Chapter

3 Kiribati

Author(s):
Douglas Scott, and Christopher Browne
Published Date:
June 1989
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The Republic of Kiribati consists of 33 islands, with a land area of 726 square kilometers, widely scattered over the Central Pacific Ocean on both sides of the equator and the international dateline. The population of 66,000 is 98 percent Micronesian. The Gilbert group, where nearly all of the population resides, is a chain of 16 islands extending for 700 kilometers in a northwesterly to southeasterly direction. The Phoenix group is 1,600 kilometers to the east and is presently uninhabited. The Line group is 3,000 kilometers to the east and only the three northern islands are inhabited. Although the land mass is very small, the 200-mile economic zone around the islands covers an area of more than 3 million square kilometers, a much larger share of the ocean than enjoyed by any other country in the region.

Except for Banaba, which is of limestone origin, all the islands are coral atolls, with shallow topsoil and a low water absorption capacity that prevents the cultivation of most crops. Although immune from cyclones, the islands see considerable variations in rainfall and suffer periodically from drought. The population density is high in relation to the scant resources; life expectancy is only 53 years; and health and education facilities are poor. There is a strong, persistent movement in search of employment from the outer islands to the national capital, Tarawa, which now contains one third of the population. In addition, 1,000 citizens are employed abroad as seamen on foreign ships and as phosphate workers on the neighboring island of Nauru, but there is little permanent emigration.

Kiribati gained independence from the United Kingdom in 1979. The President, who is Head of State and of Government, is selected from the popularly elected members of the 39-seat House of Assembly; the normal parliamentary term is four years. The British colonial presence dated back to 1892 when the Gilbert Islands were proclaimed a protectorate. These islands were joined in 1916 with the Ellice Islands to form the Gilbert and Ellice Islands Colony, which was later expanded to include other British possessions in the Central Pacific. The Ellice Islands separated and became the independent state of Tuvalu in 1975. From 1900, the main economic activity in Kiribati was phosphate mining on Banaba, which was undertaken by the British Phosphate Commission on behalf of the governments of Australia, New Zealand, and the United Kingdom.

Independence coincided with the exhaustion of the phosphate deposits. As a result, exports fell by 80 percent and government revenue and real GDP declined by about one half. However, in anticipation of the depletion of the phosphate resources, the Government began in 1956 to accumulate a reserve fund of foreign securities, primarily from the proceeds of royalties on exports. While it was originally envisaged to use these funds to help maintain the quality of government services in the post-phosphate era, in view of Kiribati’s early stage of development and the fragility of its external situation, the Government decided after independence to continue adding to the capital value of the fund. These external assets are at present equivalent to about six years of imports of goods and services.

Economic Structure

Production and Prices

Kiribati has the smallest GDP among Fund members and its standard of living, with an annual per capita GDP of SDR 275, is well below that of most countries in the Pacific region. Apart from the large quantities of tuna fish that are found around the islands, resource constraints severely limit the potential supply of exportables. The agricultural base is narrow; copra, which is produced mainly on small family plots, is the only important cash crop. Marketed output is purchased and exported solely by the Kiribati Copra Cooperative Society, which also operates a price stabilization scheme to mitigate the impact of fluctuations in world prices on growers’ income. Commercial fishing is undertaken by the four-vessel fleet of the national fishing corporation. Manufacturing is nonexistent; the scale of copra and fish production is insufficient to support processing activities. There is no infrastructure for tourism; transport and communications between islands and with foreign countries are difficult and time consuming.

Prices are largely determined by the cost of imports, especially from Australia. Wages are not adjusted automatically for price changes. Virtually all paid employment is in the public sector, where the number of employees and the wage and salary bill is held down by restraints on government budgetary expenditure. Although real wages have declined substantially since independence, unemployment has been high and rising. At the same time, an acute shortage of skilled manpower exists, which can be met only to a limited extent by expatriate staff in view of the difficult living conditions, especially the lack of housing. Outside the national capital, the population continues to be wholly engaged in subsistence activities. Urban incomes, despite declining in recent years, appear to have remained substantially higher than rural incomes. However, the differential in earnings is reduced markedly when full account is taken of the large transfers to rural households both from abroad and from family members residing in the national capital.

