Abstract
1. The Federated States of Micronesia (FSM) experienced an economic rebound in FY2021, but growth has since stagnated due to additional shocks. Economic growth rose to 3 percent in FY20211, despite a border closure until August 2022, driven by a strong performance of the fisheries sector and government support to households in response to COVID. However, the rebound was short-lived, and the economy contracted by 0.9 percent in FY2022 driven mainly by the fisheries sector, which suffered from higher costs (including logistics and fuel) and volatile demand for tuna. In FY2023, growth is projected at 0.8 percent, reflecting a gradual pick up in construction, transport, and tourism, and an increase in national government wages. Inflationary pressures intensified, with inflation reaching a decade high 6.2 percent in FY2023 mainly due to higher import prices for food and fuel and supply side constraints (Annex III).
Context
1. The Federated States of Micronesia (FSM) experienced an economic rebound in FY2021, but growth has since stagnated due to additional shocks. Economic growth rose to 3 percent in FY20211, despite a border closure until August 2022, driven by a strong performance of the fisheries sector and government support to households in response to COVID. However, the rebound was short-lived, and the economy contracted by 0.9 percent in FY2022 driven mainly by the fisheries sector, which suffered from higher costs (including logistics and fuel) and volatile demand for tuna. In FY2023, growth is projected at 0.8 percent, reflecting a gradual pick up in construction, transport, and tourism, and an increase in national government wages. Inflationary pressures intensified, with inflation reaching a decade high 6.2 percent in FY2023 mainly due to higher import prices for food and fuel and supply side constraints (Annex III).
Real Gross Domestic Product Path
(FY2019=100)
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Source: IMF staff estimates and projections.
2. Increased outward emigration is hurting growth prospects. Outward emigration has created a chronic shortage of skilled labor in both the private and public sectors. According to recent estimates, FSM’s population is estimated to have fallen by around 10–15 percent in the last decade.2 Part of the technical skills gap has been filled by foreign workers, but they were also restricted during the COVID crisis. To retain staff, the national government has granted a 45 percent pay rise across the board in FY2023 after almost two decades without increases. In addition, employment in the private sector has fallen faster as the economy is increasingly dependent on the public sector. The expected return of foreign workers could ease labor supply constraints.
Employment
(Number of workers)
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Sources: FSM authorities; and U.S. Graduate School.
3. The fiscal and external sectors posted large surpluses mainly due to large foreign grants, and sizeable fish license fees and tax revenues from foreign companies. Given the weak domestic private sector, the public sector is heavily dependent on external sources. Large fishing royalties and corporate income tax (CIT) revenues from Japanese companies—as well as, under-execution of public investment, led to substantial fiscal surpluses in FY2021–22. In FY2023, the surplus is projected to have declined significantly, driven by a gradual recovery in investment and higher public wages. Public debt declined to 12.4 percent of GDP in FY2023, while the assets of the two trust funds reached a total of 323 percent of GDP. Similarly, the external current account (CA) surpluses in FY2022–23 were large, primarily stemming from the sizeable, but volatile, fishing royalties, CIT, and donor grants. The external sector position of the FSM is assessed to be substantially stronger than the level implied by medium-term fundamentals and desirable policies (Annex VI).3
Outlook and Risks
4. In the near term, the growth momentum is expected to be supported by a gradually increase in public investment and higher public sector wages. Growth in FY2024 and FY2025 is projected to accelerate to 1.1 percent and 1.7 percent, respectively, underpinned by increases in government spending (thanks to the new COFA-related grants), including higher public sector wages at the state level (expected to follow national wages with a lag). Growth in the transportation and tourism sectors is also projected to recover to pre-pandemic levels, given the end of the border closures. Inflation in 2024 is expected to moderate only gradually due to the higher growth and increase in public wages.
5. In the medium term, economic growth is expected to return to levels below 1 percent in the absence of structural reforms. The decline reflects FSM’s geographical dispersion, climate-related shocks, low private sector participation, lack of skilled workers, and low efficiency of public investment. If coupled with deep structural reforms, the revised COFA could strengthen private sector development, which would enhance employment opportunities and boost potential growth.
Climate Risk
(Country rank, 2000–2019)
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Source: Global Climate Risk Index, Germanwatch (2021).Note: The lower the rank, the higher the risk to climate-related extreme weather events.
6. Risks to the outlook are tilted to the downside. FSM’s high vulnerability to climate change and natural disasters pose a significant risk as it can further damage the deteriorated infrastructure and aggravate food security. Increases in global energy and food prices could worsen the CA balance, increase inflation, and hamper the economic recovery. There is also a risk of a more prolonged delay in implementing the new COFA (expected to start in FY2025), but its potential adverse impact on the fiscal and external balances could be mitigated by the financial assets in the trust funds (enough to cover funding needs for more than a decade) with changes to the rules governing their use. Moreover, the acceleration of outward migration would severely jeopardize already constrained labor supply, impacting implementation of large public projects.
Authorities’ Views
7. The authorities agreed with the overall assessment of the economic outlook and risks. Authorities noted that the transient period of economy recovery in FY2021 and subsequent economy contraction in FY2022 was due to significant decline in fisheries and border closures. They stressed the challenges of geographical isolation, exposure to climate change, and labor shortages. They acknowledged staff’s assessment of the need for a well-designed long-term reform agenda, but noted it will require significant additional capital resources to support implementation and achieve economic growth above its historical average growth.
Policy Discussions
8. There was broad agreement on the need to leverage the new COFA to achieve sustainable higher economic growth led by the private sector. The disruptions from Covid-19 and border closures contributed to outward migration and loss of access to skilled foreign workers that led to delays in critical maintenance and investment projects. Deteriorating infrastructure undermines growth prospects and social goals, especially on health (sanitation and water). The private sector remains underdeveloped and is highly vulnerable to shocks. Climate change is also putting more urgency on the need for adaptation efforts and ensuring food security. The revised COFA, when approved, will bring larger grants for the next 20 years (Annex IV). However, previous surges in public investment have not led to higher potential growth (Box 1), highlighting the need for accompanying reforms.
Pacific Islands: Growth and GDP per Capita
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Sources: World Economic Outlook; and IMF staff calculations.
9. Discussions centered on the set of needed reforms, the implementation capacity, and building public support:
Reviving the reform momentum. A set of ambitious, mutually reinforcing, and transformative reforms is needed for higher, sustainable economic growth led by the private sector and tackling climate change. It will require building broad consensus across all states on critical, but difficult long-standing reforms and support from the international community.4 The ongoing work on a new strategic development plan is timely. Creating a group to monitor implementation of the reforms and address emerging issues could help. This group could include representatives of the national and state governments and other stakeholders (e.g., large donors). It could publish periodical reports on progress and challenges to keep the reform momentum going and promote accountability.
Strengthening public investment management to achieve larger growth dividends. Developing a medium-to long-term fiscal framework and public investment management capacity will be key to promote sustainable economic growth and better manage risks.
Removing the obstacles to the development of the private sector, which remains underdeveloped contributing to the lack of good jobs. Reversing this trend will require, as key priorities, improving the business environment for private and foreign investors and advancing the land reform; but also, gradually building up transportation and communication (including digital) infrastructure and promoting financial deepening.
Addressing climate challenges, including food security, will require greater efforts on climate adaptation with donor support. The climate and development strategies being developed will be more effective if well integrated.
A. Fiscal Policy
10. The fiscal surplus is expected to remain broadly stable in FY2024 as uncertainty around COFA renewal timing and capacity constraints contain the spending increase. While the renewal of COFA is taking longer than initially expected, COFA-related current grants in FY2024 are expected to continue at the FY2023 level as the U.S. Congress authorized temporary support. Nevertheless, given the uncertainty, keeping current spending levels broadly stable in FY2024 would be prudent, especially as inflation is still high. In addition, states can press ahead with implementation of delayed grant-funded public investment.5 Some spending restrain at the national level is likely, given the loss of revenues under the recently adopted new revenue-sharing agreement, which requires the national government to transfer half of the fishing royalties to the states. On the other hand, states are expected to boost spending, including granting large wage increases to keep workers—but these could be prudently delayed depending on the renewal and implementation of the new COFA.
Public Investment and Growth in the FSM
Public investment can play a crucial role in promoting economic growth. Better infrastructure, for example, can enhance connectivity, reduce transportation costs, and improve market access. These improvements could boost trade, attract private sector investment, and raise potential growth.
Public Investment Vs. Growth
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Sources: World Economic Outlook; and IMF staff calculations.
Despite substantial infrastructure spending, economic growth in the FSM has remained subdued and highly volatile. While FSM’s average annual infrastructure spending, 12 percent of GDP in FY2004–19, is broadly in line with other PICs, it has not been accompanied by significant economic growth. Over this period, FSM’s average growth rate was 0.3 percent, well below the 2.9 percent growth rate observed among other PICs.
Public Investment and GDP Growth
(In percent)
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Sources: World Economic Outlook; and IMF staff calculations.
Several factors contributed to the weak relationship between investment and growth. Firstly, weaknesses in public investment management undermine the planning, implementation, and maintenance of investment. In the FSM, public investment has been characterized by high volatility, which can lead to reduced capital accumulation, inefficient resource allocation, and increased uncertainty for businesses. Secondly, barriers to private sector development—including business environment and labor shortages—also limit the potential benefits to sustainable economic growth. In particular, the increase in emigration has resulted in a chronic shortage of skilled labor and delay in investment projects. Thirdly, the remote geographical location makes it more challenging and expensive to implement projects (e.g. import of construction material). Finally, the FSM’s vulnerability to climate change and natural disasters requires more attention to make the economy resilient to these risks.
Staff analysis suggests that implementing reforms can lead to higher potential growth and lower vulnerability to climate shocks. Simulation results using the IMF’s DIGNAD model indicate that potential growth could increase substantially by 2043 if public investment remains less volatile and efforts are made to address capacity constraints and improve PFM.1 Additionally, investing in resilient infrastructure would help mitigate the loss of output caused by severe natural disasters.
Volatility in Investment and Average Growth Rate
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Source: World Economic Outlook
11. The medium-term fiscal outlook is much improved with the new COFA but will depend on the use of the Compact funds and revenue-sharing agreements. Once approved, the new agreement will bring substantial new resources to fund development and climate measures. Public debt dynamics will be on a much stronger and sustainable path—although risks remain, especially due to climate-related shocks (see Debt Sustainability Analysis). Under the revenue-sharing agreements, states will be the main beneficiaries of the new grants (see Annex IV). The agreement will require fiscal discipline at the national level, given the loss of revenues. This situation is a reversal from past years, when the national government benefited from surging revenues and states were facing tight budget constraints, as grants fell as share of GDP.
Fiscal: National and State Governments
(million USD)
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Sources: FSM authorities and IMF staff estimates and calculations
Total Expenditure Growth: National and State Governments
(Annual percentage change)
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Sources: FSM authorities and IMF staff estimates and calculations
12. Against this backdrop, a new medium-to long-term fiscal framework would help promote the growth and climate agendas, while ensuring long-term fiscal sustainability.6 The fiscal strategy could include:
Developing a stable and sustainable spending path over the medium term—to reduce volatility and preserve public services—and accumulating appropriate fiscal buffers to manage risks and save for future generations (as grants will fall over time as a share of GDP). The authority’s broad policy goals appropriately involve preserving the large financial assets in the trust funds, limiting new borrowing, while scaling up public investment. It will also be important that the sharing of revenues and grants are done in a way that ensures a better equilibrium between spending responsibilities and revenue assignments at all levels of government.
