International Monetary Fund. Asia and Pacific Dept
This 2016 Article IV Consultation highlights that the economy of the Marshall Islands is estimated to have expanded by about 0.5 percent in FY2015 (ending September 30), as the fishery sector recovered. Following a moderate inflation of 1.1 percent in FY2014, headline inflation dropped to –2.2 percent in FY2015 amid falling oil and utility prices. The fiscal balance is estimated to have recorded a surplus of about 3 percent of GDP in FY2014–15, owing to record-high fishing license fees. Growth is expected to rise to about 1.5 percent and inflation to about 0.5 percent in FY2016, as the effects of the drought in earlier 2016 are offset by the resumption of infrastructure projects.
This 2009 Article IV Consultation highlights that the economy of the Marshall Islands is on a path to recovery. A gradual expansion with growth reaching 0.5 percent in 2010 is supported by further growth in the fish processing industry and additional foreign grant assistance. Rising prices could stoke inflation and stifle domestic demand. Executive Directors have encouraged the authorities to continue to strengthen the statistical base, especially the coverage and timeliness of fiscal and balance of payments data, in order to improve policy analysis and decision-making.
This report describes economic developments in the Marshall Islands during the 1990s. Real GDP grew by 3.7 percent in 1995. Copra production increased, owing mainly to more frequent inter-island transport services by government-owned ships. Construction activity was boosted by the availability of external concessional aid financing for a high school and a garment factory, foreign direct investment on a dry dock, and a government-sponsored 150-room hotel. Value added from the transport, communications, and energy sectors rose, owing in part to an improvement in the financial performance of government-owned enterprises.
International Monetary Fund. Asia and Pacific Dept
This Informational Annex highlights the Marshall Islands’ existing tax system’s inability to raise additional revenue, discouragement of private investment, and inequitability. Careful consideration needs to be given to the potential of a comprehensive tax reform program, including strengthening tax administration, for raising additional revenue while supporting the private sector. Many state-owned enterprises (SOEs) are a drain on public finances, and their unreliable or costly services undermine private sector development. To improve their performance, reforms are needed to strengthen efficiency, better delineate commercial and noncommercial services, and introduce tariff systems that better reflect cost of services. In areas where SOEs provide purely commercial services, divestment should be considered.
The Republic of the Marshall Islands (RMI), scattered across an area of nearly 1 million square miles in the Central Pacific, is heavily dependent on external grants. As in past consultations, the current discussions have focused on policies to put public finances on a secure footing and improve growth prospects. Recent economic performance has been lackluster. Exports have been held back mainly by structural problems. The fiscal position has improved in FY2006, but the overall balance has been slightly negative at about ½ percent of GDP.
Jihad Alwazir, Mr. Fazurin Jamaludin, Dongyeol Lee, Niamh Sheridan, and Ms. Patrizia Tumbarello
Access to financial services in the small states of the Pacific is being eroded. Weaknesses in Anti-Money Laundering and Combating the Financing of Terrorism compliance in the context of high levels of remittances are contributing to banks’ decisions to withdraw corresponding banking relationships and close bank accounts of money transfer operators. In this paper, we gather evidence on these developments in the small states of the Pacific, discuss the main drivers, and the potentially negative impact on the financial sector and macroeconomy. We then identify the collective efforts needed to address the consequences of withdrawal of corresponding banking relationships and outline policy measures to help the affected countries mitigate the impact.
Mr. Yiqun Wu, Ms. Patrizia Tumbarello, and Niamh Sheridan
Regional integration of Pacific Island countries (PICs) with Australia, New Zealand, and emerging Asia has increased over the last two decades. PICs have become more exposed to the region’s business cycles, and spillovers from regional economies are more important for PICs than from advanced economies outside the region. While strong linkages with Asia would help in the event of a global downturn, PICs remain particularly vulnerable to global commodity price shocks. In this paper, we use a Vector Error Correction Model (VECM) for each PIC to gauge the impact of global and regional growth spillovers. The analysis reveals that the impact on PICs’ growth from an adverse oil shock would be substantial, and in some cases even larger than from a negative global demand shock. We also assess the spillovers to the financial sector from the deterioration of the global outlook. PICs should continue to rebuild policy buffers and implement growth-oriented structural reforms to ensure sustained and inclusive growth.
Hoe Ee Khor, Mr. Roger P. Kronenberg, and Ms. Patrizia Tumbarello
Pacific island countries face unique challenges to realizing their growth potential and raising living standards. This book discusses ongoing challenges facing Pacific island countries and policy options to address them. Regional cooperation and solutions tailored to their unique challenges, as well as further integration with the Asia and Pacific region will each play a role. With concerted efforts, Pacific island countries can boost potential growth, increase resilience, and improve the welfare of their citizens.
International Monetary Fund. Secretary's Department
The speeches made by officials attending the IMF–World Bank Annual Meetings are published in this volume, along with the press communiqués issued by the International Monetary and Financial Committee and the Development Committee at the conclusion of the meetings.