The staff report for the 2008 Article IV Consultation of the Federated States of Micronesia examines economic developments and policies. Growth could recover modestly in the near term as falling commodity prices boost real incomes and progress is made on spending unused compact infrastructure grants. The authorities have limited tools to address risks from the global slowdown. Given the urgency of fiscal consolidation, expenditures should be streamlined and preparations for the comprehensive tax reform intensified.
This Selected Issues paper examines the reasons for the poor initial performance of the Compact Trust Fund (CTF) of Micronesia and the issues related to the governance framework. The design and recent implementation of the CTF raise concerns that Micronesia will still face a difficult transition after U.S. aid ends in FY2023. The paper provides forecasts for the fund over the medium term. It also examines the business environment in Micronesia and identifies possible areas for improvement.
International Monetary Fund. External Relations Dept.
The authorities of eight Pacific island countries—Federated States of Micronesia, Fiji, Republic of the Marshall Islands, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu—have agreed to the final text of a declaration on cooperation, intended to foster confidence in their financial sectors and in that of the region as a whole. The declaration was jointly drafted by staff from the Pacific Financial Technical Assistance Centre (PFTAC) and the Reserve Bank of Fiji, together with supervisory agencies that participate in the Pacific Islands Prudential Regulation and Supervision Initiative (PIPRSI), according to a press release issued by the PFTAC on March 1.