Strengthening capacity to plan and implement public spending, especially investment, and programs (including for core services like public utilities). A gradual increase in spending, in conjunction with the improvement in capacity, would be more effective. Continuing donor involvement is crucial to build capacity. In addition, improved public investment management could allow to scale up high quality public investment faster-than-projected to address the significant needs, including on climate adaptation. While this could lead to larger fiscal deficits in early years, it would have significant benefits for debt dynamics over time given stronger growth dividends and greater resilience to natural disaster shocks.
Addressing sustainability of the social security over time. Social security funds have been in a manageable deficit, but it can worsen if emigration persists. Reforms to promote private sector growth and reverse the fall in population could have a large positive impact.
13. Strengthening public financial management (PFM) would ensure better use of public resources, especially regarding public investment management.
The ongoing implementation of the authorities’ PFM reforms (2023–26 PFM Roadmap)7 will promote better, sustainable policies. There has been good progress to strengthen the budget process that should help avoid excessive use of supplementary budgets. However, the delay on the new financial management information system if not addressed will significantly jeopardize progress. Over time, efforts to ensure regular and timely publication of budget documents, reports and fiscal statistics would help promote greater fiscal transparency and accountability—the planned publication of the first citizen budget is welcomed. It will also be useful to continue strengthening debt management.8
Building capacity for public investment management (planning, allocation, and implementation), especially at the state level, is urgent to prevent past problems including long delays and waste. Developing multi-year plans would help ensure timely implementation and payments to contractors and adequate funding for the large maintenance needs.
14. Improving revenue administration and modernizing the tax system would help develop more stable revenue sources and support the private sector. A short-term priority is to implement the Tax Administration System (TAS) and the Automated System for Customs Data (ASYCUDA) to strengthen the administrative systems. Moving ahead with planned reforms— including the introduction of a VAT and the replacement of the turnover tax with a net profit tax—would make the tax system more efficient and raise stable tax collection in the future. This would help alleviate the tight budgetary constraints at the central level and prepare for when grants fall.
Authorities’ Views
15. The authorities highlighted the uncertainty around the approval of the COFA and that the large climate-related needs will put pressure on the budget. They confirmed that the continuous resolutions (CRs), approved by the US congress, temporarily offered COFA-related current grants and services at the FY2023 levels, and that unspent capital grants from the expired COFA are allowing to press ahead with large projects in health and education sectors. However, they noted that disbursements under the CRs are slow and putting pressure on all levels of government (especially for current spending). They noted that the new COFA, as agreed, falls significantly short of their initial request, hence, significant pressure on the budget is expected from climate-related needs and capital investments needed to escape the low-growth scenario.
16. The authorities stressed they aim to preserve the large financial assets in the trust funds for the future even while the central government faces tighter budgetary constraints. The new revenue-sharing rules will reduce the share of revenues at the central government, while the previously mandatory contributions to the FSM trust fund have been repealed (fishing royalties and CIT revenue). The authorities noted they still plan to preserve the financial assets in the trust funds and limit government debt, but this stance is becoming increasingly challenging given elevated fiscal needs. They acknowledged the planning and implementation capacity needs to be improved to scale up their investment and underscored the shortage of skilled workers and geographical challenges. They noted the ongoing efforts to implement the PFM roadmap and promote better coordination among all levels of government to improve the implementation of public investment despite the challenges.
B. Structural Reforms to Boost Private Sector Growth
17. Tackling the obstacles to private sector growth should be the key driver of the transformative reform agenda. The private sector remains substantially underdeveloped. Besides the country’s geographical challenges, there are significant obstacles hindering private sector growth, FDI and job creation. These challenges primarily arise from a substantial regulatory burden on investments and new businesses, limited education and technical skills, ageing infrastructure, expensive and unreliable energy provision, and limited health services. Barriers to FDI, which is almost nonexistent, impede the development of large projects that could boost growth and jobs. Progress in addressing longstanding issues, including the land reform and adopting a new Foreign Investment Act, remains slow (Annex I). Furthermore, despite some progress towards achieving the Sustainable Development Goals (SDGs), the FSM lags its peers, including on education and infrastructure. In particular, the population with access to the internet and all-season roads remains significantly below peer countries reflecting weak infrastructure which hinders private sector growth and employment opportunities.
18. Developing a comprehensive strategy and undertaking long-standing reforms would boost private sector growth resulting in more jobs. This will require prioritizing and building wide support for difficult reforms towards:
Improving the business environment (e.g., reduce business startup costs, improve the quality of the judicial process, and enhance coordination across states). Ensuring reliable supply of basic services (energy, water, sanitation) is also critical. Furthermore, providing adequate funding to public utilities, and allowing more flexibility to charge tariffs, is key so they can cover operational and maintenance costs and implement needed investment to replace ageing infrastructure.
Creating an environment supportive to FDI, which is critical to bring additional financial and human resources and know-how. These will include amending the Foreign Investment Act and overcoming resistance to land reforms aimed at reducing barriers to foreign ownership of business and use of land.
Improving human capital by investing more on education and skills development programs, including business skills. Promoting entrepreneurship and innovation can improve productivity and lead to more job creation.
Public Digitalization Indices, 2022
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Source: The World Bank.Note: GTMI=GovTech Maturity Index, CGSI=Core Government Systems Index, PSDI=Public Service Delivery Index, DCEI=Digital Citizen Engagement Index, GTEI=GovTech Enablers Index.
19. Improving digitalization would unlock new pathways for rapid economic growth, innovation, job creation, and access to services. Internet accessibility remains low, and the FSM lags its peers in the digital transformation in the public sector. Improving digital usage could raise labor force participation, enhance education and health outcomes, and accelerate private sector development (Annex V). There are several important initiatives ongoing—including recent liberalization of the telecom sector, connecting homes and business to faster internet access in the main islands, and developing satellite alternatives for the outer islands—that once fully implemented could have large benefits. FSM will also benefit from international efforts to build submarine cables to link different pacific island countries. The government has started efforts towards greater digitalization and while it will take time given capacity constraints, the potential social and economic benefits can be large.
Authorities’ Views
20. The authorities agreed that promoting private sector development was crucial for economic growth and job creation. They acknowledged challenges with outward emigration due to lack of well-paying private sector jobs and agreed with the need to tackle longstanding reforms, including land reform, and opening to foreign investors. However, they noted that the issues are complex, and require building consensus with the states, and domestic business sector, on crucial reforms–especially, regarding land ownership. The authorities emphasized the importance of economic diversification. They have initiated work on a long-term development plan with priority areas in the marine economy, tourism, agriculture, education, energy, and infrastructure. However, implementation success of these policy reforms will require significant financial resources, beyond what is current available.
21. The authorities recognized the necessity to enhance digital connectivity and agreed on its importance, including to improve public services. Considering the limited transportation options between the islands in the nation, improving digital connectivity is crucial for economic development. They also noted that ongoing initiatives, such as the digitalization project in partnership with the World Bank, would contribute to expanding internet access and ensuring affordability.
C. Financial Sector Development
22. The FSM’s financial sector is generally sound but plays a limited role in supporting economic development. Addressing bottlenecks to credit supply and demand will take time but would support the efforts to boost private-sector led growth. Loans to firms and households represent a small portion of total commercial bank assets and bank capital remains well above prudential limits. The banking sector is generally sound and has a large deposit base, around 100 percent of GDP, but the size of loans remains very limited at around 12 percent of deposits.9 The low domestic lending activity reflects to a large degree the informal nature of most businesses (SMEs without proper accounting and management skills) and restrictions on land ownership and transactions that limit collateral availability. In addition to these, enhancing financial inclusion and literacy, and promoting digitalization and e-banking would be beneficial.
23. Strengthening the FSM Development Bank (FSMDB) would help balance its policy objectives and maintain sound finances. The FSMDB has around 7 percent of GDP in outstanding loans, and more than 60 percent of the bank’s loans are extended to private enterprises, mainly SMEs. It has played a role in supporting the riskier sectors of the economy (especially tourism), but the quality of its assets was hit by the pandemic. The proportion of non-performing loans (NPLs), after spiking in 2022, has fallen to 37 percent by October 2023, following the restructuring of loans—and has tourism recovers, it should further help strengthen the balance sheet—during the same period, FSMDB increased its loan loss provisions to NPLs to 53 percent. The FSMDB was recently accredited by the Green Climate Fund (GFC) which will help access climate financing. Enhancing the institutional framework for the FSMDB and addressing gaps in corporate governance would promote an appropriate balance between policy goals, including more action on climate efforts, and risk management.
24. Over time, as the financial sector expands, it will be important to ensure that lending to the private sector is under prudential regulatory frameworks for both commercial banks and non-banking credit institutions. The US FDIC’s insurance and supervisory role over the two commercial banks continues despite the expiration of the COFA, which helps ensure the soundness of the system. Nevertheless, extending the FSM Banking Board (FSMBB) supervisory authority and placing FSMDB and credit unions under its supervision, and introducing prudential regulation for non-banking credit institutions, would help protect consumers and contain possible future fiscal and financial risks. It would also be useful the FSMBB continues upgrading its legal and regulatory framework, including developing supervisory tools adjusted for FSMDB’s specific business model.
Authorities’ Views
25. The authorities agreed the banking sector is sound and noted the ongoing efforts to strengthen the FSM banking board. While agreeing with staff on the main bottlenecks, they noted the possibility of lowering lending rates to promote credit provision to private sector. In addition, the authorities requested IMF Technical Assistance to continue help FSMBB to upgrade its legal and regulatory framework, including possibly placing FSMDB under its umbrella for regulation and supervision.
D. Climate Adaptation
26. Addressing FSM’s high exposure to climate shocks will require greater investment towards climate adaptation. FSM’s high exposure to extreme climatic events can result in losses in agriculture output, increase vulnerability of critical infrastructure, reduce labor productivity, and have negative effects on human health. Furthermore, rising ocean temperatures and acidification pose risks to the marine environment and resources, affecting the fishing sector (and fiscal revenues)—the “blue economy” represents a large share of FSM. The decline in tuna catches, due to climate change, could have large GDP losses (see Selected Issues Paper). The FSM has made progress on mitigation, but adaptation investment has been hindered by capacity constraints, limited policy coordination, high costs and weak public financial management.10 Integrating climate adaption in investment projects has proved burdensome and costly. The new COFA will provide some financial support, alleviating to some degree the financing constraints in the years ahead.
Share of Blue Economy in Total Gross Value Added
(2019, percent of total gross value added)
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Source: Gonguet and Zhou (forthcoming), based on EMERGING database, IMF IFS database, and authorities’ data.
Climate Readiness and Vulnerability Indices, 2021
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Source: Notre Dame Global Adaptation Initiative.
