The global development institution will invest in Bank South Pacific, which is PNG's largest commercial bank with more than 50% market share of loans and deposits in the country.
As part of the syndicate group, Netherlands Development Finance Company (FMO) and German development finance institution Deutsche Investitions und Entwicklungsgesellschaft (DEG) will be investing significantly into BSP.
The deal marks FMO's first direct investment in the country, while DEG is renewing its support to PNG.
"BSP has worked hard over the past decade to become a sophisticated banking institution offering integrated solutions to our corporate clients but our ability to compete effectively in the foreign exchange lending market has been constrained by limited access to longer-term foreign currency funding," BSP treasury general manager Mark Railston said.
"With this new facility, BSP will be better able to service Papua New Guinea's growing private sector including small and medium enterprises linked to the natural resources sectors that need access to US dollars."
Across the Pacific, BSP has the largest network of branches, rural outlets and ATMs servicing more than a million customers.
IFC has supported BSP since 2010, assisting the bank's expansion into small to medium and rural banking segments in PNG and across the Pacific.
"BSP is critical to national economic growth," IFC Pacific regional manager Gavin Murray said.
"For Papua New Guinea to meet its development potential, the country needs strong domestic financial institutions that can provide the financial products needed for the private sector to grow, provide employment and ultimately boost prosperity."