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Papua New Guinea

Government and institution measures in response to COVID-19.

Government and institution measures in response to COVID-19.

Return to homepage  |  Last updated: 17 June, 2020

General Information

Bank of Papua New Guinea (BPNG) announced a range of policy measures to maintain monetary and financial stability and provide liquidity to businesses and individuals at a reasonable cost.

The Internal Revenue Commission (IRC) initiated tax administrative relief measures.

An economic stimulus package was introduced by the Government to support business activity, protect jobs and ensure continued investment.

Tax measures – Direct and Indirect

(e.g. payment deferrals, rate reductions…)

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

Economic stimulus measures

(e.g. loans, moratorium on debt repayments…)

BPNG measures include:

  • A reduction in the Kina Facility Rate (KFR) from 5% to 3%. BPNG have also directed the banks to reduce their respective Indicator Lending Rates. 
  • A reduction in the Cash Reserves Requirement from 10% to 7% to provide additional liquidity to the banking system.
  • The intention to buyback Government securities (either Treasury Bills or Government Inscribed Stock) in an open market quantitative easing programme to provide liquidity to holders of these instruments. This programme is offered for a three-month period and includes flexibility around full or particle redemptions.
  • Encouraging interbank borrowing and lending among commercial banks by increasing the margin on Central Bank borrowing and lending to commercial banks by 25 basis points to 100 basis points on both sides of the KFR.
  • Continuing to provide the Intra Day Liquidity Facility to commercial banks to support the efficient clearing of payment transactions. This facility can be accessed on demand at prevailing limits.
  • New purchases under the Tap Facility will cease throughout the fourteen day SOE period until further notice. 
  • Authorised Foreign Exchange Dealers have been directed to give priority to retailers and wholesalers of medical drugs, medical and pharmaceutical companies and the import of Covid 19 related products. BPNG will also make foreign currency directly available to the Department of Health for Covid 19 related purchases overseas. 
  • Prudential requirements will be relaxed to cover the three months’ loan repayment holiday, namely the Prudential Standards relating to asset quality, capital adequacy and loan loss provisioning.
  • BPNG have committed to supplying adequate currency to commercial banks on a daily basis.

Treasury measures include:

  • The announcement of a K5.6 billion stimulus package. The economic stimulus package addresses budget and monetary policies, superannuation policies, business to business support, procurement policies and regulations and includes the following measures:
    • Loan repayment holidays
    • Issuance of Treasury Bonds
    • Superannuation fund support
    • Spending on critical health, security and economic sectors

Measures by superannuation funds include:

  • Payments to members whose employment has been terminated.
  • Investments in Treasury Bills.
  • Arrangements for employers for monthly contributions and relief from penalty interest.
  • Concessions on rental payments.

Contact us

Tax: Karen McEntee