Balance of Payments

The external trade account (including grants) moved from surplus to substantial deficit after the cessation of phosphate production. Exports of goods represent less than 10 percent of GDP and consist almost entirely of copra and fish. Copra is sent for processing either within the Pacific region or to Western Europe, depending on the availability of shipping. Frozen tuna is sent for canning to American Samoa. A small amount of fresh fish from Christmas Island is exported to Hawaii. Imports are equivalent to about 50 percent of GDP, reflecting the narrow resource base and the limited opportunities for substitution by domestic production. Food and beverages comprise about one third and mineral fuels about one sixth of the total. Consumer goods and petroleum products are supplied primarily from Fiji and Australia. Machinery and transport equipment, almost entirely financed with external development assistance, represent a further one third of the total.

Services and transfers show a net surplus equivalent to about two thirds of GDP. Service receipts include interest earnings and fees under fishing agreements with foreign countries to permit their vessels to operate in Kiribati waters. Service payments include freight and insurance, which account for about one fourth of the value of imports. Private remittances are received from residents employed abroad as seamen and as phosphate miners. Official transfers are equivalent to more than one half of GDP. The main donors are Australia, the European Community, Japan, New Zealand, and the United Kingdom, and nearly all aid is provided in the form of grants. Although the long-term objective is to reduce dependence on foreign assistance, Kiribati recognizes that such help will be needed for a considerable period.

The external current account (including grants) normally registers a surplus equivalent to about 20–25 percent of GDP. While the capital account usually records a deficit, the overall balance of payments is also in surplus. Both official and private capital flows are minor. Official outflows occur mainly in the form of the reinvestment abroad of interest earnings and the purchase of other assets by the public sector. External commercial borrowing is generally avoided and debt service, mainly related to a loan for an aircraft purchase, is only 3 percent of exports of goods and services.

Public Sector

The public sector consists of the central government, which is organized in nine ministries; local government, which is administered through 19 Island Councils; and 12 nonfinancial public enterprises. The central government budget, which consists of the current revenue and expenditure estimates and development fund estimates, is prepared on a calendar-year basis and presented to parliament by the Minister of Finance in November. In recent years, parliament has not exercised its power to change the budget, which is normally approved in early December. Supplementary financing requests may also be approved during the budget year. Although Kiribati emphasizes the devolution of powers, the local councils account for no more than 3 percent of total public expenditure. There are seven major public enterprises engaged in air services, shipping, fishing, shipbuilding, telecommunications, public utilities, and housing. While their investment programs are financed by external aid channeled through the central government budget, the corporations are expected to achieve operating surpluses.

Central government receipts and expenditure are each equivalent to more than 80 percent of GDP. Tax receipts are relatively small, with personal and corporate income taxes equivalent to 5 percent of GDP, most of which is paid by the commercial bank. Indirect taxes are equivalent to 10 percent of GDP, virtually all in the form of import duties, which have risen substantially since the full-scale review of the tariff structure in 1984. Nontax revenue is equivalent to one third of GDP, of which the largest sources are interest on foreign assets and receipts from fishing agreements. Interest earnings are used to finance current expenditure only to the extent necessary to prevent the emergence of overall budgetary deficits; the remaining amounts, if any, are reinvested. Fishing receipts are subject to considerable uncertainty and fluctuation, since most agreements are negotiated annually and are subject to renewal. Development grants are equivalent to about 30 percent of GDP, excluding technical assistance, which is a major component of total external aid.

Current expenditure is equivalent to more than 50 percent of GDP. A detailed economic and functional classification of expenditure is not available. Budget estimates for individual ministries suggest that wages and salaries account for at least 40 percent of the total. The local cost component of development spending is included in current expenditure, and the amounts involved are minor. Development spending, which is financed almost entirely out of external aid, is concentrated in fishing, transport and communications, and social infrastructure, including water and sewerage services. Government expenditure policy is the main instrument to influence growth, price stability, and the balance of payments, given Kiribati’s small export sector; limitations on taxation, monetary, and exchange rate policies; and the dominance of the public sector in the economy.

