World Bank to back PNG with K300m as El Niño bites

 World Bank to back PNG with K300m as El Niño bites

Papua New Guinea's Treasury has struck a deal in principle with the World Bank that could deliver up to K300 million to help the country cope with mounting El Niño damage, Treasurer Ian Ling-Stuckey announced following high-level talks in Singapore.

 

 

Held on August 7 at the World Bank's new regional office, the meeting brought together Ling-Stuckey and a team of senior bank officials to thrash out exactly how PNG could unlock disaster funds at a time when frost is wiping out crops, rivers are running low, island water tanks are drying up, and communities are struggling to reach clean water and basic transport links.

Among those at the table was Luis Benveniste, the World Bank's Regional Director for Social Policy, Education and Health for East Asia and the Pacific, who worked through PNG's available options alongside other bank representatives.

According to the Treasurer, this outcome did not happen by accident — PNG had specifically negotiated disaster response mechanisms into its recent World Bank arrangements, anticipating exactly this kind of emergency.

Central to the package is a US$50 million Catastrophe Deferred Drawdown Option, equivalent to about K220 million, which forms part of PNG's 2025 budget support loan. Officials in Singapore verified that this funding line is now accessible to respond to the El Niño emergency.

A second source of funding — up to K80 million — may come from the Rural Service Delivery Project Phase 2, channelled through its Contingent Emergency Response Component, a feature purpose-built for disaster situations. The Government is looking to draw down close to 20 per cent of that project's overall funding pool for the response.

Terms on both facilities are favourable, with interest averaging under 1.5 per cent and a repayment timeline of up to three decades.

The Treasurer also raised the possibility of adjusting the 2026 budget to create fiscal breathing room, potentially through slower rollout of some programmes and savings identified elsewhere — an approach that could be formalised through a Supplementary Budget, especially with fuel subsidy costs running high and Kumul dividend income falling short of projections.

Talks in Singapore also branched into employment strategy for PNG's youth, with two schemes on the table: the Enhancing Labour Mobility from PNG project, aimed at overseas work opportunities for young Papua New Guineans, and the Urban Youth Employment Project II, focused on training and hands-on work experience in urban centres. Officials discussed the possibility of folding the two together into a single, cost-efficient programme capable of eventual nationwide rollout.

The broader conversation extended to the World Bank's human capital agenda, including social protection options that could be factored into PNG's budget planning once the country reaches a projected surplus in 2027.

"Together, these two facilities can provide up to K300 million in El Niño disaster relief financing," Ling-Stuckey said, describing the Singapore visit as a chance to explore "how the World Bank could assist with PNG's El Niño disaster."