Bank of Papua New Guinea (BPNG) Governor Elizabeth Genia has outlined a broad financial-sector reform agenda aimed at strengthening monetary and financial stability, expanding financial inclusion and creating a more competitive and modern financial system to support investment and sustainable economic growth.
Speaking at the Business Advantage PNG Investment Conference in Brisbane on 10 August 2026, Genia said stability must remain the foundation of Papua New Guinea’s economic development, as businesses, households and investors require confidence and predictability to make long-term decisions.
Her address, titled “Driving Financial Sector Reform, Inclusion and Stability”, highlighted reforms across monetary policy, banking regulation, payments infrastructure, foreign exchange, financial inclusion, green finance and prudential supervision.
Genia said the Bank’s statutory mandate under the Central Banking Act places price stability as its primary objective, followed by financial stability and the promotion of sustainable medium-term economic growth, particularly in the non-mineral and non-petroleum sectors.
“A stable financial system allows savings to be channelled towards productive investment and supports the flow of credit through the economy, giving households and businesses greater certainty when planning for the future,” she said.
On price stability, Genia said headline inflation is forecast at around 4 per cent in 2026, with underlying inflation measures expected to remain at or just below that level through 2027 and 2028.
She said the convergence of headline and underlying inflation measures provides greater confidence in the medium-term inflation outlook, although the Bank remains alert to external and domestic risks.
The re-emergence of the El Niño weather pattern is already affecting mining operations and domestic food production, she said, making weather-related pressures an area of close monitoring for the central bank.
Genia also highlighted the impact of exchange-rate movements on inflation, noting that in recent years the exchange rate has played a stronger role than the Kina Facility Rate (KFR) as the nominal anchor for inflation.
The Bank’s longer-term objective is for the KFR to become a more effective monetary-policy instrument.
A key part of the reform agenda is restoring greater flexibility and convertibility in the foreign-exchange market.
Genia said the Kina is now approximately 20 per cent lower against major currencies than it was in January 2023, describing the depreciation as measured and gradual, with minimal impact on inflation and broader macroeconomic stability.
“As the exchange rate adjusted lower and inflows strengthened, the backlog of outstanding FX orders fell significantly,” she said.
According to Genia, the reduction in the foreign-exchange backlog is one of the clearest indications that the market is moving closer to equilibrium.
While PNG has not yet achieved full Kina convertibility, she said the country is moving in the right direction.
The adjustment in the exchange rate also creates conditions for monetary policy to play a greater role in anchoring inflation.
“If we now have more of the exchange-rate adjustment behind us than ahead of us, it creates the conditions for the nominal anchor for inflation to begin passing back from the exchange rate to the Kina Facility Rate,” Genia said.
Bank of PNG targets stronger monetary-policy transmission
Genia identified weak monetary-policy transmission as one of the major challenges facing the financial system.
Changes in the KFR have not historically translated into corresponding movements in commercial lending and deposit rates, limiting the effectiveness of monetary policy in influencing economic activity.
She said strengthening transmission through the KFR is therefore a critical next stage of reform.
The Governor also pointed to limited competition in PNG’s banking market as another challenge.
The recent entry of National Banking Corporation (NBC), TISA Bank and CreditBank is expected to increase competition for deposits and lending, although Genia cautioned that the new institutions will need time to build their businesses sustainably.
Genia said BPNG is strengthening the regulatory and institutional foundations of the financial sector.
Recent amendments to the Central Banking Act have strengthened the Bank’s governance while preserving its independence. Further reviews are also being undertaken of the Banks and Financial Institutions Act, the foreign-exchange regulatory framework and the National Payments System Act.
The Bank is also strengthening prudential supervision and system-wide stress testing to identify risks not only within individual financial institutions but across the financial system.
Operational resilience is another priority, including stronger risk management, information technology, cybersecurity and payments infrastructure.
Genia said critical financial services must remain available during disruptions and that the infrastructure supporting transactions across the economy must be secure and resilient.
BPNG has also introduced an Emergency Liquidity Assistance Policy, approved by its Board earlier this year, which allows the Bank to provide temporary liquidity support to an otherwise solvent and viable commercial bank experiencing severe short-term liquidity pressures.