Financial Sector

The financial sector comprises a commercial bank, a development bank, and the National Provident Fund. The Bank of Kiribati, which is 51 percent owned by an Australian banking group and 49 percent owned by the Government, is expected to remain as the only licensed commercial bank and foreign exchange dealer at least until 1991. The Kiribati Development Bank, which opened in mid-1987 with assistance from the Asian Development Bank, is authorized to make long-term loans to private enterprises engaged in agriculture, fisheries, industry, and services. The Development Bank took over the assets of the National Loans Board, which had been inactive for several years, because of the absence of allocations of budgetary funds. The National Provident Fund, established in 1977, operates a compulsory superannuation scheme to which employers and employees must each contribute 6 percent of wages and salaries; its assets are largely invested abroad.

There is no central monetary institution. The Australian dollar is legal tender and the sole circulating medium of exchange; exchange controls are not used. The scope for monetary policy is severely circumscribed. The amount of currency in circulation is difficult to estimate. Since the Australian dollar is used as the domestic currency, monetary growth is ultimately linked to balance of payments surpluses. With the limited demand for money for transaction purposes, much of the growth in liquidity represents financial savings in the form of time deposits; few alternative instruments for these funds are available. Internationally competitive interest rates are paid on large time deposits to encourage their placement with the domestic banking system rather than foreign financial institutions. At present, little use is made of domestic savings to finance investment and growth. The Government makes no recourse to domestic borrowing; opportunities for profitable lending to the public enterprises and the private sector are extremely small. Consequently, the commercial bank’s foreign assets are equivalent to more than 95 percent of deposit liabilities.

Developments in the 1970s

The sparsity of official statistics makes a detailed assessment of developments in the 1970s difficult. However, the Kiribati economy certainly prospered during this period because of relatively high phosphate prices. Assisted by buoyant receipts from mining company taxation and export duties, the overall budgetary position also registered large surpluses. While several pay raises were granted to public employees, particularly during the second half of the decade, the Government tried to contain the growth of current expenditure in order to avoid disruption during the transition to the post-phosphate era. As a result, persistent foreign trade, current account, and overall external surpluses were recorded. Substantial amounts of capital were paid into the phosphate reserve fund and all investment income accruing to the fund was automatically reinvested.

Economic planning focused primarily on policies to develop alternative sources of income. With respect to employment creation, the only notable success was the seamen’s training school. Efforts to promote agricultural, manufacturing, and tourism activities were not successful. No development occurred in the financial system. The public investment program was small, and economic and social infrastructure remained rudimentary. At the time of independence, prospects for economic growth appeared bleak, with little likelihood of quickly reducing dependence on external assistance.

Developments in the 1980s

Preliminary national accounts data suggest that real GDP growth has been negligible during this decade and, on a per capita basis, GDP remains far below that in the days of phosphate mining. Central government expenditure data and import statistics confirm the absence of any firm upward trend in activity. Annual fluctuations in copra and fish output are considerable, mainly owing to climatic changes. The fragility of the economic base was demonstrated in 1987, when unfavorable weather diminished copra production by one half and the fish catch was only one fourth of its potential with the existing fleet.

A major aim of fiscal policy has been to develop infrastructure and productive resources that would lay the foundations for future growth. Investment by the central government and public enterprises has averaged 30 percent of GDP since independence, although the impact on economic growth has been limited by the long gestation period of major projects and the high capital-output ratio, because of the small and widely dispersed population. Only projects that could be financed out of external concessional assistance have been undertaken. The pursuit of a more expansive investment program, for which local resources might have been made available, has been precluded by the lack of absorptive capacity of the economy.

Kiribati has exercised marked restraint on current budgetary spending so that public services could be curtailed to a level sustainable in the medium term. To avoid overall budgetary deficits, current expenditure was reduced from 65 percent of GDP in 1980 to 52 percent in 1987. A major part of this adjustment was accomplished through substantial cuts in the real wage and salary bill of the public sector. Wage increases were much lower than the rise in the cost of living. Established posts were abolished on several occasions and recruitment freezes were imposed for lengthy periods.