27. Implementing a comprehensive National Adaptation Plan (NAP) in coordination with states is a key step to an effective climate agenda. Although some work has been undertaken, there are multiple challenges due to capacity constraints and lack of coordination. The development of the NAP with the support of the GFC is in an early stage, while progress in setting up a Presidential Sustainable Development Council—responsible for policies pertaining to climate change and climate finance—is underway. To be more effective, the NAP should be closely coordinated with other ongoing development initiatives, including by incorporating climate adaptation measures in the budget and PFM processes.
28. Scaling up initiatives in the agriculture sector would help address food security. Climate change is threatening FSM’s food security due to degradation of arable land, crop losses, and saltwater intrusion. There are a few pilot projects funded by the GCF to test crop varieties resistant to salt water with support from several agencies. The international community is also helping in setting up field trials for root crops in the states. While these initiatives are promising, further efforts to ensure food security are required, including donor support to develop climate-resilient crops.
29. Other efforts to make the economy more resilient include the adoption of new building codes, and the strengthening of early warning systems and post-disaster assistance. Improving administrative capacity and adopting building codes, land use policies, and hazard mapping will be essential to enhance the climate adaptation strategy. A strengthening of the early warning systems will be required for a timely and effective response to natural disasters, as will the establishment of disaster contingency fund. Coordination with international partners could help in implementing projects and developing multilateral risk-sharing mechanisms.
Authorities’ Views
30. The authorities agreed with the significant risks posed by climate change and the adverse impact on the economy, including fishing sector, and food security. They agreed that climate adaptation investment is needed and should be part of the project components, however, the cost of integrating climate adaptation in infrastructure projects is very expensive. The authorities further agreed that NAP should be accelerated including a holistic approach that involves State and National Government initiatives to make FSM more resilient to the risk associated with climate change. They highlighted that access to climate finance has been challenging, and despite global promises and ambitions to fight climate change, the flow of climate finance from global sources has been extremely slow with excessive access requirements.
E. Other Issues
31. Addressing data weaknesses would help strengthen the effectiveness of public policies, increase transparency and accountability and enhance macroeconomic surveillance. Despite some improvements, there are still significant capacity constraints and legal hurdles to having comprehensive and timely economic statistics. Many macroeconomic statistics are only available with substantial time lags. The long delays result from the lack of resources at the statistic agency, legal hurdles to access critical data from other agencies, and delays on audits of the public sector financial statements.
32. Efforts are needed to improve the data collection process, strengthen the capacity of the statistical agency, and promote greater disclosure of data across all government levels and agencies. Legal and regulatory measures could be taken to facilitate and promote data sharing and collaborations between various agencies and states. Technical Assistance (TA) has resumed since 2022 in macroeconomic programing, tax administration and government finance statistics. Further capacity building on PFM and public investment management, financial sector supervision and macroeconomic projections would help address FSM’s challenges.
Authorities’ Views
33. The authorities acknowledged the importance of reliable and timely data collection and appreciated IMF and PFTAC TA support. They highlighted that the recent delay in data collection was mainly due to the lingering effects of the COVID-19 and border closure and that substantial progress had been made recently. They also noted ongoing efforts to set up a new statistical website that will help with increasing transparency. They also expressed interest in receiving TA to strengthen their capacity in compiling various macroeconomic statistics and reiterated the need for long-term in country-based TA as the best model for sustainable capacity development for small islands like Micronesia.
Staff Appraisal
34. Economic growth in the near term is expected to accelerate, but medium-term prospects remain challenging. The economy is expected to continue to rebound after the Covid-related border closures ended and as large public infrastructure projects are implemented. However, in the absence of structural reforms, economic growth is likely to return to past low levels in the medium term and the outward migration trend could accelerate. The greater impact of climate change, including on food security, adds urgency to adaptation efforts.
35. The new COFA presents an opportunity to adopt a transformative reform agenda anchored on a vibrant private sector and an enhanced climate resilient strategy. Longstanding challenges have been exacerbated by Covid-19, which raises the urgency of reforms to spur private sector jobs and reverse the trend of outward migration. The new COFA, when approved, will ensure critical resources for infrastructure investment and the climate policy agenda. However, the increased spending will need to be accompanied by ambitious reforms to raise sustainable, private sector-led economic growth. Such reforms will require building broad domestic consensus and support from the international community.
36. In the short term, fiscal policy conduct should remain cautious until the new COFA is implemented. Keeping current spending stable, while gradually increasing public investment funded by existing grants would be prudent and consistent with capacity constraints to implement large projects. Pressing ahead with the implementation of the authorities’ 2023–26 PFM reform roadmap, and increasing budget transparency, would help ensure more efficient spending and greater accountability.
37. A new fiscal framework would help to better manage public resources and strengthen their growth impact, while ensuring long-term fiscal sustainability. A comprehensive medium-to long-term fiscal framework would help better plan the use the resources more effectively and enhancing risk management. Developing public investment management is crucial to get more growth dividends from public investment. Strengthening revenue administration and modernizing the tax system will help develop more stable revenue sources.
38. Decisive reforms are needed to support private sector development. Boosting private sector growth should be the key driver of the transformative reform agenda. A comprehensive approach is needed, including improve the business environment, ensure reliable supply of basic services, further invest in education and training, and digitalization. Creating an environment supportive to FDI is critical to bring additional financial and human resources and know-how but will require overcome ingrained resistance by states and some vested interests. Together with land reform, these are crucial to promote higher economic growth, innovation, and job creation. In addition, while the current account is assessed as substantially stronger than the level implied by fundamentals and desirable policies, the current strength is driven by a few and highly volatile factors, and the current account is expected to deteriorate in the medium term. The structural reforms proposed by staff would help diversify the export base and reduce external risks.
39. The financial sector could play an increased role to support economic development. Strengthening the private sector, especially the formal sector with necessary accounting standards and capacity to develop business plans, will be a necessary step for further financial deepening. Measures to enhance financial inclusion and literacy and promote e-banking would be beneficial. Placing the FSMDB and credit unions under the FSM Banking Board’s regulation and supervision would help strengthening the financial system and protect consumers.
40. Investment in climate adaptation is crucial given the high exposure to climate shocks and safeguarding food security. The development and implementation of a comprehensive National Adaptation Plan (NAP), involving state and national government, should aim to better coordinate climate policies and access climate finance. It will also be important to ensure the climate and other ongoing development initiatives are closely coordinated, including by incorporating climate adaptation in the budget and PFM processes. To improve resilience to climate change, should also strengthening early warning systems, improving administrative capacity, and upgrade safety nets for post-disaster assistance.
41. Prompt actions are required to address data weakness. Improving economic statistics will take time, given the need to build capacity, but some steps can be accelerated to address the large delays since Covid. This includes promote greater disclosure of data across all government levels and agencies and having timely audits. Legal and regulatory measures could be taken to facilitate and promote data sharing and collaborations between various agencies and states.
42. It is recommended that the next Article IV consultation take place on the current 24-month cycle.
Federated States of Micronesia: Real Sector Developments
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Sources: FSM authorities; IMF World Economic Outlook database; and IMF staff estimates and calculations.
Federated States of Micronesia: Fiscal Developments
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Sources: FSM authorities, World Bank’s World Development Indicator database, Gratcheva and Emery (2021), and IMF staff estimates.
Federated States of Micronesia: External Sector Developments
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Sources: FSM Statistics, IMF Direction of Trade Statistics, IMF World Economic Outlook database, and IMF staff calculations.
Federated States of Micronesia: Monetary and Financial Sector Developments
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Sources: FSM Banking Board, IMF World Economic Outlook database, and IMF staff calculations.
Federated States of Micronesia: Bottlenecks to Growth 1/
Citation: IMF Staff Country Reports 2024, 066; 10.5089/9798400269561.002.A001
Sources: World Bank’s Country Policy and Institutional Assessment (CPIA), World Development Indicator database, World Telecom munication/ICT Indicators database, and Terry Miller, Anthony B. Kim and James M. Roberts, Index of Economic Freedom (Washington: The Heritage Foundation).1/ The World Bank’s CPIA assess the conduciveness of a country’s policy and institutional framework to poverty reduction, sustainable growth, and the effective use of development assistance. The rule of law indicators are components of the Heritage Foundation’s Economic Freedom Index, reflecting the country’s business climate. Non-IMF indicators provide qualitative information about country policy and institutional framework. They do not represent the IMF’s assessment of the quality of policies and institutions.
Federated States of Micronesia: Selected Economic Indicators, FY2021–25 1/
Fiscal year ends on September 30. Data for FY2019–22 is estimate from authorities and subject to revision.
Excludes contributions to the Compact Trust Fund.
Compact Trust Fund and FSM Trust Fund.
Includes only domestic lending and does not account for loans to customers outside the country.
Calendar year. 2010=100. The U.S. dollar is legal tender and the official currency.
Federated States of Micronesia: Selected Economic Indicators, FY2021–25 1/
| Nominal GDP (FY2022): | US$430 million |
| Population (FY2022): | 94,768 |
| GDP per capita (FY2022): | US$4,540 |
| IMF Quota: | SDR 7.2 million |
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Projections | |||||||
| Real sector (annual percent change) | |||||||||
| Real GDP | 3.0 | -0.9 | 0.8 | 1.1 | 1.7 | ||||
| Consumer prices | 1.8 | 5.0 | 6.2 | 4.0 | 3.0 | ||||
| Consolidated government finance (in percent of GDP) | |||||||||
| Revenue and grants | 71.3 | 67.0 | 59.4 | 61.2 | 65.4 | ||||
| Revenue | 37.3 | 41.7 | 34.9 | 33.1 | 34.0 | ||||
| Tax revenue | 15.9 | 21.7 | 16.5 | 16.7 | 16.9 | ||||
| of which: corporate income tax | 2.9 | 9.5 | 4.6 | 4.6 | 4.6 | ||||
| Non-tax revenue | 20.6 | 20.0 | 18.5 | 16.5 | 17.0 | ||||
| of which: Fishing license fees | 17.7 | 17.0 | 15.4 | 13.4 | 14.0 | ||||
| Grants 2/ | 33.9 | 25.3 | 24.5 | 28.1 | 31.4 | ||||
| Expenditure | 66.8 | 59.2 | 57.9 | 60.0 | 65.8 | ||||
| Expense | 63.6 | 55.5 | 53.4 | 53.3 | 57.2 | ||||
| Net acquisition of nonfinancial assets | 3.2 | 3.7 | 4.5 | 6.7 | 8.5 | ||||
| Gross Public Investment | 9.4 | 9.5 | 10.0 | 12.0 | 13.5 | ||||
| Net lending/borrowing | 4.5 | 7.8 | 1.6 | 1.3 | -0.4 | ||||
| Net lending/borrowing (excl. grants) | -29.5 | -17.5 | -22.9 | -26.8 | -31.8 | ||||
| Public debt (outstanding stock, end of period) | 17.0 | 14.6 | 12.4 | 10.6 | 10.6 | ||||
| Balance of trust funds 3/ | 351.5 | 287.7 | 323.2 | 330.9 | 381.0 | ||||
| Commercial banks (in percentage of GDP; end of period) | |||||||||
| Loans 4/ | 13.3 | 12.8 | 11.1 | 11.3 | 11.5 | ||||
| Deposits | 111.7 | 99.5 | 96.2 | 94.2 | 92.9 | ||||
| Interest rates (in percent, average for FY) | |||||||||
| Consumer loans | 14.2 | 13.7 | 14.3 | … | … | ||||
| Commercial loans | 5.8 | 5.1 | 4.8 | … | … | ||||
| Balance of payments (in millions of U.S. dollars) | |||||||||
| Trade balance | -161.4 | -162.4 | -169.9 | -181.0 | -203.5 | ||||
| Net services and income | 22.2 | 26.5 | 29.3 | 21.9 | 26.4 | ||||
| Private and official transfers | 147.7 | 172.4 | 155.9 | 162.8 | 180.9 | ||||
| Current account | 8.5 | 36.6 | 15.3 | 3.7 | 3.8 | ||||
| (in percent of GDP) | 2.2 | 8.5 | 3.3 | 0.8 | 0.8 | ||||
| External debt (in millions of U.S. dollars; end of period) | |||||||||
| Outstanding stock | 62.9 | 59.4 | 54.3 | 49.2 | 51.3 | ||||
| (in percent of GDP) | 16.1 | 13.8 | 11.8 | 10.2 | 10.1 | ||||
| Memorandum items: | |||||||||
| Real effective exchange rate 5/ | 100.9 | 106.9 | 114.8 | … | … | ||||
| Nominal GDP (in millions of U.S. dollars) | 390.0 | 430.2 | 460.5 | 484.0 | 507.1 | ||||
Fiscal year ends on September 30. Data for FY2019–22 is estimate from authorities and subject to revision.
