MELBOURNE (Reuters) - Australia on Saturday said it would provide a loan of $300 million as direct budget assistance for the Pacific island of Papua New Guinea and aid its economic reforms and government financing.

Australia's ties with PNG and other small, developing countries in the Pacific have gained significance as China expands its influence in a region dominated by the United States and its allies since World War Two.

Though rich in natural gas, crude oil, gold and copper, among other commodities, PNG has seen its revenues hit in recent years by a downturn in global commodity prices, and has increasingly turned to China for financing.

"This assistance reflects the Australian national interest in a stable and prosperous Papua New Guinea," Alex Hawke, Australia's minister for international development and the Pacific, said in a statement.

"It builds on our two countries' strong economic partnership, which includes support for economic reform," he said.

"It will also benefit Papua New Guinean and Australian businesses by increasing the availability of foreign exchange in the country and by supporting trade and investment."

In August, PNG said it was seeking to refinance its entire government debt, turning to Beijing for help.

(Writing by Lidia Kelly; Editing by Clarence Fernandez)