The Government has been successful in strengthening the finances of the public enterprise sector. Budgetary subsidies, which reached 10 percent of GDP during 1980–82, chiefly because of losses incurred by the national airline on international routes, were reduced to about 2 percent of GDP by 1987. The curtailment of regional services enabled the elimination of payments to the airline. Payments to the shipyard and telecommunications enterprises were limited primarily to assistance with starting costs. More flexible pricing policies were implemented and, in several enterprises, management took decisive steps to contain operating costs.

Public expenditure restraint was crucial for the achievement of a viable external payments position, particularly since domestic budgetary revenue declined in relation to GDP for several years after independence. Little scope existed to increase domestic taxes to compensate for the loss of phosphate-related revenues. Tax revenue was sluggish because of the low growth of household earnings, corporate income, and dutiable imports; nontax revenue was generally stagnant. To prevent an undue decline in the availability of services, the authorities during 1980-85 utilized the cash budgetary support offered by the United Kingdom under the terms of the financial agreement negotiated at independence. The Government also used all the interest earnings on external assets as a source of budgetary revenue in this period. Beginning in 1986, when the revenue position strengthened following the negotiation of a one-year fishing agreement with the U.S.S.R., it was decided not to request further cash budgetary support from the United Kingdom and to draw down only part of the interest earnings on external assets, thereby permitting the remainder of these receipts to be reinvested abroad. However, tight control over current expenditure was continued.

Monetary developments have not conflicted with external objectives. The rate of growth of domestic liquidity was modest during 1980-83 when interest rates were held to a maximum of 8 percent annually. Since this was often well below the rates available abroad on Australian dollar-denominated funds, most financial savings were held at foreign financial institutions. Following the decision to offer competitive yields on large time deposits, which caused rates to be increased up to 12.5 percent, strong deposit growth occurred during 1984–85. With the completion of the shift in portfolios from foreign to domestic assets, the growth of liquidity then moderated. The commercial bank reinvested virtually all of these funds abroad, although the Government sought to encourage bank lending to promote private sector activity. The ratio of advances to deposits, which had reached a peak equivalent to 50 percent in 1982 as a result of loans to public enterprises, fell to 7 percent in 1984 after the airline used the proceeds of an aircraft sale to repay its borrowing. Thereafter, domestic lending comprised only small amounts for working capital for fishermen and retail traders.

The current account, including official transfers, registered deficits in 1980–82, even though Kiribati, with its small export sector and large and stable flows of official transfers, appeared less vulnerable to the deterioration in the terms of trade and the world recession than other Pacific island economies. The trade deficit widened markedly because of low copra export prices, the high volume of imports of capital equipment including aircraft, and the increased cost of petroleum products. In 1983–84, a combination of factors contributed to a strengthening of the trade account and the achievement of current account surpluses. Exports of copra were unusually high because of favorable weather and strong foreign demand. Imports declined because of fiscal restraint and lower fuel imports following the sale of aircraft, and higher services receipts reflected the negotiation of several fishing agreements.

The external current account remained strong in subsequent years, although the surplus declined in relation to GDP, partly because exports reverted to the equivalent of less than one fifth of imports, in view of lower prices and the poor fish catch. The impact on the trade balance was mitigated by the decline in the cost of imports, reflecting cheaper petroleum prices, lower aid-related imports, and weak consumer demand. The balance on services and transfers continued to register surpluses with continued inflows in the form of interest earnings, fishing royalties, seamen’s remittances, and concessional aid. The overall balance of payments, which had been in deficit during 1980–81, registered surpluses thereafter, and external assets accumulated steadily. Expenditure from the phosphate reserve fund was limited to the repurchase of Fanning and Washington Islands from an Australian trading company that had operated plantations there for many years.