Excludes contributions to the Compact Trust Fund.
Compact Trust Fund and FSM Trust Fund.
Includes only domestic lending and does not account for loans to customers outside the country.
Calendar year. 2010=100. The U.S. dollar is legal tender and the official currency.
Federated States of Micronesia: Selected Economic Indicators, FY2021–25 1/
| Nominal GDP (FY2022): | US$430 million |
| Population (FY2022): | 94,768 |
| GDP per capita (FY2022): | US$4,540 |
| IMF Quota: | SDR 7.2 million |
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Projections | |||||||
| Real sector (annual percent change) | |||||||||
| Real GDP | 3.0 | -0.9 | 0.8 | 1.1 | 1.7 | ||||
| Consumer prices | 1.8 | 5.0 | 6.2 | 4.0 | 3.0 | ||||
| Consolidated government finance (in percent of GDP) | |||||||||
| Revenue and grants | 71.3 | 67.0 | 59.4 | 61.2 | 65.4 | ||||
| Revenue | 37.3 | 41.7 | 34.9 | 33.1 | 34.0 | ||||
| Tax revenue | 15.9 | 21.7 | 16.5 | 16.7 | 16.9 | ||||
| of which: corporate income tax | 2.9 | 9.5 | 4.6 | 4.6 | 4.6 | ||||
| Non-tax revenue | 20.6 | 20.0 | 18.5 | 16.5 | 17.0 | ||||
| of which: Fishing license fees | 17.7 | 17.0 | 15.4 | 13.4 | 14.0 | ||||
| Grants 2/ | 33.9 | 25.3 | 24.5 | 28.1 | 31.4 | ||||
| Expenditure | 66.8 | 59.2 | 57.9 | 60.0 | 65.8 | ||||
| Expense | 63.6 | 55.5 | 53.4 | 53.3 | 57.2 | ||||
| Net acquisition of nonfinancial assets | 3.2 | 3.7 | 4.5 | 6.7 | 8.5 | ||||
| Gross Public Investment | 9.4 | 9.5 | 10.0 | 12.0 | 13.5 | ||||
| Net lending/borrowing | 4.5 | 7.8 | 1.6 | 1.3 | -0.4 | ||||
| Net lending/borrowing (excl. grants) | -29.5 | -17.5 | -22.9 | -26.8 | -31.8 | ||||
| Public debt (outstanding stock, end of period) | 17.0 | 14.6 | 12.4 | 10.6 | 10.6 | ||||
| Balance of trust funds 3/ | 351.5 | 287.7 | 323.2 | 330.9 | 381.0 | ||||
| Commercial banks (in percentage of GDP; end of period) | |||||||||
| Loans 4/ | 13.3 | 12.8 | 11.1 | 11.3 | 11.5 | ||||
| Deposits | 111.7 | 99.5 | 96.2 | 94.2 | 92.9 | ||||
| Interest rates (in percent, average for FY) | |||||||||
| Consumer loans | 14.2 | 13.7 | 14.3 | … | … | ||||
| Commercial loans | 5.8 | 5.1 | 4.8 | … | … | ||||
| Balance of payments (in millions of U.S. dollars) | |||||||||
| Trade balance | -161.4 | -162.4 | -169.9 | -181.0 | -203.5 | ||||
| Net services and income | 22.2 | 26.5 | 29.3 | 21.9 | 26.4 | ||||
| Private and official transfers | 147.7 | 172.4 | 155.9 | 162.8 | 180.9 | ||||
| Current account | 8.5 | 36.6 | 15.3 | 3.7 | 3.8 | ||||
| (in percent of GDP) | 2.2 | 8.5 | 3.3 | 0.8 | 0.8 | ||||
| External debt (in millions of U.S. dollars; end of period) | |||||||||
| Outstanding stock | 62.9 | 59.4 | 54.3 | 49.2 | 51.3 | ||||
| (in percent of GDP) | 16.1 | 13.8 | 11.8 | 10.2 | 10.1 | ||||
| Memorandum items: | |||||||||
| Real effective exchange rate 5/ | 100.9 | 106.9 | 114.8 | … | … | ||||
| Nominal GDP (in millions of U.S. dollars) | 390.0 | 430.2 | 460.5 | 484.0 | 507.1 | ||||
Fiscal year ends on September 30. Data for FY2019–22 is estimate from authorities and subject to revision.
Excludes contributions to the Compact Trust Fund.
Compact Trust Fund and FSM Trust Fund.
Includes only domestic lending and does not account for loans to customers outside the country.
Calendar year. 2010=100. The U.S. dollar is legal tender and the official currency.
Federated States of Micronesia: General Government Operations, FY2021–25 1/
(In millions of U.S. dollars)
Fiscal year ending September. The consolidated fiscal accounts cover the national and four state governments.
Excludes contributions to the Compact Trust Fund.
Federated States of Micronesia: General Government Operations, FY2021–25 1/
(In millions of U.S. dollars)
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | ||||
|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Projections | ||||||
| Revenue | 277.9 | 288.5 | 273.6 | 296.4 | 331.5 | |||
| Tax revenue | 62.0 | 93.5 | 75.9 | 80.7 | 85.9 | |||
| Wage and salary tax | 10.6 | 10.7 | 12.1 | 13.1 | 14.1 | |||
| Gross revenue tax | 23.4 | 24.8 | 27.1 | 28.5 | 29.9 | |||
| Corporate Tax | 11.2 | 41.0 | 21.0 | 22.1 | 23.1 | |||
| Import taxes | 16.4 | 16.5 | 15.2 | 16.5 | 18.3 | |||
| Other taxes | 0.4 | 0.4 | 0.4 | 0.5 | 0.5 | |||
| Grants 2/ | 132.4 | 108.9 | 112.7 | 136.0 | 159.1 | |||
| Current | 132.0 | 108.1 | 106.4 | 119.9 | 133.8 | |||
| U.S. Compact sector grants | 70.3 | 70.8 | 73.3 | 73.3 | 89.3 | |||
| Other U.S. grants | 34.1 | 20.9 | 22.2 | 23.0 | 23.7 | |||
| Other | 27.6 | 16.5 | 10.9 | 23.6 | 20.8 | |||
| Capital | 0.4 | 0.8 | 6.4 | 16.1 | 25.4 | |||
| U.S. Compact sector grants | 0.2 | 0.6 | 3.5 | 10.0 | 20.0 | |||
| Other U.S. grants | 0.1 | 0.1 | 0.1 | 0.2 | 0.2 | |||
| Other | 0.0 | 0.0 | 2.7 | 5.9 | 5.2 | |||
| Other | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Non-tax revenue | 80.2 | 86.1 | 85.0 | 79.7 | 86.4 | |||
| Fishing license fees | 69.0 | 73.0 | 71.0 | 65.0 | 71.0 | |||
| Dividend and interest income | -1.4 | 0.6 | 0.6 | 0.7 | 0.7 | |||
| Other nontax revenues | 12.6 | 12.5 | 13.4 | 14.1 | 14.7 | |||
| Distributions from trust funds | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Other | 12.6 | 12.5 | 13.4 | 14.1 | 14.7 | |||
| Expenditure | 260.5 | 254.9 | 266.4 | 290.3 | 333.5 | |||
| Expense | 248.0 | 238.9 | 245.9 | 258.0 | 290.3 | |||
| Wages and salaries | 86.1 | 89.8 | 99.2 | 110.2 | 122.0 | |||
| Purchases of goods and services | 89.8 | 94.2 | 106.1 | 111.5 | 131.8 | |||
| Interest payments | 0.9 | 0.6 | 0.6 | 0.6 | 0.5 | |||
| Subsidies | 2.9 | 2.7 | 2.8 | 3.0 | 3.1 | |||
| Grants | 9.6 | 8.7 | 9.7 | 5.2 | 5.5 | |||
| Other expenses | 58.8 | 42.8 | 27.5 | 27.4 | 27.3 | |||
| Net acquisition of nonfinancial assets | 12.5 | 16.0 | 20.5 | 32.3 | 43.2 | |||
| Gross Public Investment | 36.7 | 40.9 | 46.2 | 57.9 | 68.7 | |||
| Gross operating balance | 29.9 | 49.6 | 27.7 | 38.4 | 41.2 | |||
| Net lending/borrowing | 17.4 | 33.6 | 7.2 | 6.1 | -2.0 | |||
| Memorandum items: | ||||||||
| U.S. Compact sector grants | 70.6 | 71.4 | 76.8 | 83.3 | 109.3 | |||
| Other U.S. grants | 34.3 | 21.0 | 22.3 | 23.2 | 23.9 | |||
| Net lending/borrowing excluding: | ||||||||
| Total grants | -115.0 | -75.4 | -105.5 | -129.8 | -161.2 | |||
| U.S. grants | -87.4 | -58.9 | -91.8 | -100.3 | -135.2 | |||
| Balance of trust funds | 1,370.7 | 1,237.8 | 1,488.3 | 1,601.6 | 1,931.7 | |||
| Compact Trust Fund | 999.8 | 910.7 | 1,082.5 | 1,175.6 | 1,484.3 | |||
| FSM Trust Fund | 371.0 | 327.0 | 405.8 | 426.1 | 447.4 | |||
| Nominal GDP | 390.0 | 430.2 | 460.5 | 484.0 | 507.1 | |||
Fiscal year ending September. The consolidated fiscal accounts cover the national and four state governments.
Excludes contributions to the Compact Trust Fund.