She said the policy forms part of broader contingency arrangements designed to protect confidence and financial stability.
Financial inclusion expands
Financial inclusion remains another major pillar of the Bank’s agenda under the National Financial Inclusion Strategy 2023–2027 and through the Centre for Excellence in Financial Inclusion (CEFI).
The strategy focuses on expanding access to financial services, particularly through mobile and digital banking, with a strong focus on women and rural communities.
Genia said more than 250,000 Papua New Guineans have received financial literacy training through CEFI programmes, including approximately 120,000 women.
She said financial inclusion is ultimately about bringing more people into the formal financial system and enabling them to participate more fully in economic activity.
PNG is also preparing to host the Alliance for Financial Inclusion (AFI) Global Policy Forum in Port Moresby, bringing together central bank governors, policymakers and financial-sector thought leaders from around the world.
The forum will be held under the theme “Building Resilient Economies for an Inclusive Future”.
Genia said hosting the international forum provides PNG with an opportunity to showcase its progress, strengthen regional cooperation and draw greater international attention to financial inclusion opportunities and challenges in the Pacific.
Green finance emerges as new investment pathway
Climate resilience and sustainable use of natural resources are also becoming increasingly important components of PNG’s financial-sector development.
Genia said BPNG’s Inclusive Green Finance agenda is intended to help mobilise private and public capital towards investments that deliver environmental and economic benefits.
A Green Finance Summit held in Port Moresby in May brought together government, development partners and the private sector to focus on moving green finance policy towards implementation.
Four key components are being developed: the Inclusive Green Finance Taxonomy, Green Finance Academy, Environmental Risk Guidelines and Green Finance Facilities.
The taxonomy is intended to provide clarity on what qualifies as green or sustainable investment, while the Green Finance Academy will build technical capacity within the sector.
The Environmental Risk Guidelines will support better classification and reporting of green lending and help financial institutions incorporate environmental and climate risks into their risk-management systems.
Green Finance Facilities, meanwhile, are intended to mobilise capital for commercially viable investments that support climate resilience.
East Sepik project demonstrates economic value of conservation
Genia highlighted the April Salumei Rainforest Community Conservation Project in East Sepik as an example of green finance being applied in practice.
The project covers more than 600,000 hectares of rainforest that had originally been identified for commercial logging.
Traditional landowners instead chose to preserve the forest and generate economic value through the carbon stored in the rainforest.
Verified carbon credits generated through the project can be sold to entities seeking to offset emissions, with proceeds used to support community development initiatives, including schools, sustainable agriculture and employment.
Under a new five-year development plan, further investment is expected in health and education.
Genia said the project demonstrates how environmental assets can be protected while creating economic value and directing benefits back to the communities that own and protect those resources.
AML/CFT reforms and FATF grey-list response
The Governor also linked financial-sector reform to Papua New Guinea’s international financial-system obligations.
PNG is currently responding to its placement on the Financial Action Task Force (FATF) grey list, with a review of the Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) Act forming part of the national reform programme.
Genia said the focus is on implementing the agreed action plan, strengthening the effectiveness of PNG’s AML/CFT framework and demonstrating progress.
For BPNG, she said the reforms are directly connected to maintaining the integrity of the domestic financial system and confidence in PNG’s links with the international financial system.
BPNG is also pursuing reforms to the national payments system as financial technology and payment platforms continue to evolve.
Genia said domestic and international payment systems must remain interoperable, secure and capable of accommodating new technologies.
For PNG’s domestic market, she said financial institutions must be able to transact effectively with one another and the country’s national payments infrastructure must keep pace with developments in the wider payments ecosystem.
Genia stressed that financial-sector reform would not produce results overnight.
“Financial sector reform is not one single switch. It involves a series of measures that take time to take effect and, above all, require stability if they are to deliver meaningful results,” she said.
For investors and businesses, the reform agenda points to a financial system intended to provide greater stability, stronger competition, improved access to finance and more effective monetary-policy transmission, while creating new opportunities in digital banking, green investment and the broader non-resource economy.