Table 1.Kiribati: Gross Domestic Product by Sectoral Origin, 1979–86(In thousands of Australian dollars at current prices)
19791980198119821983198419851986
Agriculture4,0261,5283,0122,8463,3405,9774,1513,728
Copra3,3858552,2421,9462,2644,8522,9042,328
Fishing2,0082,3272,8423,2964,2934,9314,8784,800
Commercial8731,1061,3481,5662,4872,6892,3252,200
Manufacturing304321496494508627594600
Electricity and water541328398456661715824900
Construction9349921,1211,1266168421,0531,500
Trade and hotels2,3533,2123,2904,4783,4553,5383,5863,600
Transport and communications2,1373,8713,7026,0324,7663,0723,9404,500
Finance and Insurance1931446376825957471,0201,100
Ownership of dwellings502636628152754536824850
Government administration6,3827,3226,8196,6787,7277,4627,9748,100
Community services449456491527543603733750
Less: bank service charges-114-111-572-643-484-796-1,205-1,200
GDP at factor cost34,74521,02522,86626,42426,77428,25328,37229,228
Plus: indirect taxes4,0853,9253,9853,9383,6823,9164,2004,500
Less: subsidies-1,786-2,491-3,859-4,260-3,657-2,504-2,164-1,800
GDP at market prices37,04424,46022,99226,10326,79929,66530,40731,928
Monetary GDP34,76220,03320,04422,74123,06725,44925,70826,978
Nonmonetary GDP2,2822,4272,9483,3623,7324,2174,6994,950
Agriculture6416737719001,0771,1251,2461,400
Fishing1,1351,2211,4951,7281,8052,2422,5532,600
Other506533682734850850900950
Memorandum items:
GDP at 1980 prices143,09922,46021,34822,97322,18823,30322,85722,518
Change in real GDP (in percent)-47.8-5.07.6-3.45.0-1.9-1.5
(In metric tons)
Copra output8,9377,52711,2709,8896,94713,3898,4835,911
Gilbert Islands6,7916,0719,5028,0816,36211,4035,3344,411
Line Islands2,1461,4581,7681,8085851,9863,1491,500
Fish catch6284921,6382,05871.81,358
Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Deflated by the Tarawa retail price index.

Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Deflated by the Tarawa retail price index.

Table 2.Kiribati: Consumer Price Index, 1979–86(Annual average percentage change)
Weights119791980198119821983198419851986
Food50.010.115.76.83.73.54.64.27.3
Beverages and tobacco14.013.220.40.610.414.55.13.58.0
Clothing and footwear8.0-1.014.38.74.73.88.914.01.6
Transport8.06.715.224.78.97.41.211.310.3
Household operations7.57.321.314.09.611.410.4-2.56.3
Miscellaneous12.512.55.63.35.14.46.02.67.6
Overall index100.08.916.17.75.56.35.44.56.6
(End-of-period; percentage change)
Memorandum item:
Overall index100.09.517.84.76.37.43.20.77.8
Source: Data provided by the Kiribati authorities.

Tarawa retail price index, fourth quarter 1975 = 100.

Source: Data provided by the Kiribati authorities.

Tarawa retail price index, fourth quarter 1975 = 100.

Table 3.Kiribati: Central Government Budget, 1979–86(In thousands of Australian dollars)
19791980198119821983198419851986
Revenue and grants22,64822,66922,23222,54224,41124,46525,33227,238
Tax revenue13,1156,1594,4174,4654,6054,5364,9475,698
Nontax revenue4,4338,6109,4988,2778,6069,4559,80010,540
External grants5,1007,9008,3179,80011,20010,47410,58511,000
Current12,0002,0173,5003,5001,7741,485
Development25,1005,9006,3006,3007,7008,7009,10011,000
Total expenditure18,51120,45022,55322,19123,62224,29525,90727,632
Current expenditure13,41114,55016,25315,89115,92215,59516,80716,632
Development expenditure5,1005,9006,3006,3007,7008,7009,10011,000
Overall balance4,1372,219-321351789170-575-394
(In percent of GDP)
Memorandum items:
Revenue and grants61.1100.996.786.491.182.583.385.3
Tax revenue35.427.419.217.117.215.316.317.8
Nontax revenue12.038.341.331.732.131.932.233.0
External grants13.835.236.237.541.835.334.834.5
Total expenditure50.091.198.185.088.181.985.286.5
Current expenditure36.264.870.760.959.452.655.352.1
Capital expenditure13.826.327.424.128.729.329.934.5
Overall balance11.29.9-1.41.32.90.6-1.9-1.3
Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Budgetary grant from the United Kingdom.

