From Aid Dependency to Climate Investment: Unlocking Green Finance for Papua New Guinea’s Future

The global development landscape is evolving rapidly. With foreign aid budgets shrinking such as the UK’s recent cut from 0.5% to 0.3% of GDP, the termination of thousands of USAID programs, among others, the era of predictable, long-term aid is nearing its end.

For countries like Papua New Guinea, which faces complex development and climate resilience challenges, this shift presents both a wake-up call and an unprecedented opportunity.

This was the clear message echoed at the recent Green Finance Summit, hosted by the Bank of Papua New Guinea and supported by partners including AFD, ADB, IMF, and the World Bank. The summit marked a critical inflection point in PNG’s path to sustainability: a recognition that mobilizing private capital, not just increasing aid flows, is central to delivering climate-resilient infrastructure and inclusive economic transformation.

Why It Matters

Rural communities, especially women, youth, and informal sector entrepreneurs, are disproportionately vulnerable to climate shocks. Yet these groups also represent the greatest potential for economic resilience. Green and blue finance are not luxuries; they are development imperatives. However, unlocking these forms of finance requires building a domestic ecosystem that reduces investment risk and attracts private capital.

UNCDF’s Role in Enabling Green and Blue Finance

UNCDF brings a unique mandate to unlock capital in the world’s most underserved markets, and in PNG, we are working closely with the Bank of Papua New Guinea’s Green Finance Centre to roll out innovative financial instruments such as: The Green Guarantee Facility, Blended finance structures, Parametric insurance to protect businesses and communities from climate shocks

UNCDF is also advancing blue economy finance through our strategic partnership with UNDP. Together, we are designing and preparing to launch a Blue Finance Guarantee Facility to support enterprises in marine resources, fisheries, eco-tourism, and coastal resilience. The facility aims to catalyse private sector lending to sustainable blue economy projects while safeguarding marine ecosystems and enhancing livelihoods in coastal areas.

Collaboration Across the UN System

In alignment with our “One UN” approach, UNCDF is working hand in hand with sister UN agencies, including:

• UNDP, to align finance instruments with national climate adaptation goals and support institutional capacity building for climate-smart development

• UN Women to mainstream gender-responsive financial inclusion and support women-led enterprises in all sectors

• FAO under the EU-funded STREIT Programme, we are supporting rural financial inclusion in the cocoa, vanilla, and fisheries value chains, expanding access to credit through digital finance solutions, agent banking, and farmer cooperatives in East and West Sepik Provinces

Through these partnerships, UNCDF brings technical expertise, catalytic funding, and risk-sharing tools that enable sustainable development for those most at risk of being left behind.

 A National Commitment to Climate Resilience

We commend the Department of Treasury, CEFI, and provincial governments for taking bold steps to integrate climate and financial inclusion priorities into development planning. We acknowledge the leadership of Governor Elizabeth Genia of the Bank of PNG, and the strong support of development partners like DFAT, MFAT, and the European Union.

This collective effort is helping lay the foundation for a climate-resilient and inclusive financial ecosystem, a system that does more than deliver capital; it drives equity, opportunity, and resilience.

The Path Forward

The message from Port Moresby was clear: Papua New Guinea is no longer waiting for aid. It is ready for investment.

UNCDF is committed to this transition. Through blended finance, guarantee mechanisms, and multi-stakeholder partnerships, we will continue helping PNG mobilize capital that delivers development results where it’s needed most.

Let’s turn momentum into capital. Let’s turn capital into impact.

United Nations Capital Development Fund (UNCDF) , Bank of Papua New Guinea, UNDP Papua New Guinea, UNWomen Wwk, Agence Française de Développement,The World Bank, Asian Development Bank (ADB), International Monetary Fund, Department for International Development (DFID) - CEFI,DFAT Western Australia State Office DFAT South Australia State Office, MFAT in Auckland, Pradeep KurukulasuriyaEuropean Union in Papua New Guinea, Arun Negi,Australian Department of Foreign Affairs and Trade Elizabeth Genia George Awap Pradeep Kurukulasuriya