The Asian Development Bank says a second 35 million US dollar tranche of a loan to Papua New Guinea could be released early next year.
The comments come despite a remark by the PNG Prime Minister, Sir Michael Somare, that it will end arrangements with donor partners if promised funds are not made available.
Steven Van der Tak, the ADB country director in Port Moresby, says the funds are the second tranche of an existing loan and were to have been paid in 2002.
Mr Van der Tak says most technical conditions have been met, but ADB managers have been concerned about issues including nepotism and procedural problems in the selection of department heads and heads of statutory bodies.
He says the ADB has been talking with the Government and if talks restart, following release of the Budget last week, the loan tranche should be paid soon.
"If we start up the process of dialogue again I would expect to be able to, that we should be able to go to our board and release in the first quarter of next year."
Steven Van der Tak of the ADB office in Port Moresby.