Development budgets of the central government and public enterprises, which are derived from the balance of payments statistics after excluding technical assistance costs.

Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Budgetary grant from the United Kingdom.

Development budgets of the central government and public enterprises, which are derived from the balance of payments statistics after excluding technical assistance costs.

Table 4.Kiribati: Central Government Revenue, 1979–86(In thousands of Australian dollars)
19791980198119821983198419851986
Tax revenue13,1156,1594,4174,4654,6054,5364,9475,698
Income and profits1,3091,0209191,0201,2781,0541,1951,559
Companies45111126273211100164400
Individuals1,2649097937471,0679541,0311,159
Indirect taxation11,8065,1393,4983,4453,3273,4823,7524,139
Import duties3,3153,3803,4833,4283,2993,4723,7024,052
Phosphate tax8,3541,669
Other13790151728105087
Nontax revenue4,4338,6109,4988,2778,6069,4559,80010,540
Reserve fund income14,2505,7514,7505,5005,5005,1825,200
Meteorology2191267275316223625233104
Fishing royalties6146161,2559831,9363,0063,767
Bank of Kiribati25150
Rent14424620111756
Philatelic sales4574895901,04721
Aircraft landing fees4763011064
School fees9090104108104103103105
Telecommunications112136151183171243200
Interest266801455426265133329296
Shipyard sales107147191661453710
Fish sales361213373573414047
Public works charges25437030722151036019
Other fees and charges2,1151,0711551,087647482385730
Total17,54814,76913,91512,74213,21113,99114,74716,238
Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Amounts drawn. The amounts earned are shown in the balance of payments.

Payments by the Japanese space agency for the use of Christmas Island facilities to obtain meteorological information.

Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Amounts drawn. The amounts earned are shown in the balance of payments.

Payments by the Japanese space agency for the use of Christmas Island facilities to obtain meteorological information.

Table 5.Kiribati: Central Government Current Expenditure, 1979–86(In thousands of Australian dollars)
19791980198119821983198419851986
General services2,8793,0393,3593,2453,7083,6534,3234,090
Office of the President125477358479486538588636
Judiciary112130162161189173218243
Public Service Commission1727191416101211
Parliament131232186174217237276311
Attorney General2828373248433651
Audit4552606686918990
Pensions544523403449278491511312
Home Affairs1,3469291,4441,3801,7231,4891,5511,594
Finance5316416904906655811,042842
Public order and safety7491,0947638961,3111,2201,3931,311
Education2,6073,0313,0772,9492,6472,6732,9933,022
Hearth1,1531,4821,7351,8071,7351,6471,6901,966
Economic services6,0235,9047,3196,9946,5216,4026,4086,243
Natural resources6867406088349071,2211,3472,087
Trade and industry1,7741671,341215508539457541
Communications13,4644,9164,6182,9662,8622,2361,7071,299
Works and energy2,2771,5131,6031,5231,306
Line and Phoenix Islands99817526827318031,3741,010
Total13,41114,55016,25315,89115,92215,59516,80716,632
Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Includes expenditure on works and energy during 1979–81.

Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Includes expenditure on works and energy during 1979–81.

Table 6.Kiribati: Commercial Bank Balance Sheet, 1979–861(In millions of Australian dollars; end of period)
19791980198119821983198419851986
Net foreign assets27.88.35.84.47.919.428.028.5
Domestic credit0.41.03.74.33.60.81.01.7
Public enterprises0.43.03.62.90.50.40.3
Air Tungaru0.42.02.72.3
Kiribati Shipping Corporation1.00.90.60.40.30.3
Te Mautari Limited30.10.1
Private sector0.40.60.70.70.70.30.61.4
Deposits8.09.19.38.511.319.528.229.2
Demand2.53.04.23.44.53.62.63.4
Savings2.52.82.32.72.73.13.64.1
Time3.03.32.82.44.112.822.021.7
Other items, net0.20.20.20.20.20.70.81.0
Memorandum item:
Time deposits (as percent of total deposits)37.536.330.128.236.365.678.074.3
Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Bank of Kiribati Limited is the country’s only commercial bank.

