Asylum seekers sent to PNG and eligible for resettlement will not be guaranteed citizenship and may be sent elsewhere, Prime Minister Peter O'Neill says.
Mr O'Neill on Sunday said Australia's $A500 million aid budget will be aligned to PNG's national priorities "for the first time" as a result of the agreement.
"Those found to have genuine refugee status will be resettled in Papua New Guinea and other participating countries in our region," Mr O'Neill said in a statement.
"There is no guarantee of citizenship unless and until all the requirements of our residency and citizenship laws have been met."
The Australian Government will meet all costs for resettlement, from arrival through to processing and resettlement.
"There will be no negative impact on our budget," Mr O'Neill said.
"This will give our economy a massive boost, with the first benefits to be seen in a short period of time."
PNG citizenship can only be applied for after eight years of residency, and applicants must speak Tok Pisin, Hiri Motu or "a vernacular of the country, sufficiently for normal conversational purpose."
PNG currently does not allow dual citizenship, and applicants must pay about $A4,500 in fees, as well as provide birth and marriage certificates.
Processing and resettlement arrangements will take place under PNG laws, Mr O'Neill said, as well as the UN Convention on the Status of Refugees, to which PNG is a signatory.
Papua New Guinea awoke to the headline "Ruddiculous" on the front page of its only Sunday paper, the Sunday Chronicle.
The newspaper also carried a damning editorial of the plan, which said the controversial border protection plan was about winning votes for Kevin Rudd.
"He (Rudd) has unashamedly dragged our PM into Australian domestic politics under the guise of correcting a regional problem which in the long run will effect us all," it said.
"The big question remains, where is PNG going to resettle those identified as genuine refugees." AAP is seeking an answer to that question from Mr O'Neill's office.
Comment is also being sought from the opposition, who have vowed to mount a constitutional challenge against the current, temporary asylum seeker facility on Manus island.
Mr O'Neill said PNG will benefit economically to the tune of "hundreds of millions of kina" from the controversial program.
"Perhaps the most important aspect of our new agreement with Australia is that for the first time since independence, Australia's development assistance program with Papua New Guinea ... will be aligned with our own national policy and program priorities," Mr O'Neill said in a statement.
"This is a major achievement. It is something every prime minister in the last two or three decades has wanted to achieve. I am proud to have delivered it via the agreement I signed in Brisbane on Friday.
"The agreement will deliver substantial, long term benefits for Papua New Guinea as a whole, and not just provinces such as Manus, which will have regional detention and assessment centres." He said there will be significant ongoing spending in the management and operation of detention centres - such as staff, food, services and infrastructure.
He also vowed to ensure local benefits to local contractors and small businesses were maximised