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Asia and Pacific > Kiribati

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Cover High-Level Summary Technical Assistance Reports
Kiribati: Agricultural Subsidies for Copra: Improving Efficiency and Equity and Balancing Trade-offs
International Monetary Fund. Fiscal Affairs Dept.
This technical assistance mission assessed Kiribati’s agricultural output price scheme that subsidizes the production of copra (dried coconut). The mission estimates that subsidies in 2023 amounted to 7.8 percent of GDP. The scheme’s technical and allocative inefficiencies, incidence in rural areas, and high fiscal cost, could be mitigated in the short- and medium term, by scaling back the subsidies, replacing them in part with cash transfers and public goods provision in the outer islands, securing fiscal savings in the process, and introducing competitive elements in the copra value chain.
Keywords:
Kiribati; subsidy; agriculture; efficiency; equity; expenditure; IMF activity; subsidy scheme; copra value chain; value chain concern; farmgate price; public goods provision; Government subsidies; Export prices; Agricultural sector; Consumption
Cover IMF Staff Country Reports
Kiribati: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper focuses on a case study on copra subsidy in Kiribati. The copra subsidy, disbursed as a minimum support price, is a major part of the social safety net in Kiribati. The subsidy has multiple purposes—including as a means to transfer resources to the outer islands and to stem migration to the capital. The horizontal diversification model shows that a higher subsidy on copra diverts production and labor towards copra but lowers overall income. The vertical diversification model demonstrates how a subsidy on a primary product increases its supply but reduces production of the final good. Considering the benefits, the government could boost the subsidy’s efficiency, replace the scheme with a poverty-targeted social assistance program, or impose a cap on payments. Development partners, including the IMF and the World Bank, stand ready to provide support in both areas as needed.
Keywords:
COPRA subsidy; Copra support price; price support scheme; impact of subsidy; household income expenditure survey report; cut support price; Price incentives; Agricultural commodities; Income; Exports; Pacific Islands; Global