The change in net foreign assets corresponds to the overall balance of payments surplus or deficit (after allowance for statistical discrepancies caused by differences in the timing of the recording of certain transactions).

The national fishing corporation.

Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Bank of Kiribati Limited is the country’s only commercial bank.

The change in net foreign assets corresponds to the overall balance of payments surplus or deficit (after allowance for statistical discrepancies caused by differences in the timing of the recording of certain transactions).

The national fishing corporation.

Table 7.Kiribati: Interest Rate Structure, June 1987(In percent per annum; end of period)
Commercial bank deposit rates
Savings deposits15.00
Term deposits under $A 50,000
3months6.00
6months7.00
12months8.00
Term deposits over $A 50,000
7days13.75
14days13.75
1month14.28
2months14.22
3months14.09
6months14.15
Commercial bank lending rates
Secured loans12.00
Unsecured loans13.00
Source: Data provided by the Kiribati authorities.

Island accounts, with a minimum deposit of $A 100 and no restrictions on withdrawal, were introduced at an interest rate of 6.5 percent with effect from April 1987.

Source: Data provided by the Kiribati authorities.

Island accounts, with a minimum deposit of $A 100 and no restrictions on withdrawal, were introduced at an interest rate of 6.5 percent with effect from April 1987.

Table 8.Kiribati: Balance of Payments, 1979–86(In thousands of SDRs)
19791980198119821983198419851986
Trade balance5,448-13,715-18,766-18,815-13,430-7,028-10,811-11,057
Exports, f.o.b.19,0682,2763,4872,1683,37610,7184,2141,419
Imports, f.o.b.-13,620-15,991-22,252-20,983-16,806-17,746-15,025-12,476
Services, net433-1,7071,219-2301,2661,8884,0603,374
Receipts6,1436,61010,1877,8798,61110,38310,1349,893
Reserve fund interest4,0663,7215,6054,3774,6434,7203,5773,431
Payments-5,710-8,317-8,967-8,109-7,345-8,495-6,074-6,519
Private transfers, net1,2111,2261,6572,3042,1111,8881,6571,830
Official transfers17,96013,22013,74313,54615,19613,55811,18110,580
Current account15,052-976-2,146-3,1965,14210,3066,0874,726
Capital account2-6,749-2,101-292553-1,435-1,287-621-4,403
Overall balance38,303-3,077-2,439-2,6433,7079,0185,466323
Memorandum items:
Current account (in percent of GDP)47.0-5.0-9.6-13.322.736.229.625.6
Australian dollars per SDR (period average)1.161.141.031.091.181.171.451.75
Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Including aid-in-kind and technical assistance.

Outflows consist primarily of the reinvestment of interest earnings of the reserve fund, investment abroad by the National Provident Fund, and repayments of the capital transactions have been identified.

Corresponds to the change in net foreign assets of the Bank of Kiribati (apart from differences in timing of the recording of transactions).

Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Including aid-in-kind and technical assistance.

Outflows consist primarily of the reinvestment of interest earnings of the reserve fund, investment abroad by the National Provident Fund, and repayments of the capital transactions have been identified.

Corresponds to the change in net foreign assets of the Bank of Kiribati (apart from differences in timing of the recording of transactions).

Table 9.Kiribati: Exports by Commodity, 1979–86(Value in thousands of SDRs, volume in metric tons, unit value in SDRs per metric ton)
19791980198119821983198419851986
Fish
Value1311646834751,2691,4727061,006
Volume651127435791,8582,2981,0341,523
Unit Value2,0101,462920820683641683661
Copra
Value3,1871,9012,5711,3401,8225,9963,256262
Volume7,2506,96011,9578,7956,76411,33310,3775,900
Unit Value44027321515226952931444
Shark fins
Value2217152814391713
Volume--1121311
Unit Value--16,63514,62113,82314,35113,15814,37910,484
Phosphate1
Value15,533--------------
Volume445,700--------------
Unit Value35--------------
Other (Value)2220221818182822
Domestic exports18,8952,1013,2921,8603,1237,5264,0071,303
Re-exports21731751953092533,192207116
Total (Value)19,0662,2763,4872,1683,37610,7184,2141,419
Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Phosphate mining was halted in 1979.