Federated States of Micronesia: General Government Operations, FY2021–25 1/
(In millions of U.S. dollars)
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | ||||
|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Projections | ||||||
| Revenue | 277.9 | 288.5 | 273.6 | 296.4 | 331.5 | |||
| Tax revenue | 62.0 | 93.5 | 75.9 | 80.7 | 85.9 | |||
| Wage and salary tax | 10.6 | 10.7 | 12.1 | 13.1 | 14.1 | |||
| Gross revenue tax | 23.4 | 24.8 | 27.1 | 28.5 | 29.9 | |||
| Corporate Tax | 11.2 | 41.0 | 21.0 | 22.1 | 23.1 | |||
| Import taxes | 16.4 | 16.5 | 15.2 | 16.5 | 18.3 | |||
| Other taxes | 0.4 | 0.4 | 0.4 | 0.5 | 0.5 | |||
| Grants 2/ | 132.4 | 108.9 | 112.7 | 136.0 | 159.1 | |||
| Current | 132.0 | 108.1 | 106.4 | 119.9 | 133.8 | |||
| U.S. Compact sector grants | 70.3 | 70.8 | 73.3 | 73.3 | 89.3 | |||
| Other U.S. grants | 34.1 | 20.9 | 22.2 | 23.0 | 23.7 | |||
| Other | 27.6 | 16.5 | 10.9 | 23.6 | 20.8 | |||
| Capital | 0.4 | 0.8 | 6.4 | 16.1 | 25.4 | |||
| U.S. Compact sector grants | 0.2 | 0.6 | 3.5 | 10.0 | 20.0 | |||
| Other U.S. grants | 0.1 | 0.1 | 0.1 | 0.2 | 0.2 | |||
| Other | 0.0 | 0.0 | 2.7 | 5.9 | 5.2 | |||
| Other | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Non-tax revenue | 80.2 | 86.1 | 85.0 | 79.7 | 86.4 | |||
| Fishing license fees | 69.0 | 73.0 | 71.0 | 65.0 | 71.0 | |||
| Dividend and interest income | -1.4 | 0.6 | 0.6 | 0.7 | 0.7 | |||
| Other nontax revenues | 12.6 | 12.5 | 13.4 | 14.1 | 14.7 | |||
| Distributions from trust funds | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Other | 12.6 | 12.5 | 13.4 | 14.1 | 14.7 | |||
| Expenditure | 260.5 | 254.9 | 266.4 | 290.3 | 333.5 | |||
| Expense | 248.0 | 238.9 | 245.9 | 258.0 | 290.3 | |||
| Wages and salaries | 86.1 | 89.8 | 99.2 | 110.2 | 122.0 | |||
| Purchases of goods and services | 89.8 | 94.2 | 106.1 | 111.5 | 131.8 | |||
| Interest payments | 0.9 | 0.6 | 0.6 | 0.6 | 0.5 | |||
| Subsidies | 2.9 | 2.7 | 2.8 | 3.0 | 3.1 | |||
| Grants | 9.6 | 8.7 | 9.7 | 5.2 | 5.5 | |||
| Other expenses | 58.8 | 42.8 | 27.5 | 27.4 | 27.3 | |||
| Net acquisition of nonfinancial assets | 12.5 | 16.0 | 20.5 | 32.3 | 43.2 | |||
| Gross Public Investment | 36.7 | 40.9 | 46.2 | 57.9 | 68.7 | |||
| Gross operating balance | 29.9 | 49.6 | 27.7 | 38.4 | 41.2 | |||
| Net lending/borrowing | 17.4 | 33.6 | 7.2 | 6.1 | -2.0 | |||
| Memorandum items: | ||||||||
| U.S. Compact sector grants | 70.6 | 71.4 | 76.8 | 83.3 | 109.3 | |||
| Other U.S. grants | 34.3 | 21.0 | 22.3 | 23.2 | 23.9 | |||
| Net lending/borrowing excluding: | ||||||||
| Total grants | -115.0 | -75.4 | -105.5 | -129.8 | -161.2 | |||
| U.S. grants | -87.4 | -58.9 | -91.8 | -100.3 | -135.2 | |||
| Balance of trust funds | 1,370.7 | 1,237.8 | 1,488.3 | 1,601.6 | 1,931.7 | |||
| Compact Trust Fund | 999.8 | 910.7 | 1,082.5 | 1,175.6 | 1,484.3 | |||
| FSM Trust Fund | 371.0 | 327.0 | 405.8 | 426.1 | 447.4 | |||
| Nominal GDP | 390.0 | 430.2 | 460.5 | 484.0 | 507.1 | |||
Fiscal year ending September. The consolidated fiscal accounts cover the national and four state governments.
Excludes contributions to the Compact Trust Fund.
Federated States of Micronesia: General Government Operations, FY2021–25 1/
(In percent of GDP)
Fiscal year ending September. The consolidated fiscal accounts cover the national and four state governments.
Excludes contributions to the Compact Trust Fund.
Federated States of Micronesia: General Government Operations, FY2021–25 1/
(In percent of GDP)
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | ||||
|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Projections | ||||||
| Revenue | 71.3 | 67.0 | 59.4 | 61.2 | 65.4 | |||
| Tax revenue | 15.9 | 21.7 | 16.5 | 16.7 | 16.9 | |||
| Wage and salary tax | 2.7 | 2.5 | 2.6 | 2.7 | 2.8 | |||
| Gross revenue tax | 6.0 | 5.8 | 5.9 | 5.9 | 5.9 | |||
| Corporate Tax | 2.9 | 9.5 | 4.6 | 4.6 | 4.6 | |||
| Import taxes | 4.2 | 3.8 | 3.3 | 3.4 | 3.6 | |||
| Other taxes | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | |||
| Grants 2/ | 33.9 | 25.3 | 24.5 | 28.1 | 31.4 | |||
| Current | 33.9 | 25.1 | 23.1 | 24.8 | 26.4 | |||
| U.S. Compact sector grants | 18.0 | 16.4 | 15.9 | 15.1 | 17.6 | |||
| Other U.S. grants | 8.8 | 4.8 | 4.8 | 4.8 | 4.7 | |||
| Other | 7.1 | 3.8 | 2.4 | 4.9 | 4.1 | |||
| Capital | 0.1 | 0.2 | 1.4 | 3.3 | 5.0 | |||
| U.S. Compact sector grants | 0.1 | 0.1 | 0.8 | 2.1 | 3.9 | |||
| Other U.S. grants | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Other | 0.0 | 0.0 | 0.6 | 1.2 | 1.0 | |||
| Other | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Non-tax revenue | 20.6 | 20.0 | 18.5 | 16.5 | 17.0 | |||
| Fishing license fees | 17.7 | 17.0 | 15.4 | 13.4 | 14.0 | |||
| Dividend and interest income | -0.4 | 0.1 | 0.1 | 0.1 | 0.1 | |||
| Other nontax revenues | 3.2 | 2.9 | 2.9 | 2.9 | 2.9 | |||
| Distributions from Compact Trust Fund | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Other | 3.2 | 2.9 | 2.9 | 2.9 | 2.9 | |||
| Expenditure | 66.8 | 59.2 | 57.9 | 60.0 | 65.8 | |||
| Expense | 63.6 | 55.5 | 53.4 | 53.3 | 57.2 | |||
| Wages and salaries | 22.1 | 20.9 | 21.5 | 22.8 | 24.1 | |||
| Purchases of goods and services | 23.0 | 21.9 | 23.0 | 23.0 | 26.0 | |||
| Interest payments | 0.2 | 0.1 | 0.1 | 0.1 | 0.1 | |||
| Subsidies | 0.7 | 0.6 | 0.6 | 0.6 | 0.6 | |||
| Grants | 2.5 | 2.0 | 2.1 | 1.1 | 1.1 | |||
| Other expenses | 15.1 | 10.0 | 6.0 | 5.7 | 5.4 | |||
| Net acquisition of nonfinancial assets | 3.2 | 3.7 | 4.5 | 6.7 | 8.5 | |||
| Gross Public Investment | 9.4 | 9.5 | 10.0 | 12.0 | 13.5 | |||
| Gross operating balance | 7.7 | 11.5 | 6.0 | 7.9 | 8.1 | |||
| Net lending/borrowing | 4.5 | 7.8 | 1.6 | 1.3 | -0.4 | |||
| Memorandum items: | ||||||||
| Primary balance | 3.9 | 7.8 | 1.6 | 1.3 | -0.4 | |||
| U.S. Compact sector grants | 18.1 | 16.6 | 16.7 | 17.2 | 21.6 | |||
| Other U.S. grants | 8.8 | 4.9 | 4.8 | 4.8 | 4.7 | |||
| Net lending/borrowing excluding: | ||||||||
| Total grants | -29.5 | -17.5 | -22.9 | -26.8 | -31.8 | |||
| U.S. grants | -22.4 | -13.7 | -19.9 | -20.7 | -26.7 | |||
| Balance of trust funds | 351.5 | 287.7 | 323.2 | 330.9 | 381.0 | |||
| Compact Trust Fund | 256.4 | 211.7 | 235.1 | 242.9 | 292.7 | |||
| FSM Trust Fund | 95.1 | 76.0 | 88.1 | 88.0 | 88.2 | |||
| Public external debt | 16.1 | 13.8 | 11.8 | 10.2 | 10.1 | |||
Fiscal year ending September. The consolidated fiscal accounts cover the national and four state governments.
Excludes contributions to the Compact Trust Fund.
