Papua New Guinea (PNG) has seen a significant reduction in its foreign exchange backlog, according to major banks in the country. This improvement in forex supply has raised hopes that the long-standing crisis that has hindered business could be nearing an end.
In its May Pacific Foreign Exchange Insights report, ANZ Bank confirmed that the forex situation in PNG had “gradually eased,” with the backlog temporarily eliminated by early May. Patrick Wright, Head of Financial Services at Westpac Bank PNG, reported that the bank saw near-zero forex backlogs last month.
“Due to the sharp reduction, we sometimes process major orders the same day they’re received, after a review in line with forex control guidelines,” Wright told Business Advantage PNG.
Rohan George, General Manager of Financial and Market Services at Bank of South Pacific (BSP), added that forex order execution times are now “under seven days.” He noted the backlog had dropped from an average of PGK 570 million between February and April to PGK 101 million by May.
However, George cautioned that previous reductions in the backlog have not always been sustained.
Exports Boosting Capital Inflows
Experts attribute the reduction in the backlog to increased export revenues, particularly from coffee, cocoa, and gold, leading to a rise in foreign exchange inflows. According to the Bank of Papua New Guinea (BPNG), forex inflows for April and May totaled PGK 5.4 billion, with projections for the June quarter reaching PGK 8.2 billion, marking a fifth consecutive record-breaking quarter.
Kishti Sen, an international economist at ANZ Bank, noted that rising commodity prices have boosted exporter earnings, with foreign currency being converted into local Kina to pay domestic suppliers, workers, and contractors.
Though exports have played a major role, Wright and George pointed out that businesses have reduced import expenditures, leading to a decreased demand for foreign currency.
“The move toward forex balance and the convertibility of the Kina is becoming more feasible,” Wright observed.
However, George mentioned that domestic economic conditions remain weak, with inflation reducing demand, and a 25% drop in global oil prices has led to fewer oil imports. Supply chain disruptions and tariff uncertainties are also affecting new orders.
Is the Forex Crisis Truly Over?
PNG’s forex shortage traces back to the conclusion of the Liquefied Natural Gas (LNG) project in 2014. For nearly a decade, forex issues have consistently ranked as a major challenge in the Business Advantage PNG / Westpac Bank PNG annual CEO survey.
Given the improvements in 2025, experts are cautiously optimistic but refrain from declaring the crisis entirely over.
George from BPNG warned that a potential decline in commodity prices, particularly gold, remains a key risk to forex supply.
“There’s also the risk of disruptions in export operations, including weather, environmental, shipping, safety, and supply chain issues, which could undermine the current favorable export conditions,” George said.
On the demand side, George anticipates an increase in foreign currency orders during the second half of the year, driven by stronger global certainty, favorable seasonal factors, and progress on new projects like the Kaviang Port upgrade in West New Britain.
“As the global environment improves in the latter half of the year, BPNG’s interventions may ease the ongoing structural supply-demand imbalance,” George predicted.
Wright, however, remains more optimistic, saying that the shift toward forex balance and Kina convertibility is becoming increasingly realistic.
Kishti Sen refrained from declaring the crisis over but expressed growing confidence. He suggested that once PNG’s LNG and other large-scale resource, infrastructure, and energy projects are finalized, the situation may stabilize.
“When these projects are up and running, capital flowing through commercial banks will balance the market, and the demand for Kina will outpace supply, pushing the Kina exchange rate higher,” Sen explained.
For now, commodity prices continue to be heavily influenced by foreign direct investment.
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