Nauru’s Economy Sees Substantial Income from Regional Processing Centre

Nauru, a small island nation in the Pacific, has continued to rely on the Australian dollar as its nominated currency. According to recent reports, the Regional Processing Centre (RPC) remains the main source of income for Nauru, followed by fisheries under the Parties to Nauru Agreement.

Income Sources

• The RPC is the main source of income for Nauru, with personal emoluments and business tax contributing substantially.
• Fisheries under the Parties to Nauru Agreement are the second highest income source.
• Experts note that assessments on Nauru’s GDP based on income from the RPC may not be an accurate reflection of real income due to potential reduction in cash flow once the RPC closes.

Government Expenditure

The Government Revenue in the Treasury Fund is governed by Article 58 of the Constitution, while Article 59(1) governs the withdrawal of money from the Treasury Fund. Nauru complies with these requirements, ensuring that all monies withdrawn are under the Appropriation Act.

• The country has established a DFA (Development Finance Amendment) Act in 2011, which governs all grants, donations, and other funds.
• As part of the budget presentation, the Minister for Finance is required to table a six-monthly report to Parliament under Section 8 of the DFA 2011.

Nauru Airlines and Flights

Nauru Airlines operates a fleet of six aircraft, including three passenger aircraft and three dedicated freight-only aircraft. The airline has increased its airfreight services following the COVID-19 pandemic.

• Destinations include:
  • Nadi (Fiji International Airport)
  • Brisbane (Australia)
  • Tarawa (Kiribati)
  • Kiritimati (Christmas) Island
  • Pohnpei (FSM)
  • Majuro (Marshall Islands)

Shipping - Nauru’s Port and NSL

In 2018, it was noted that Nauru did not have a port for the offloading and loading of cargo. However, this has changed significantly.

• The country is now building a port capable of handling large vessels carrying containers, funded by an Asian Development Bank grant.
• The port is currently under construction, but some ships are already able to berth properly.
• NSL’s “Micronesian Pride” and other smaller vessels have been loading and offloading goods from the port.
• A landmark change was achieved in September 2023 when a vessel carrying petroleum products berthed for the first time at the port, delivering fuel through pipes to bunkers in Buada District.

Future Developments

• The handling charges are expected to be reduced due to quick return times for vessels, and the benefits must be passed on to the people of Nauru.
• The entire port, including terminal buildings, is expected to be completed by next year.
• This development will have significant implications for anti-money laundering/combating the financing of terrorism (AML/CFT) activities, as more ships are expected to berth at the port.