Federated States of Micronesia: General Government Operations, FY2021–25 1/
(In percent of GDP)
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | ||||
|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Projections | ||||||
| Revenue | 71.3 | 67.0 | 59.4 | 61.2 | 65.4 | |||
| Tax revenue | 15.9 | 21.7 | 16.5 | 16.7 | 16.9 | |||
| Wage and salary tax | 2.7 | 2.5 | 2.6 | 2.7 | 2.8 | |||
| Gross revenue tax | 6.0 | 5.8 | 5.9 | 5.9 | 5.9 | |||
| Corporate Tax | 2.9 | 9.5 | 4.6 | 4.6 | 4.6 | |||
| Import taxes | 4.2 | 3.8 | 3.3 | 3.4 | 3.6 | |||
| Other taxes | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | |||
| Grants 2/ | 33.9 | 25.3 | 24.5 | 28.1 | 31.4 | |||
| Current | 33.9 | 25.1 | 23.1 | 24.8 | 26.4 | |||
| U.S. Compact sector grants | 18.0 | 16.4 | 15.9 | 15.1 | 17.6 | |||
| Other U.S. grants | 8.8 | 4.8 | 4.8 | 4.8 | 4.7 | |||
| Other | 7.1 | 3.8 | 2.4 | 4.9 | 4.1 | |||
| Capital | 0.1 | 0.2 | 1.4 | 3.3 | 5.0 | |||
| U.S. Compact sector grants | 0.1 | 0.1 | 0.8 | 2.1 | 3.9 | |||
| Other U.S. grants | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Other | 0.0 | 0.0 | 0.6 | 1.2 | 1.0 | |||
| Other | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Non-tax revenue | 20.6 | 20.0 | 18.5 | 16.5 | 17.0 | |||
| Fishing license fees | 17.7 | 17.0 | 15.4 | 13.4 | 14.0 | |||
| Dividend and interest income | -0.4 | 0.1 | 0.1 | 0.1 | 0.1 | |||
| Other nontax revenues | 3.2 | 2.9 | 2.9 | 2.9 | 2.9 | |||
| Distributions from Compact Trust Fund | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Other | 3.2 | 2.9 | 2.9 | 2.9 | 2.9 | |||
| Expenditure | 66.8 | 59.2 | 57.9 | 60.0 | 65.8 | |||
| Expense | 63.6 | 55.5 | 53.4 | 53.3 | 57.2 | |||
| Wages and salaries | 22.1 | 20.9 | 21.5 | 22.8 | 24.1 | |||
| Purchases of goods and services | 23.0 | 21.9 | 23.0 | 23.0 | 26.0 | |||
| Interest payments | 0.2 | 0.1 | 0.1 | 0.1 | 0.1 | |||
| Subsidies | 0.7 | 0.6 | 0.6 | 0.6 | 0.6 | |||
| Grants | 2.5 | 2.0 | 2.1 | 1.1 | 1.1 | |||
| Other expenses | 15.1 | 10.0 | 6.0 | 5.7 | 5.4 | |||
| Net acquisition of nonfinancial assets | 3.2 | 3.7 | 4.5 | 6.7 | 8.5 | |||
| Gross Public Investment | 9.4 | 9.5 | 10.0 | 12.0 | 13.5 | |||
| Gross operating balance | 7.7 | 11.5 | 6.0 | 7.9 | 8.1 | |||
| Net lending/borrowing | 4.5 | 7.8 | 1.6 | 1.3 | -0.4 | |||
| Memorandum items: | ||||||||
| Primary balance | 3.9 | 7.8 | 1.6 | 1.3 | -0.4 | |||
| U.S. Compact sector grants | 18.1 | 16.6 | 16.7 | 17.2 | 21.6 | |||
| Other U.S. grants | 8.8 | 4.9 | 4.8 | 4.8 | 4.7 | |||
| Net lending/borrowing excluding: | ||||||||
| Total grants | -29.5 | -17.5 | -22.9 | -26.8 | -31.8 | |||
| U.S. grants | -22.4 | -13.7 | -19.9 | -20.7 | -26.7 | |||
| Balance of trust funds | 351.5 | 287.7 | 323.2 | 330.9 | 381.0 | |||
| Compact Trust Fund | 256.4 | 211.7 | 235.1 | 242.9 | 292.7 | |||
| FSM Trust Fund | 95.1 | 76.0 | 88.1 | 88.0 | 88.2 | |||
| Public external debt | 16.1 | 13.8 | 11.8 | 10.2 | 10.1 | |||
Fiscal year ending September. The consolidated fiscal accounts cover the national and four state governments.
Excludes contributions to the Compact Trust Fund.
Federated States of Micronesia: Balance of Payments, FY2021–25
Refers to passenger services transportation.
Includes household remittance and corporate tax on income from abroad.
Federated States of Micronesia: Balance of Payments, FY2021–25
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | ||||
|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Projections | ||||||
| (In millions of U.S. dollars) | ||||||||
| Current account balance | 8.5 | 36.6 | 15.3 | 3.7 | 3.8 | |||
| Trade balance | -161.4 | -162.4 | -169.9 | -181.0 | -203.5 | |||
| Exports, f.o.b. | 46.6 | 50.9 | 53.9 | 53.9 | 56.2 | |||
| Imports, f.o.b. | 208.0 | 213.2 | 223.8 | 234.9 | 259.6 | |||
| of which: petroleum products | 33.8 | 43.0 | 57.6 | 60.5 | 63.4 | |||
| Services account | -23.5 | -21.5 | -15.0 | -15.4 | -15.7 | |||
| Receipts | 31.8 | 39.6 | 71.9 | 75.6 | 79.2 | |||
| of which: travel | 3.1 | 6.0 | 33.9 | 35.6 | 37.3 | |||
| Payments | 55.3 | 61.1 | 86.9 | 91.0 | 94.9 | |||
| of which: freight and insurance | 25.7 | 27.3 | 30.2 | 31.8 | 33.3 | |||
| of which: transportation 1/ | 1.5 | 1.6 | 12.7 | 13.4 | 14.0 | |||
| Income, net | 45.7 | 48.0 | 44.3 | 37.3 | 42.1 | |||
| Receipts | 76.6 | 81.0 | 79.6 | 74.3 | 80.6 | |||
| of which: fishing license fees | 66.9 | 70.8 | 68.9 | 63.1 | 68.9 | |||
| Payments | 30.9 | 33.0 | 35.3 | 37.0 | 38.5 | |||
| of which: foreign workers earnings | 4.4 | 4.9 | 5.2 | 5.5 | 5.8 | |||
| Transfers | 147.7 | 172.4 | 155.9 | 162.8 | 180.9 | |||
| Private | 17.1 | 55.4 | 37.6 | 39.4 | 42.0 | |||
| Inflows 2/ | 34.2 | 72.9 | 55.4 | 57.3 | 60.0 | |||
| Outflows | 17.0 | 17.6 | 17.7 | 17.9 | 18.0 | |||
| Official | 130.6 | 117.1 | 118.3 | 123.4 | 138.9 | |||
| US Compact | 70.3 | 70.8 | 73.3 | 73.3 | 89.3 | |||
| Other | 60.2 | 46.3 | 45.1 | 50.1 | 49.6 | |||
| Capital account balance | 17.4 | 17.8 | 23.4 | 33.1 | 42.4 | |||
| Capital inflow | 17.4 | 17.8 | 23.4 | 33.1 | 42.4 | |||
| Compact Capital grants | 0.2 | 0.6 | 3.5 | 10.0 | 20.0 | |||
| Other | 17.2 | 17.2 | 19.9 | 23.1 | 22.4 | |||
| Financial account balance | 25.9 | 54.4 | 38.7 | 36.8 | 46.2 | |||
| Direct Investment (net) | -0.2 | -0.2 | -0.2 | -0.3 | -0.3 | |||
| Portfolio investment (net) | -7.8 | 16.4 | 37.3 | 3.8 | -4.7 | |||
| Other investment (net) | 24.2 | 38.3 | 1.7 | 33.3 | 51.2 | |||
| Errors and Omissions | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| (In percent of GDP) | ||||||||
| Current account balance | 2.2 | 8.5 | 3.3 | 0.8 | 0.8 | |||
| Trade balance | -41.4 | -37.7 | -36.9 | -37.4 | -40.1 | |||
| Exports | 12.0 | 11.8 | 11.7 | 11.1 | 11.1 | |||
| Imports | 53.3 | 49.6 | 48.6 | 48.5 | 51.2 | |||
| Service | -6.0 | -5.0 | -3.3 | -3.2 | -3.1 | |||
| Income (net) | 11.7 | 11.2 | 9.6 | 7.7 | 8.3 | |||
| Receipts | 19.6 | 18.8 | 17.3 | 15.3 | 15.9 | |||
| of which: fishing license fees | 17.2 | 16.5 | 15.0 | 13.0 | 13.6 | |||
| Payments | 7.9 | 7.7 | 7.7 | 7.6 | 7.6 | |||
| Transfers | 37.9 | 40.1 | 33.9 | 33.6 | 35.7 | |||
| Private 2/ | 4.4 | 12.9 | 8.2 | 8.1 | 8.3 | |||
| Official | 33.5 | 27.2 | 25.7 | 25.5 | 27.4 | |||
| Capital account balance | 4.5 | 4.1 | 5.1 | 6.8 | 8.4 | |||
| Capital grants | 4.5 | 4.1 | 5.1 | 6.8 | 8.4 | |||
| of which Compact capital grants | 0.1 | 0.1 | 0.8 | 2.1 | 3.9 | |||
| Financial account balance | 6.7 | 12.7 | 8.4 | 7.6 | 9.1 | |||
| Direct investment (net) | -0.1 | -0.1 | -0.1 | -0.1 | -0.1 | |||
| Portfolio investment (net) | -2.0 | 3.8 | 8.1 | 0.8 | -0.9 | |||
| Other investment (net) | 6.2 | 8.9 | 0.4 | 6.9 | 10.1 | |||
| Errors and omissions | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
Refers to passenger services transportation.
Includes household remittance and corporate tax on income from abroad.
Federated States of Micronesia: Balance of Payments, FY2021–25
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | ||||
|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Projections | ||||||
| (In millions of U.S. dollars) | ||||||||
| Current account balance | 8.5 | 36.6 | 15.3 | 3.7 | 3.8 | |||
| Trade balance | -161.4 | -162.4 | -169.9 | -181.0 | -203.5 | |||
| Exports, f.o.b. | 46.6 | 50.9 | 53.9 | 53.9 | 56.2 | |||
| Imports, f.o.b. | 208.0 | 213.2 | 223.8 | 234.9 | 259.6 | |||
| of which: petroleum products | 33.8 | 43.0 | 57.6 | 60.5 | 63.4 | |||
| Services account | -23.5 | -21.5 | -15.0 | -15.4 | -15.7 | |||
| Receipts | 31.8 | 39.6 | 71.9 | 75.6 | 79.2 | |||
| of which: travel | 3.1 | 6.0 | 33.9 | 35.6 | 37.3 | |||
| Payments | 55.3 | 61.1 | 86.9 | 91.0 | 94.9 | |||
| of which: freight and insurance | 25.7 | 27.3 | 30.2 | 31.8 | 33.3 | |||
| of which: transportation 1/ | 1.5 | 1.6 | 12.7 | 13.4 | 14.0 | |||
| Income, net | 45.7 | 48.0 | 44.3 | 37.3 | 42.1 | |||
| Receipts | 76.6 | 81.0 | 79.6 | 74.3 | 80.6 | |||
| of which: fishing license fees | 66.9 | 70.8 | 68.9 | 63.1 | 68.9 | |||
| Payments | 30.9 | 33.0 | 35.3 | 37.0 | 38.5 | |||
| of which: foreign workers earnings | 4.4 | 4.9 | 5.2 | 5.5 | 5.8 | |||
| Transfers | 147.7 | 172.4 | 155.9 | 162.8 | 180.9 | |||
| Private | 17.1 | 55.4 | 37.6 | 39.4 | 42.0 | |||
| Inflows 2/ | 34.2 | 72.9 | 55.4 | 57.3 | 60.0 | |||
| Outflows | 17.0 | 17.6 | 17.7 | 17.9 | 18.0 | |||
| Official | 130.6 | 117.1 | 118.3 | 123.4 | 138.9 | |||
| US Compact | 70.3 | 70.8 | 73.3 | 73.3 | 89.3 | |||
| Other | 60.2 | 46.3 | 45.1 | 50.1 | 49.6 | |||
| Capital account balance | 17.4 | 17.8 | 23.4 | 33.1 | 42.4 | |||
| Capital inflow | 17.4 | 17.8 | 23.4 | 33.1 | 42.4 | |||
| Compact Capital grants | 0.2 | 0.6 | 3.5 | 10.0 | 20.0 | |||
| Other | 17.2 | 17.2 | 19.9 | 23.1 | 22.4 | |||
| Financial account balance | 25.9 | 54.4 | 38.7 | 36.8 | 46.2 | |||
| Direct Investment (net) | -0.2 | -0.2 | -0.2 | -0.3 | -0.3 | |||
| Portfolio investment (net) | -7.8 | 16.4 | 37.3 | 3.8 | -4.7 | |||
| Other investment (net) | 24.2 | 38.3 | 1.7 | 33.3 | 51.2 | |||
| Errors and Omissions | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| (In percent of GDP) | ||||||||
| Current account balance | 2.2 | 8.5 | 3.3 | 0.8 | 0.8 | |||
| Trade balance | -41.4 | -37.7 | -36.9 | -37.4 | -40.1 | |||
| Exports | 12.0 | 11.8 | 11.7 | 11.1 | 11.1 | |||
| Imports | 53.3 | 49.6 | 48.6 | 48.5 | 51.2 | |||
| Service | -6.0 | -5.0 | -3.3 | -3.2 | -3.1 | |||
| Income (net) | 11.7 | 11.2 | 9.6 | 7.7 | 8.3 | |||
| Receipts | 19.6 | 18.8 | 17.3 | 15.3 | 15.9 | |||
| of which: fishing license fees | 17.2 | 16.5 | 15.0 | 13.0 | 13.6 | |||
| Payments | 7.9 | 7.7 | 7.7 | 7.6 | 7.6 | |||
| Transfers | 37.9 | 40.1 | 33.9 | 33.6 | 35.7 | |||
| Private 2/ | 4.4 | 12.9 | 8.2 | 8.1 | 8.3 | |||
| Official | 33.5 | 27.2 | 25.7 | 25.5 | 27.4 | |||
| Capital account balance | 4.5 | 4.1 | 5.1 | 6.8 | 8.4 | |||
| Capital grants | 4.5 | 4.1 | 5.1 | 6.8 | 8.4 | |||
| of which Compact capital grants | 0.1 | 0.1 | 0.8 | 2.1 | 3.9 | |||
| Financial account balance | 6.7 | 12.7 | 8.4 | 7.6 | 9.1 | |||
| Direct investment (net) | -0.1 | -0.1 | -0.1 | -0.1 | -0.1 | |||
| Portfolio investment (net) | -2.0 | 3.8 | 8.1 | 0.8 | -0.9 | |||
| Other investment (net) | 6.2 | 8.9 | 0.4 | 6.9 | 10.1 | |||
| Errors and omissions | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||
Refers to passenger services transportation.
