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IMF Country Report No. 14/138
KIRIBATI
2014 ARTICLE IV CONSULTATION—STAFF REPORT; PRESS RELEASE; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR KIRIBATI
May 2014
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2014 Article IV consultation with Kiribati, the following documents have been released and are included in this package:
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on May 16, 2014, following discussions that ended on March 15, 2014, with the officials of Kiribati on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on May 5, 2014.
An Informational Annex prepared by the IMF.
A Debt Sustainability Analysis prepared by the staffs of the IMF and the World Bank.
A Press Release summarizing the views of the Executive Board as expressed during its May 16, 2014 consideration of the staff report that concluded the Article IV consultation with Kiribati.
A Statement by the Executive Director for Kiribati.
The publication policy for staff reports and other documents allows for the deletion of market-sensitive information.
Copies of this report are available to the public from
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©2014 International Monetary Fund
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KIRIBATI
STAFF REPORT FOR THE 2014 ARTICLE IV CONSULTATION
May 5, 2014
Key Issues
Kiribati’s key economic challenges are to reduce large structural fiscal imbalances and increase growth and employment opportunities, while facing obstacles posed by remoteness, lack of scale, vulnerabilities to external shocks and climate change.
The significant fiscal consolidation envisaged by the authorities will help stabilize Kiribati’s sovereign wealth fund (the Revenue Equalization Reserve Fund, or RERF) in real per capita terms. This stabilization effort would also require that fishing license fees remain close to recent exceptionally high levels, with windfall incomes relative to the conservative budgeted baseline saved. In the event of weaker fishing license fee revenues, a more ambitious adjustment in the non-fishing budget would be needed..
The small private sector share in the economy due to remoteness and weaknesses in business climate constrains growth and puts strain on public finances. Continuing the fiscal and structural reform program is essential. Climate change brings additional risks and fiscal costs.
Main Recommendations:
Continue fiscal reforms designed to deliver fiscal consolidation and improved public financial management. Seek to maintain fishing license fees above the current conservative budget baseline, with windfalls saved to strengthen RERF balances. If fishing license fee windfalls cannot be sustained, explore other options to further strengthen fiscal balances.
Continue reforms of state-owned enterprises (SOEs).
Facilitate growth through improving the business climate and infrastructure, including through streamlining government services.
Approved By:
Hoe Ee Khor and Peter Allum
Discussions were held in Kiribati. The mission met with President Anote Tong, Minister of Finance Mr. Murdoch, Secretary of Finance Mr. Elli, other senior government officials and representatives from public enterprises and the private sector. The mission also participated in the Development Partner Forum organized by the government. The team comprised of Mr. Dodzin (Head), Mr. Bai, Mr. Cabezon, and Ms. Rauqeuqe (all APD). The World Bank and AsDB teams led by Mr. Haque and Mr. Lotele, and Mr. Choi (ED office) also joined the policy discussions.
Contents
BACKGROUND
OUTLOOK
POLICIES TO ACHIEVE FISCAL SUSTAINABILITY AND PROMOTE LONG-TERM GROWTH
A. Fiscal Policy
B. State-owned Enterprises Reforms
C. Increasing Private Sector Growth Opportunities
D. Financial Sector
E. Exchange Rate Assessment
STAFF APPRAISAL
RISK ASSESSMENT MATRIX
BOXES
1. Seamen Employment and Remittances
2. Ensuring Fiscal Sustainability
3. Linkages Between the Government Sector and Growth and Fiscal Multipliers in Kiribati
4. Regional Arrangement for Fishing License Fees
FIGURES
1. The Setting in a Cross-Country Context
2. Fiscal Dynamics
TABLES
1. Selected Economic Indicators, 2009–15
2. Summary of Central Government Operations, 2009–19
3. Medium-Term Projections, 2009–19
4. Balance of Payments, 2009–19
5. Summary of Central Government Under Different Scenarios, 2012–34
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KIRIBATI
STAFF REPORT FOR THE 2014 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
May 2, 2014
Prepared By:
The Asia and Pacific Department (In Consultation with Other Departments)
Contents
FUND RELATIONS
RELATIONS WITH THE PACIFIC FINANCIAL TECHNICAL ASSISTANCE CENTRE
BANK-FUND COLLABORATION
RELATIONS WITH THE ASIAN DEVELOPMENT BANK
STATISTICAL ISSUES
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KIRIBATI
STAFF REPORT FOR THE 2014 ARTICLE IV CONSULTATION—DEBT SUSTAINABILITY ANALYSIS
May 13, 2014
Approved By:
Hoe Ee Khor and Peter Allum, (IMF) and Jeffrey Lewis and Sudhir Shetty, (IDA)
Prepared by the Staff of the International Monetary Fund and the World Bank.
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Press Release No. 14/242
FOR IMMEDIATE RELEASE
May 23, 2014
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