Including an aircraft in 1984.

Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Phosphate mining was halted in 1979.

Including an aircraft in 1984.

Table 10.Kiribati: Imports by Commodity Group, 1979–86(In thousands of SDRs)
19791980198119821983198419851986
Food and live animals4,0634,7594,8354,8044,6164,8414,1233,243
Beverages and tobacco1,3021,1411,0821,0821,010967716707
Raw materials227265394346444261135193
Mineral fuels1,9542,1923,5783,1711,9342,3652,3481,280
Oils and fats1619222812332013
Chemicals745791846845676967749651
Manufactured goods1,6092,2772,4262,6202,9231,8031,4122,508
Machinery and transport equipment2,3722,9147,5195,7833,8645,2804,3862,545
Miscellaneous manufactured articles1,2531,4291,3522,1711,2381,1439781,244
Other79204198133898615892
Total13,62015,99122,25220,98316,80617,74615,02512,476
Source: Data provided by the Kiribati authorities.
Source: Data provided by the Kiribati authorities.
Table 11.Kiribati: External Grants and Concessionary Loans, 1979–86(In millions of SDRs)
19791980198119821983198419851986
Australia2.12.12.42.21.92.01.71.7
Sewerage project0.90.91.01.70.6
Water project0.81.00.81.0
Other aid1.21.21.40.60.51.00.90.7
New Zealand0.10.10.20.30.30.40.71.2
Japan0.10.41.52.12.01.92.83.1
Fishing vessels1.21.31.11.32.4
Cold storage0.40.70.5
Causeway2.9
Other aid0.10.40.30.40.30.10.40.2
United Kingdom4.210.18.27.78.45.84.13.1
Budgetary grant1.81.93.23.01.51.0
Project aid2.45.33.71.73.01.71.01.4
Technical assistance1.83.02.52.92.42.62.11.7
Asian Development Bank0.30.20.20.40.40.4
Loans0.30.20.2
Technical assistance0.20.20.40.20.2
European Community1.20.30.90.21.71.90.70.3
Bilateral program0.30.40.20.80.90.30.2
Regional program1.01.40.1
STABEX1.20.50.8
Other10.30.30.60.80.71.41.01.0
Total8.213.213.713.515.213.811.410.8
Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

The bilateral assistance of Canada, China, and the Federal Republic of Germany; the activities of UN agencies; and the programs of private organizations.

Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

The bilateral assistance of Canada, China, and the Federal Republic of Germany; the activities of UN agencies; and the programs of private organizations.

Table 12.Kiribati: External Assets, 1979–86(In millions of SDRs; end of period)
19791980198119821983198419851986
Phosphate reserve fund57.165.862.270.973.876.282.297.2
Government bank accounts18.012.26.45.45.33.23.52.8
National Provident Fund11.73.22.94.15.36.15.36.3
Bank of Kiribati investments26.57.75.63.96.716.417.416.4
Total assets73.389.077.184.491.1101.9108.5122.7
Memorandum items:
External debt0.30.30.31.61.61.71.71.7
(In percent of GDP)1.01.51.57.57.06.68.09.3
Debt service0.20.30.30.30.4
(In percent of goods and services)1.52.51.52.03.1
Australian dollars per SDR (end of period)1.191.081.031.121.161.181.611.84
Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Excluding deposits with the Bank of Kiribati.

These assets are shown in Australian dollars in the commercial bank balance sheet.

Sources: Data provided by the Kiribati authorities; and Fund staff estimates.

Excluding deposits with the Bank of Kiribati.

These assets are shown in Australian dollars in the commercial bank balance sheet.

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