 billion.
When the board approved the sixth payment in June, PNG needed a waiver for missing a performance criterion, according to the title of the IMF’s published staff report.
Ling-Stuckey’s September supplementary budget speech set expected dividends from the state’s Kumul companies at a minimum of K1.67 billion, against an offer from Kumul of K650 million. His speech said the mid-year deficit had reached K2.4 billion and that policy actions worth about K2.9 billion were needed to get back on track.
“The authorities remain committed to their fiscal repair strategy,” Klein said.
The climate money keeps shrinking
When IMF staff agreed the sixth payment in March, they expected about US$134 million from the climate fund. The board released about US$81 million in June. The final payment is “up to” US$107 million.
Payments from the fund depend on PNG completing agreed reforms, aimed at preparing the country for disasters and climate shocks. The October statement listed what remains: a National Emergency Management Authority, rules for public investment that take climate risk into account, and a central database of climate projects. The IMF did not explain the gap between the March estimate and the June payment.
PNG also has unfinished work on financial crime. The country is on the grey list of the Financial Action Task Force, the global anti-money laundering watchdog. “Decisive implementation of the FATF Action Plan remains critical to address the remaining gaps,” Klein said.
Leaving in a tough year
“Real GDP growth is projected to moderate to 3.1 percent in 2026 from 6.2 percent in 2025,” Klein said. The IMF blamed gas production that has stopped rising, El Niño’s damage to farming and mining, weaker demand abroad and higher import costs linked to the war in the Middle East.
The Fund also expects prices to climb. “Headline inflation is projected to increase to 4.8 percent driven by higher betelnut, food, and transport prices,” Klein said.
Westpac still expects growth of 4.6% this year. Prime Minister James Marape said in July that the debate “should therefore not be about whether PNG is growing. The evidence shows that it is,” according to his office.
Ling-Stuckey said in August that the fuel subsidy, which holds pump prices at March levels, cost K801.4 million to the end of July and would reach about K1.5 billion by year’s end, Papua New Guinea Today reported. He said the subsidy would run until the end of the year, the same month the IMF programme expires. The supplementary budget also set aside K500 million for El Niño relief nationally, K665 million through districts and provinces, and K150 million for election preparations, according to the Prime Minister’s office. Total spending for 2026 rose to a record K32.245 billion.
World Bank financing of up to K300 million is also on offer for El Niño, but Ling-Stuckey’s speech said it would require a national emergency declaration. The IMF said the government had kept its deficit target while leaving room for El Niño spending.
Against that, the government has promised its first budget surplus in more than a decade in 2027, according to Westpac. The IMF programme has been the outside check on that promise since 2023.
The global backdrop
“Even if the war in the Gulf were to end soon, the problem of high energy prices will likely persist for some time,” Managing Director Kristalina Georgieva said in Singapore on 7 October, Reuters reported.
She put oil at about US$100 a barrel, above the US$89 average the IMF assumed in July. She also urged central banks to keep interest rates firm against rising prices. “Now may be a good time for a prudently hawkish bias in many countries’ monetary policy,” she said. The Bank of Papua New Guinea has held its main lending rate at 5.0% this year, Westpac reported in September.
She also noted that the IMF expects global public debt to pass 100% of world GDP before 2030, Reuters reported.
For PNG, longer high oil prices mean a bigger fuel subsidy bill, or higher pump prices if the subsidy ends. The IMF said in October that higher import costs linked to the Middle East war were already weighing on activity outside mining and gas.
What the programme fixed
In April 2025, the IMF’s then resident representative in Port Moresby, Sohrab Rafiq, told a briefing: “PNG is now the best-performing country in our region under an IMF programme.”
The budget deficit narrowed to 2.4% of GDP in 2025 from 3.3% in 2024, the IMF said in March, when it also noted the government’s aim to balance the budget by 2027. Public debt has started to fall, the Fund said in October. Gross foreign reserves stood at about US$4 billion at the end of June, enough to pay for about five months of imports, according to the October statement.
The central bank adopted a crawl-like exchange rate in January 2024, lowering the kina in small planned steps. The IMF said this had narrowed the currency’s overvaluation and eased shortages of foreign exchange, and that the Bank of PNG’s reform plan was “paving the way for a gradual return to Kina convertibility.” Full convertibility would let businesses buy foreign currency freely at a market price. The IMF’s remaining asks are clearer public rules for the crawl, more room for the market to set the rate within announced limits, and a central bank interest rate that moves in step with the exchange rate policy.
The IMF also welcomed the recent gazettal of amendments to the 2019 Public Financial Management Act, which make Treasury’s power to authorise spending part of the law.
What happens next
The IMF’s staff will now prepare a report for the board, subject to management approval. The Fund has not announced a date.
After December, the IMF plans annual economic reviews, known as Article IV consultations, along with checks on PNG’s ability to repay and continued technical help, according to the October statement.
Treasury’s 2027 Budget, due in November, will be the first since the programme began to be written with no IMF payment ahead. It will show whether the surplus promise holds once the outside referee leaves.