Includes household remittance and corporate tax on income from abroad.
Federated States of Micronesia: Medium Term, FY2021–29 1/
(In percent of GDP, unless otherwise noted)
Fiscal year ends on September 30. Data for FY2019–22 is estimate from authorities and subject to revision.
Excludes contributions to the Compact Trust Fund.
Compact Trust Fund and FSM Trust Fund.
Includes only domestic lending and does not account for loans to customers outside the country.
Calendar year. 2010=100. The U.S. dollar is legal tender and the official currency.
Federated States of Micronesia: Medium Term, FY2021–29 1/
(In percent of GDP, unless otherwise noted)
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 | FY2027 | FY2028 | FY2029 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Projections | |||||||||||
| Real sector (annual percent change) | |||||||||||||
| Real GDP | 3.0 | -0.9 | 0.8 | 1.1 | 1.7 | 1.1 | 0.8 | 0.7 | 0.7 | ||||
| Consumer prices | 1.8 | 5.0 | 6.2 | 4.0 | 3.0 | 2.5 | 2.1 | 2.0 | 2.0 | ||||
| Consolidated government finance (in percent of GDP) | |||||||||||||
| Revenue and grants | 71.3 | 67.0 | 59.4 | 61.2 | 65.4 | 66.1 | 65.8 | 65.7 | 64.8 | ||||
| Revenue | 37.3 | 41.7 | 34.9 | 33.1 | 34.0 | 33.9 | 33.6 | 33.3 | 33.2 | ||||
| Tax revenue | 15.9 | 21.7 | 16.5 | 16.7 | 16.9 | 17.1 | 17.1 | 17.1 | 17.1 | ||||
| of which: corporate income tax | 2.9 | 9.5 | 4.6 | 4.6 | 4.6 | 4.6 | 4.6 | 4.6 | 4.6 | ||||
| Non-tax revenue | 20.6 | 20.0 | 18.5 | 16.5 | 17.0 | 16.8 | 16.5 | 16.2 | 16.1 | ||||
| of which: Fishing license fees | 17.7 | 17.0 | 15.4 | 13.4 | 14.0 | 13.7 | 13.4 | 13.2 | 13.0 | ||||
| Grants 2/ | 33.9 | 25.3 | 24.5 | 28.1 | 31.4 | 32.2 | 32.2 | 32.4 | 31.6 | ||||
| Expenditure | 66.8 | 59.2 | 57.9 | 60.0 | 65.8 | 67.0 | 67.0 | 66.8 | 66.4 | ||||
| Expense | 63.6 | 55.5 | 53.4 | 53.3 | 57.2 | 57.8 | 57.3 | 57.1 | 56.9 | ||||
| Net acquisition of nonfinancial assets | 3.2 | 3.7 | 4.5 | 6.7 | 8.5 | 9.3 | 9.7 | 9.7 | 9.4 | ||||
| Gross Public Investment | 9.4 | 9.5 | 10.0 | 12.0 | 13.5 | 14.1 | 14.4 | 14.5 | 14.5 | ||||
| Net lending/borrowing | 4.5 | 7.8 | 1.6 | 1.3 | -0.4 | -1.0 | -1.1 | -1.1 | -1.6 | ||||
| Net lending/borrowing (excl. grants) | -29.5 | -17.5 | -22.9 | -26.8 | -31.8 | -33.1 | -33.4 | -33.5 | -33.2 | ||||
| Public debt (outstanding stock, end of period) | 17.0 | 14.6 | 12.4 | 10.6 | 10.6 | 10.7 | 11.0 | 11.3 | 12.1 | ||||
| Balance of trust funds 3/ | 351.5 | 287.7 | 323.2 | 330.9 | 381.0 | 436.5 | 447.5 | 458.9 | 470.2 | ||||
| Commercial banks (in percentage of GDP; end of period) | |||||||||||||
| Loans 4/ | 13.3 | 12.8 | 11.1 | 11.3 | 11.5 | 11.7 | 11.9 | 12.1 | 12.3 | ||||
| Deposits | 111.7 | 99.5 | 96.2 | 94.2 | 92.9 | 91.8 | 90.7 | 89.6 | 89.6 | ||||
| Interest rates (in percent, average for FY) | |||||||||||||
| Consumer loans | 14.2 | 13.7 | 14.3 | … | … | … | … | … | … | ||||
| Commercial loans | 5.8 | 5.1 | 4.8 | … | … | … | … | … | … | ||||
| Balance of payments (in millions of U.S. dollars) | |||||||||||||
| Trade balance | -161.4 | -162.4 | -169.9 | -181.0 | -203.5 | -211.8 | -218.4 | -224.7 | -232.2 | ||||
| Net services and income | 22.2 | 26.5 | 29.3 | 21.9 | 26.4 | 26.5 | 27.4 | 27.3 | 28.0 | ||||
| Private and official transfers | 147.7 | 172.4 | 155.9 | 162.8 | 180.9 | 188.5 | 192.8 | 198.6 | 201.2 | ||||
| Current account | 8.5 | 36.6 | 15.3 | 3.7 | 3.8 | 3.1 | 1.9 | 1.2 | -3.0 | ||||
| (in percent of GDP) | 2.2 | 8.5 | 3.3 | 0.8 | 0.8 | 0.6 | 0.3 | 0.2 | -0.5 | ||||
| External debt (in millions of U.S. dollars; end of period) | |||||||||||||
| Outstanding stock | 62.9 | 59.4 | 54.3 | 49.2 | 51.3 | 53.9 | 57.4 | 61.3 | 67.4 | ||||
| (in percent of GDP) | 16.1 | 13.8 | 11.8 | 10.2 | 10.1 | 10.2 | 10.6 | 11.0 | 11.8 | ||||
| Memorandum items: | |||||||||||||
| Real effective exchange rate 5/ | 100.9 | 106.9 | 114.8 | … | … | … | … | … | … | ||||
| Nominal GDP (in millions of U.S. dollars) | 390.0 | 430.2 | 460.5 | 484.0 | 507.1 | 525.5 | 540.8 | 555.9 | 571.0 | ||||
Fiscal year ends on September 30. Data for FY2019–22 is estimate from authorities and subject to revision.
Excludes contributions to the Compact Trust Fund.
Compact Trust Fund and FSM Trust Fund.
Includes only domestic lending and does not account for loans to customers outside the country.
Calendar year. 2010=100. The U.S. dollar is legal tender and the official currency.
