The Bank of Papua New Guinea (BPNG) has kept its Kina Facility Rate (KFR) at 5.0 per cent, Governor Elizabeth Genia said on 9 March 2026 as she presented the central bank's March 2026 Outlook on the Economy, Inflation and Monetary Policy. The Monetary Policy Committee (MPC) also held the Cash Reserve Requirement at 9.0 per cent.
Genia said the committee judged that current monetary policy settings are consistent with a "broadly neutral stance". BPNG has maintained a crawl-like exchange rate arrangement, with the exchange rate serving as the nominal anchor for monetary policy.
GROWTH TO MODERATE
BPNG revised its estimate of real GDP growth in 2025 up to 5.3 per cent, from 4.2 per cent, and trimmed its figure for 2024 to 3.9 per cent from 4.1 per cent. Growth is projected to moderate to around 3.0 per cent in 2026, which Genia described as a return to a more sustainable pace.
Headline inflation was 4.1 per cent in the December quarter of 2025, or 1.2 per cent excluding betelnut, while core measures ranged between 0.7 and 1.8 per cent. The central bank raised its 2026 headline inflation forecast to around 4.0 per cent and expects core inflation of between 2.5 and 3.0 per cent.
RESERVES AND EXTERNAL RISKS
Gross international reserves stood at US$4.1 billion in early February, equivalent to about seven months of total import cover and 11 months of non-mineral import cover. Genia also pointed to a US$540 million sovereign bond repayment due in 2028.
Genia said the outbreak of conflict in the Middle East had introduced significant uncertainty into the global outlook, with disruption to maritime transport and energy supply pushing energy prices higher and raising the risk of imported inflation for Papua New Guinea. Genia said the bank's projections had been prepared before the events of the preceding ten days. She also addressed Papua New Guinea's inclusion on the Financial Action Task Force grey list, under which the country must meet 18 reform milestones.