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IMF Urges Kiribati to Implement Fiscal Consolidation and Structural Reforms to Boost Growth

Washington D.C. - The International Monetary Fund (IMF) has urged the government of Kiribati to implement fiscal consolidation measures and structural reforms to boost economic growth and reduce its high debt levels.

Challenges Facing Kiribati’s Economy

According to a recent IMF mission report, Kiribati’s economy faces significant challenges, including:

  • A large budget deficit
  • High public debt

To address these issues, the IMF recommends implementing fiscal consolidation measures such as:

  • Rationalizing the copra subsidy
  • Improving the targeting of social protection spending
  • Increasing tax revenues through measures such as:
    • Introducing an income tax bill
    • Eliminating tax exemptions for some state-owned enterprises

Public Financial Management Reforms

The report also emphasizes the need to improve public financial management, including:

  • Strengthening cash flow management
  • Publishing regular fiscal reports
  • Finalizing the drafting of a Public Financial Management Act

Additionally, the IMF recommends placing state-owned enterprises (SOEs) on a commercial and sustainable footing by:

  • Recalibrating tariffs
  • Reviewing economic tradeoffs
  • Improving their financial management

Structural Reforms to Boost Growth

Structural reforms are also essential to boost Kiribati’s economy, according to the report. The IMF suggests focusing on:

  • Boosting export competitiveness
  • Private sector investment
  • Inclusive growth through measures such as:
    • Upgrading quality within existing export sectors
    • Diversifying exports
    • Investing in infrastructure and human capital

Progress and Future Steps

The report notes that Kiribati has made progress in implementing structural reforms, including the passage of key legislation such as the Environment Act and Fisheries Act. However, more needs to be done to ensure these laws are properly enforced.

Data Dissemination System

The IMF also recommends improving the quality, timeliness, and coverage of statistics to support sound policy management. The authorities plan to implement the Enhanced General Data Dissemination System (e-GDDS) by publishing economic data on a National Summary Data Page.

Commitment to Reforms

“We commend the government’s efforts to implement economic reforms and appreciate its commitment to working with the IMF,” said an IMF spokesperson. “We stand ready to continue supporting Kiribati’s reform efforts through policy advice and capacity development.”

Acknowledgement

The IMF mission team expressed gratitude to the authorities, other stakeholders, and development partners for their cooperation and open discussions during the visit.

Contact: Pemba Sherpa IMF Communications Department Phone: +1 202 623-7100 Email: MEDIA@IMF.org Twitter: @IMFSpokesperson