On the grey list, forex supply and the impact of war
Papua New Guinea’s greylisting by the Financial Action Task Force, the potential re-emergence of forex supply issues and the trickle-down effects of war in the Middle East are all reminders that PNG is increasingly connected to the global economy – for better or worse.
The Bank of PNG building in Port Moresby. Governor Elizabeth Genia is co-chairing the committee tasked with getting PNG off the Financial Action Task Force’s grey list. Credit: BAI
As expected, the Financial Action Task Force (FATF), the global anti-money-laundering/counter-terrorism financing (AML/CTF) body, added Papua New Guinea to its “grey list” on 13 February.
PNG’s 23-agency National Coordinating Committee (NCC) on AML/CTF now has the task of addressing the FATF’s seven-point action plan to get off the list before its next mutual evaluation, due at the end of this decade.
“The action plan provides PNG with a clear roadmap and defined reporting cycles,” said Bank of PNG Governor Elizabeth Genia, NCC Co-Chair, after the greylisting was confirmed. “Our responsibility is now disciplined implementation, measurable outcomes and regular progress updates to the FATF.”
We talked to the country’s bankers recently on the likely impact of greylisting. What is clear is that the international AML/CTF regime has become more complex and demanding since PNG last got off the grey list in 2016.
One item that will certainly need more attention is the issue of beneficial ownership, i.e. who ultimately owns and controls a company or asset.
More transparency will be required of business owners and this will require changes to PNG’s Companies Act to allow the Investment Promotion Authority (IPA) to collect information on beneficial owners and share it with law enforcement if required.
The IPA is currently embarking on a series of roadshows to explain the significant implications for both business owners and directors.
Forex issues re-emerging?
While the greater availability of forex last year, helped by stronger export receipts and IMF support, provided a relief for business, recent anecdotal reports of more shortages are a reminder that this issue is not “fixed.”
Until a final investment decision on TotalEnergies’ US$14 billion-plus Papua LNG project takes place, PNG’s forex availability will depend to a significant extent on its ability to continue to generate strong export revenue.
Export receipts this year look likely to remain healthy, with continuing high prices for gold, copper, silver and coffee (although the price of cocoa has fallen back to 2023 levels after two strong years). On the other hand, demand for forex is likely to increase as local businesses purchase plant, equipment and inputs in anticipation of Papua LNG.
Then, there is the issue of the purchasing power of the PNG kina, with the prevailing view being that it is still over-valued.
The Bank of PNG will be releasing its March 2026 economic outlook on 9 March and, given the central bank’s important role in managing forex supply, Governor Elizabeth Genia’s speech is likely to be closely analysed.
If this isn’t complicated enough, there’s the uncertainty created by conflict in the Middle East, which is set to drive up global oil and gas prices if it continues for any length of time.
As a net importer of oil, PNG is sensitive to rising oil prices, should they occur. However, its status as an LNG exporter may help soften the blow, as BSP’s analysts Andy C. Wu and Dujon Kora-Aisa note in a Flash Insight released this week:
“Elevated LNG prices are likely to translate directly into stronger export revenues and more foreign exchange inflows … Additionally, PNG’s geographic distance from the conflict zone enhances its appeal as a stable and reliable alternative LNG supplier to Asian markets.”
PNG 100 CEO Survey
Finally, the results of the 2026 Business Advantage PNG/Westpac PNG 100 CEO Survey will be announced at a special Port Moresby Chamber of Commerce and Industry business breakfast at the Hilton Hotel in Port Moresby on 18 March. A separate event will also take place in Lae in the same week, hosted by the Lae Chamber of Commerce and Industry.
This business confidence survey, run annually since 2012, captures the investment, profit and recruitment expectations of PNG’s largest companies, and also asks them to rank the impediments they face in their businesses.
The survey results themselves will be presented by BAI’s Publishing Director Andrew Wilkins, while Westpac’s Senior Economist Justin Smirk will present his analysis of the results.
