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Kiribati Seeks to Boost Revenue with Tax Reforms and Structural Changes

Washington D.C., [Date] - The International Monetary Fund (IMF) has released a report highlighting the need for Kiribati to implement medium-term reforms to put its revenues on a more sustainable footing.

Improving Tax Revenue

The authorities can generate greater revenue by:

  • Protecting the tax base
  • Revising dividend policies
  • Increasing taxes on tobacco and fuel
  • Simplifying the tax regime for small businesses
  • Reviewing tax policy to align Kiribati’s rates with international levels
  • Formulating a deep seabed mining fiscal regime
  • Leveraging participation in the Parties to the Nauru Agreement (PNA) to broaden the vessel day scheme

Improving Public Financial Management

The report emphasizes the need for improved public financial management to make public spending more effective. To achieve this, the authorities can:

  • Prioritize developing credible budgets
  • Execute in-year controls over expenditure and revenue
  • Execute central controls over cash balances

Structural Reforms for Economic Diversification

To mitigate long-term consequences of the pandemic, the report recommends economic diversification through a more dynamic private sector. This can be achieved by:

  • Upgrading fishing exports
  • Investing in renewable energy
  • Exploring manganese and copper resources
  • Improving connectivity and human capital

Development of Private Sector

The development of the private sector requires adequate sources of financing for productive investment. The report suggests:

  • Improving land access procedures and dispute resolution mechanisms to enhance property rights
  • Promoting mobile connectivity and mobile banking
  • Formulating a regulatory and supervisory framework for financial institutions

Strengthening State-Owned Enterprises

An overall strategy is needed to set state-owned enterprises (SOEs) on a more commercial and sustainable footing. This can be achieved by:

  • Strengthening the commercial mandate of SOEs
  • Developing a medium-term plan for financially sustainable delivery of utilities
  • Phasing out SOE exemptions from value-added tax

Improved Governance

The report emphasizes the need for overall improvement in governance to boost public trust. This can be achieved by:

  • Addressing governance deficiencies in budget outcomes and institutions
  • Strengthening the governance of public investment
  • Promoting transparency on fisheries management

Enhancing Statistical Capacity

Continued efforts are needed to build statistical capacity and enhance interagency collaboration to facilitate evidence-based policy making.

The IMF is committed to supporting Kiribati’s reform efforts through policy advice and capacity development.

Contact

Pemba Sherpa, Press Officer Phone: +1 202 623-7100 Email: MEDIA@IMF.ORG Twitter: @IMFSpokesperson