The Board of the Bank of Papua New Guinea (BPNG) has endorsed a new Emergency Liquidity Assistance (ELA) Policy Framework aimed at strengthening the central bank’s ability to respond to extreme short-term liquidity pressures within the country’s banking system.
In a statement issued on April 30, 2026, and authorised by Governor Elizabeth Genia, the central bank said the framework forms part of standard contingency planning undertaken by central banks globally and is not linked to any current concerns about the health of PNG’s financial system.
“The banking system is well-capitalised, with high levels of liquid assets held by all institutions,” the statement said.
BPNG said the ELA framework formalises the Bank’s approach to providing temporary liquidity support to eligible commercial banks experiencing severe but short-term funding constraints, consistent with its role under the Central Banking Act as the country’s “Lender of Last Resort.”
According to the central bank, the framework is designed to support overall financial system stability while ensuring that any emergency support is delivered in a prudent, controlled, and transparent manner.
The policy specifies that assistance would only be available to institutions deemed solvent and viable, with emphasis placed on safeguarding the broader financial system rather than supporting the survival of any individual institution.
The framework also outlines broad eligibility criteria, governance arrangements, and operational procedures governing how emergency liquidity assistance may be accessed.
BPNG stated that access to the facility would remain subject to strict conditions, including solvency requirements, appropriate collateral arrangements, and credible recovery measures by recipient institutions.
The central bank said the ELA Policy Framework complements its wider financial stability and prudential oversight responsibilities and enhances its capacity to respond effectively to emerging liquidity pressures across the financial sector.
BPNG added that it will continue engaging with stakeholders while developing supporting guidelines to ensure effective implementation and a consistent understanding of the framework.
“The Bank of PNG remains committed to maintaining a stable and resilient financial system that supports sustainable economic development,” the statement said.
