It covers payment methods and information on, banking systems, foreign exchange controls, and U.S. and correspondent banking.
Methods of Payment
Papua New Guinea’s National Payments System (NPS) encompasses everything to do with the movement of money. This involves a network of financial institutions and payment services providers (PSPs) along with the supporting technology, processes, procedures, and legislation that together enable funds to be moved from payers (or senders) to payees (recipients) in whatever form or at whatever time, across the whole economy.
In PNG, people and businesses use a variety of financial instruments, including cash, cheques, electronic payments, real time gross settlement, direct credits, and card and mobile payments.
For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.
To access P&G’s ICS section on financing, visit the U.S. Department of State Investment Climate Statement website.
The PNG banking system has no specific rules/laws that affect U.S. business. There are both domestic and international banks in PNG, and all have reported profits in their most recent reporting. Based on the Bank of Papua New Guinea’s 2020 statistics, assets in the commercial sector have recorded exponential growth of 12.4 per cent between 2002 and 2020. The Bank of PNG reported that total commercial banking assets rose from PGK3.9 billion (USD1.2 billion) in that year to reach PGK20.3 billion (USD6.3 billion) in 2011. Growth has been slower in recent years, however, with total assets rising from PGK22.7 billion (USD7.1 billion) in 2012 to a high of PGK32.53 billion (USD9.72 billion) in 2020.
The Bank of Papua New Guinea (BPNG) regulates depository corporations, superannuation funds, life insurance companies, and money exchange and remittance services. The following financial institutions listed below are authorized or licensed under the Central Banking Act 2000, Banks & Financial Institutions Act 2000, Savings and Loan Societies (Amendment) Act 1995, Central Banking Act 2000, Superannuation (General Provisions) Act 2000 and Life Insurance Act 2000. These authorized financial institutions are licensed or authorized to accept deposits from the public.
It is illegal for any company or person whose name is not listed below to conduct any form of business meant for these institutions without obtaining a license from the Central Bank.
These authorized financial institutions are licensed or authorized to accept deposits from the public.
- Commercial Banks
- Licensed Financial Institutions (LFIs)
- Savings & Loan Societies
- Mobile Network Operator
- Money Remittance Operators
- FX Dealers
- Money Changers
- Life Insurance Business
- Superannuation Funds
- Gold Exporters
Foreign Exchange Controls
While there are no legal restrictions on foreign investors in converting, transferring, or repatriating funds associated with an investment (e.g., remittances of investment capital, earnings, loan or lease payments, royalties), a lack of available foreign exchange makes such conversions, transfers, and repatriation time-consuming or impossible.
Funds associated with any form of investment cannot be freely converted into any world currency. Bank of Papua New Guinea requires that all funds held in PNG be held in PNG kina (PGK). This rule was announced with little notice and caught many businesses off-guard in 2016. While there was an appeal process for businesses that wished to keep non-PGK accounts, none of the appeals were granted.
On June 4, 2014, the Central Bank introduced measures which have effectively pegged the kina at levels that led to foreign exchange shortages. While the kina does fluctuate somewhat in value, it only trades in a tight band as allowed by the central bank (Bank of Papua New Guinea). Recently, the central bank has allowed PGK to slowly depreciate against the USD and other currencies.
U.S. Banks and Local Correspondent Banks
There are no U.S. banks operating in Papua New Guinea however, U.S. industry has played a prominent role in realizing PNG’s mining and energy potential, and ExxonMobil’s lead involvement in the USD 19 billion PNG LNG project was supported in 2009 by USD 3 billion in export financing from EXIM Bank, at the time the largest single exposure in the history of EXIM Bank.