Mr Skate denied any link between the resignation and the loans from Taiwan, which have caused a regional diplomatic storm as the deal meant relinquishing all long-standing diplomatic ties with China. Mr Skate was due to face a no-confidence vote next Tuesday in parliament. He said he had been betrayed by political allies who plan to unseat him and that he had resigned in order to save his government. News of the deal on Monday sparked immediate condemnation from China and angered Papua New Guinea's former colonial ruler Australia, which said it feared the deal would lead to instability in the Asia-Pacific region.
China views Taiwan as a breakaway province and has sought to push it into diplomatic isolation.
Beijing usually severes ties with states that recognise Taipei. But Taiwanese foreign minister Jason Hu denied all reports of such a loan. No pressure Mr Skate denied that he had come under pressure from his cabinet to step down. Mr Skate's coalition partner the People's Democratic Movement recently deserted the government to join the opposition. Confusion reigned however over the country's immediate leadership.