1. Nauru faces structural challenges due to its small size and remoteness. Nauru is located in the south Pacific Ocean with approximately 21 square kilometers of land and a population of 12,000. Its geographical isolation and small size make Nauru dependent on imports and vulnerable to external shocks. A narrow and volatile revenue base comprises fishing license fees, residual phosphate processing revenue, and revenue from the Regional Processing Center (RPC)1, which is being scaled down. Phosphate mining has resulted in widespread land degradation, forcing the population to inhabit in a narrow coastal area, thereby increasing their vulnerability to climate change.
This was the first full in-person mission since the pandemic. The authorities attach significant value to engagement with the IMF and broadly concur with the staff assessment, including most policy recommendations. Being one of the most isolated, small, and vulnerable members of the Fund, Nauru faces difficult policy choices while constrained by very limited prospects for economic diversification.
This statement is to update the Executive Board on developments following the issuance of the Staff Report for the 2023 Article IV Consultation. These developments do not alter the thrust of the staff report or staff appraisal.
1. Nauru’s size and location pose challenges for economic growth and development. Nauru is a remote island nation in the Pacific, with a land area of about 21 square kilometers and a population of approximately 12,000 people in 2021. Its size and remoteness constrain potential growth and raise its reliance on food and fuel imports. The revenue base—comprising sales of fishing licenses, residual phosphate mining and, since FY2012, revenues associated with the Australian Regional Processing Center (RPC) for asylum seekers—is narrow and volatile. Due to land degradation from phosphate mining in the 1980s, the population mainly resides along the narrow coastal land, raising vulnerability to climate change. Nauru’s population also has a high incidence of non-communicable disease (NCDs).