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International Monetary Fund. Asia and Pacific Dept
International Monetary Fund. Asia and Pacific Dept

IMF Country Report No. 24/103

International Monetary Fund. Asia and Pacific Dept
Kiribati’s economy recovered strongly from the pandemic on the back of supportive fiscal measures including subsidies, grants, and (most recently) an increase in civil service wages. Inflation, which has decelerated from its recent peak, is projected to pick up again mainly due to increased domestic demand. Kiribati is among the most vulnerable countries to the effects of climate change. Infrastructure gaps compound already challenging constraints imposed by distance and dispersion, limiting the development of the private sector in the state-dominated economy, and cementing its reliance on imports, especially for essential commodities such as food and fuel.
International Monetary Fund. Asia and Pacific Dept

1. Kiribati’s economy recovered strongly from the pandemic on the back of supportive fiscal policies. After a mild, pandemic-inflicted recession followed by a strong recovery, the economy is estimated to be about 17 percent larger in 2023 compared to 2019. This recovery is attributed to a substantial increase in the government’s recurrent spending from 2019 to 2023, mainly on subsidies and grants. The authorities introduced unemployment benefits (covering about 70 percent of the working age population) in 2020 and leave grants for the private sector in 2023. In addition, they bolstered existing support schemes such as the senior citizen benefit and copra subsidy. Notably, Kiribati has one of the highest recurrent spending to GDP ratios in the world (at 64 percent on average over 2019-23), surpassing most Pacific Island countries (PICs); this spending is largely financed by fishing revenue,1 budget support from development partners, and tax revenues. State-owned enterprises (SOEs) operate across a wide range of industries such as utilities, transportation, housing, and financial services. Parliamentary elections are expected around August2024, followed by presidential elections approximately two months later.

International Monetary Fund. Asia and Pacific Dept

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