DMD Zhu’s Interview on the Pacific Island Countries in Business Melanesia
Supporting growth and reforms
How involved is the IMF in the Pacific?
The IMF is greatly involved in the Pacific particularly in the areas of policy or financial programs. We provide macro policy consultations and macro policy assessments to help countries in the region form their own policy because macro stability is the most important thing for a country.
We also provide technical assistance. We have had a technical assistance centre in the Pacific for 20 years now, as capacity building is important for the small countries in the region. So gradually we help Governments in building their capacity in areas such as tax, administration, revenue process, expenditure, financial regulation and such.
We do a lot of training for the region. We also do multinational surveillance, so we bring in the international picture to the region which is important as the region is part of the whole world. Last but not least of these important issues is that if the members are in need, we provide financial support.
You mentioned the importance of macro polices for the region can you give us some specific examples?
Take for example tax policy - How do you set the proper tax rates? How do you class tax, how do you tax income tax or VAT? You make sure the tax collected is enough revenue to support the Government, to support the country, but you don’t want to over tax anyone. You may want the burden of tax to be evenly shared among the rich and poor. You don’t want it to be shared only among the poor people or only among the rich. Those are very important issues. The tax policy is a very important issue for a country.
What do you see as priority areas for the region?
It’s growth. Let me emphasize -sustainable economic inclusive growth. There are two sides of policy. The first priority is still maintaining macro stability, if you have macro instability where inflation is high, you would not be able to do it.
The second issue is - you need structural reform, you need investments in infrastructure, investments in education, investments in capacity building, you need to improve the business environment to bring in more private sector to do that.
Those are the two major priorities that can be addressed for 2014 by the region.
How would you describe the IMF’s relationship with Pacific island countries?
We have a very good relationship with the region. We are committed to the region. We have a new agenda which is based on cooperation between the IMF and the region. We aim to lift the profile of the region.
Upcoming IMF Cross-Country Research Papers on Small States
• Pacific Island Countries: Strengthening Fiscal Frameworks to Support Growth and Macro Stability, Emanuele Baldacci, Ezequiel Cabezon, and Patrizia Tumbarello (APD)
• Economic Growth and Fiscal Multipliers in the Small States: An Application to the Pacific Islands, Sergei Dodzin and Xuefei Bai (APD)
• Inflation Drivers and Exchange Rate Pass-through in the Pacific Island Countries, Xuefei Bai, Yiqun Wu, and Patrizia Tumbarello (APD)
• Pacific Island Countries: in Search of a Trade Strategy, Hong Chen, Lanieta Rauqeuqe, Shiu Raj Singh, Yiqun Wu, and Yongzheng Yang (APD)
• Labor Market Issues in the Caribbean: Scope to Mobilize Employment Growth, Magda Kandil, Qiaoe Chen, Xin Li, Genevieve Lindow, Mario Mansilla, Joel Okwuokei, Marika Santoro, Jochen Schmittmann, and Solomon Stavis (Western Hemisphere Department—WHD)
• Boosting Potential Growth in Small Middle-Income Countries in Sub-Saharan Africa, Aidar Abdychev, La-Bhus Jirasavetakul, Andrew Jonelis, Lamin Leigh, Ashwin Moheeput, Friska Parulian, Ara Stepanyan, and Albert Touna Mama (African Department—AFR)
Useful Links
IMF Resident Representative Office in the Pacific Islands
http://www.imf.org/external/region/pis/rr/
IMF Regional Office for Asia and the Pacific (OAP)
http://www.imf.org/external/oap/
Pacific Financial Technical Assistance Centre (PFTAC)
The World Bank
http://www.worldbank.org/en/country/smallstates
Asian Development Bank
http://www.adb.org/publications/series/pacific-economic-monitor
Pacific Islands Forum Secretariat
The Commonwealth
Upcoming Events on Small Islands/States
• 2014 Forum Economic Ministers Meeting, July 8-11, 2014, Honiara, Solomon Islands
• The 45th Pacific Islands Forum Meeting, July 29-August 1, 2014, Koror, Palau
• The Third International Conference on Small Island Developing States, September 1-4, 2014, Apia, Samoa, Organizer: United Nations—http://www.sids2014.org/
• South-Pacific Governors’ Meeting, December 4-6, Fiji
Recent IMF-Related Events on Small States
• PFTAC Steering Committee Meeting, November 21, 2013 in Port Vila, Vanuatu (see photos on following page)— http://afspc.pftac.org/events/2, co-hosted by PFTAC and the government of Vanuatu
• Government of Vanuatu/IMF Pacific Islands Conference–“The Pacific Way: Lifting Potential Growth in the Pacific Islands,” November 22, 2013 in sPort Vila, Vanuatu (see photos below)— http://www.imf.org/external/np/seminars/eng/2013/PIC/, co-hosted by the IMF Asia and Pacific Department and the government of Vanuatu
•2013 High-Level Caribbean Forum: “Building Growth into the Caribbean Sustainability Agenda,” September 19-20, 2013 in Nassau, The Bahamas—http://www.imf.org/external/np/seminars/eng/2013/caribbean/, co-hosted by the IMF WHD and the government of The Bahamas
• Government of Timor-Leste/IMF High-Level Conference, “Harnessing Natural Resource Wealth for Inclusive Growth and Economic Development,” September 17-19, 2013 in Dili, Timor-Leste, http://www.imf.org/external/np/seminars/eng/2013/timor/, co-hosted by the IMF and the Government of Timor-Leste in collaboration with the Asian Development Bank, the World Bank Group, and the Japan International Cooperation Agency (JICA)
Asia and Pacific Small States—Basic Facts and Country Groupings
Sources: Country authorities; and IMF staff estimates and calculations.Note: APD: Asia and Pacific developing small states; WHD: Western Hemisphere developing small states; AFR: African developing small states; MCD: Middle East and Central Asia developing small states; and EUR: European developing small states.