Federated States of Micronesia: Medium Term, FY2021–29 1/
(In percent of GDP, unless otherwise noted)
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 | FY2027 | FY2028 | FY2029 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Projections | |||||||||||
| Real sector (annual percent change) | |||||||||||||
| Real GDP | 3.0 | -0.9 | 0.8 | 1.1 | 1.7 | 1.1 | 0.8 | 0.7 | 0.7 | ||||
| Consumer prices | 1.8 | 5.0 | 6.2 | 4.0 | 3.0 | 2.5 | 2.1 | 2.0 | 2.0 | ||||
| Consolidated government finance (in percent of GDP) | |||||||||||||
| Revenue and grants | 71.3 | 67.0 | 59.4 | 61.2 | 65.4 | 66.1 | 65.8 | 65.7 | 64.8 | ||||
| Revenue | 37.3 | 41.7 | 34.9 | 33.1 | 34.0 | 33.9 | 33.6 | 33.3 | 33.2 | ||||
| Tax revenue | 15.9 | 21.7 | 16.5 | 16.7 | 16.9 | 17.1 | 17.1 | 17.1 | 17.1 | ||||
| of which: corporate income tax | 2.9 | 9.5 | 4.6 | 4.6 | 4.6 | 4.6 | 4.6 | 4.6 | 4.6 | ||||
| Non-tax revenue | 20.6 | 20.0 | 18.5 | 16.5 | 17.0 | 16.8 | 16.5 | 16.2 | 16.1 | ||||
| of which: Fishing license fees | 17.7 | 17.0 | 15.4 | 13.4 | 14.0 | 13.7 | 13.4 | 13.2 | 13.0 | ||||
| Grants 2/ | 33.9 | 25.3 | 24.5 | 28.1 | 31.4 | 32.2 | 32.2 | 32.4 | 31.6 | ||||
| Expenditure | 66.8 | 59.2 | 57.9 | 60.0 | 65.8 | 67.0 | 67.0 | 66.8 | 66.4 | ||||
| Expense | 63.6 | 55.5 | 53.4 | 53.3 | 57.2 | 57.8 | 57.3 | 57.1 | 56.9 | ||||
| Net acquisition of nonfinancial assets | 3.2 | 3.7 | 4.5 | 6.7 | 8.5 | 9.3 | 9.7 | 9.7 | 9.4 | ||||
| Gross Public Investment | 9.4 | 9.5 | 10.0 | 12.0 | 13.5 | 14.1 | 14.4 | 14.5 | 14.5 | ||||
| Net lending/borrowing | 4.5 | 7.8 | 1.6 | 1.3 | -0.4 | -1.0 | -1.1 | -1.1 | -1.6 | ||||
| Net lending/borrowing (excl. grants) | -29.5 | -17.5 | -22.9 | -26.8 | -31.8 | -33.1 | -33.4 | -33.5 | -33.2 | ||||
| Public debt (outstanding stock, end of period) | 17.0 | 14.6 | 12.4 | 10.6 | 10.6 | 10.7 | 11.0 | 11.3 | 12.1 | ||||
| Balance of trust funds 3/ | 351.5 | 287.7 | 323.2 | 330.9 | 381.0 | 436.5 | 447.5 | 458.9 | 470.2 | ||||
| Commercial banks (in percentage of GDP; end of period) | |||||||||||||
| Loans 4/ | 13.3 | 12.8 | 11.1 | 11.3 | 11.5 | 11.7 | 11.9 | 12.1 | 12.3 | ||||
| Deposits | 111.7 | 99.5 | 96.2 | 94.2 | 92.9 | 91.8 | 90.7 | 89.6 | 89.6 | ||||
| Interest rates (in percent, average for FY) | |||||||||||||
| Consumer loans | 14.2 | 13.7 | 14.3 | … | … | … | … | … | … | ||||
| Commercial loans | 5.8 | 5.1 | 4.8 | … | … | … | … | … | … | ||||
| Balance of payments (in millions of U.S. dollars) | |||||||||||||
| Trade balance | -161.4 | -162.4 | -169.9 | -181.0 | -203.5 | -211.8 | -218.4 | -224.7 | -232.2 | ||||
| Net services and income | 22.2 | 26.5 | 29.3 | 21.9 | 26.4 | 26.5 | 27.4 | 27.3 | 28.0 | ||||
| Private and official transfers | 147.7 | 172.4 | 155.9 | 162.8 | 180.9 | 188.5 | 192.8 | 198.6 | 201.2 | ||||
| Current account | 8.5 | 36.6 | 15.3 | 3.7 | 3.8 | 3.1 | 1.9 | 1.2 | -3.0 | ||||
| (in percent of GDP) | 2.2 | 8.5 | 3.3 | 0.8 | 0.8 | 0.6 | 0.3 | 0.2 | -0.5 | ||||
| External debt (in millions of U.S. dollars; end of period) | |||||||||||||
| Outstanding stock | 62.9 | 59.4 | 54.3 | 49.2 | 51.3 | 53.9 | 57.4 | 61.3 | 67.4 | ||||
| (in percent of GDP) | 16.1 | 13.8 | 11.8 | 10.2 | 10.1 | 10.2 | 10.6 | 11.0 | 11.8 | ||||
| Memorandum items: | |||||||||||||
| Real effective exchange rate 5/ | 100.9 | 106.9 | 114.8 | … | … | … | … | … | … | ||||
| Nominal GDP (in millions of U.S. dollars) | 390.0 | 430.2 | 460.5 | 484.0 | 507.1 | 525.5 | 540.8 | 555.9 | 571.0 | ||||
Fiscal year ends on September 30. Data for FY2019–22 is estimate from authorities and subject to revision.
Excludes contributions to the Compact Trust Fund.
Compact Trust Fund and FSM Trust Fund.
Includes only domestic lending and does not account for loans to customers outside the country.
Calendar year. 2010=100. The U.S. dollar is legal tender and the official currency.
Federated States of Micronesia: Deposit Money Banks, FY2019–23
(In millions of U.S. dollars, unless otherwise noted)
Includes loans to abroad.
Excludes loans to abroad.
Average rates offered by the deposit money banks.
Average rates charged by the deposit money banks.
Federated States of Micronesia: Deposit Money Banks, FY2019–23
(In millions of U.S. dollars, unless otherwise noted)
| FY2019 | FY2020 | FY2021 | FY2022 | FY2023 | ||||
|---|---|---|---|---|---|---|---|---|
| Assets and liabilities | ||||||||
| Assets | 389.7 | 423.3 | 474.1 | 464.0 | 488.0 | |||
| Foreign assets 1/ | 329.2 | 362.2 | 304.2 | 399.0 | 426.2 | |||
| Claims on private sector | 45.7 | 45.8 | 47.4 | 51.2 | 48.0 | |||
| Consumer loans | 32.4 | 31.4 | 32.8 | 34.8 | 35.0 | |||
| Commercial loans | 13.4 | 10.9 | 11.4 | 13.6 | 13.0 | |||
| Claims on nonfinancial public enterprises | 5.1 | 4.9 | 4.3 | 3.7 | 3.2 | |||
| Others assets | 9.7 | 10.3 | 10.1 | 10.1 | 10.6 | |||
| Liabilities | 389.7 | 423.3 | 474.1 | 464.0 | 488.0 | |||
| Deposits | 350.7 | 384.1 | 435.5 | 428.2 | 442.9 | |||
| Of which: national government | 82.7 | 87.4 | 90.1 | 85.3 | 75.5 | |||
| Capital accounts | 28.9 | 28.7 | 27.9 | 25.0 | 33.4 | |||
| Other liabilities | 10.1 | 10.4 | 10.7 | 10.8 | 11.7 | |||
| Memorandum items: | ||||||||
| Loan/deposit ratio (in percent) 2/ | 14.5 | 13.2 | 11.9 | 12.8 | 11.6 | |||
| Deposits (percent change) | 4.5 | 9.5 | 13.4 | -1.7 | 3.4 | |||
| Loans (percent change) | 1.3 | -0.1 | 1.9 | 6.4 | -6.9 | |||
| Interest rates (percent) | ||||||||
| Deposit rates | ||||||||
| Savings deposits 3/ | 0.3 | 0.2 | 0.1 | 0.1 | 0.3 | |||
| CDs | 0.4 | 0.2 | 0.1 | 0.1 | 0.4 | |||
| Time Deposits | 0.1 | 0.1 | 0.0 | 0.0 | 0.0 | |||
| Loans rates 4/ | ||||||||
| Consumer loans | 15.7 | 14.9 | 14.2 | 13.7 | 14.3 | |||
| Commercial loans | 8.4 | 6.9 | 5.8 | 5.1 | 4.8 | |||
Includes loans to abroad.
Excludes loans to abroad.
Average rates offered by the deposit money banks.
Average rates charged by the deposit money banks.
Federated States of Micronesia: Deposit Money Banks, FY2019–23
(In millions of U.S. dollars, unless otherwise noted)
| FY2019 | FY2020 | FY2021 | FY2022 | FY2023 | ||||
|---|---|---|---|---|---|---|---|---|
| Assets and liabilities | ||||||||
| Assets | 389.7 | 423.3 | 474.1 | 464.0 | 488.0 | |||
| Foreign assets 1/ | 329.2 | 362.2 | 304.2 | 399.0 | 426.2 | |||
| Claims on private sector | 45.7 | 45.8 | 47.4 | 51.2 | 48.0 | |||
| Consumer loans | 32.4 | 31.4 | 32.8 | 34.8 | 35.0 | |||
| Commercial loans | 13.4 | 10.9 | 11.4 | 13.6 | 13.0 | |||
| Claims on nonfinancial public enterprises | 5.1 | 4.9 | 4.3 | 3.7 | 3.2 | |||
| Others assets | 9.7 | 10.3 | 10.1 | 10.1 | 10.6 | |||
| Liabilities | 389.7 | 423.3 | 474.1 | 464.0 | 488.0 | |||
| Deposits | 350.7 | 384.1 | 435.5 | 428.2 | 442.9 | |||
| Of which: national government | 82.7 | 87.4 | 90.1 | 85.3 | 75.5 | |||
| Capital accounts | 28.9 | 28.7 | 27.9 | 25.0 | 33.4 | |||
| Other liabilities | 10.1 | 10.4 | 10.7 | 10.8 | 11.7 | |||
| Memorandum items: | ||||||||
| Loan/deposit ratio (in percent) 2/ | 14.5 | 13.2 | 11.9 | 12.8 | 11.6 | |||
| Deposits (percent change) | 4.5 | 9.5 | 13.4 | -1.7 | 3.4 | |||
| Loans (percent change) | 1.3 | -0.1 | 1.9 | 6.4 | -6.9 | |||
| Interest rates (percent) | ||||||||
| Deposit rates | ||||||||
| Savings deposits 3/ | 0.3 | 0.2 | 0.1 | 0.1 | 0.3 | |||
| CDs | 0.4 | 0.2 | 0.1 | 0.1 | 0.4 | |||
| Time Deposits | 0.1 | 0.1 | 0.0 | 0.0 | 0.0 | |||
| Loans rates 4/ | ||||||||
| Consumer loans | 15.7 | 14.9 | 14.2 | 13.7 | 14.3 | |||
| Commercial loans | 8.4 | 6.9 | 5.8 | 5.1 | 4.8 | |||
Includes loans to abroad.
Excludes loans to abroad.
Average rates offered by the deposit money banks.
Average rates charged by the deposit money banks.
Federated States of Micronesia: Vulnerability Indicators, FY2021–25
Loans are calendar year data.
Federated States of Micronesia: Vulnerability Indicators, FY2021–25
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | ||||
|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Proj. | ||||||
| Deposit money banks | ||||||||
| Deposits (in percent of GDP) | 111.7 | 99.5 | 96.2 | 94.2 | 92.9 | |||
| Deposits (Year-on-year percent change) | 13.4 | -1.7 | 3.4 | 2.9 | 3.3 | |||
| Loans (in percent of GDP) | 13.3 | 12.8 | 11.1 | 11.3 | 11.5 | |||
| Loans (Year-on-year percent change) | 1.9 | 6.4 | -6.9 | 7.0 | 6.6 | |||
| Loan to deposit ratio (in percent) | 11.9 | 12.8 | 11.6 | 12.0 | 12.4 | |||
| Foreign assets (in percent of GDP) | 78.0 | 92.7 | 92.6 | … | … | |||
| Equity capital (in percent of total asset) | 5.9 | 5.4 | 6.8 | … | … | |||
| FSM Development Bank | ||||||||
| Loans (in percent of GDP) 1/ | 8.8 | 9.0 | 7.3 | … | … | |||
| External indicators | ||||||||
| Exports (goods & services, y/y percent change) | 21.9 | 15.4 | 39.0 | 2.9 | 4.5 | |||
| Imports (goods & services, y/y percent change) | 3.7 | 4.2 | 13.2 | 4.9 | 8.8 | |||
| Current account balance (percent of GDP) | ||||||||
| Including official transfers | 2.2 | 8.5 | 3.3 | 0.8 | 0.8 | |||
| Excluding official transfers | -31.3 | -18.7 | -22.4 | -24.7 | -26.6 | |||
| Total external debt | ||||||||
| In millions of U.S. dollars | 62.9 | 59.4 | 54.3 | 49.2 | 51.3 | |||
| In percent of exports of goods and services | 80.2 | 65.7 | 43.2 | 38.0 | 37.9 | |||
| In percent of GDP | 16.1 | 13.8 | 11.8 | 10.2 | 10.1 | |||
| Debt service | ||||||||
| In millions of U.S. dollars | 6.1 | 5.4 | 6.2 | 6.1 | 5.9 | |||
| In percent of exports of goods and services | 7.8 | 6.0 | 4.9 | 4.7 | 4.4 | |||
| In percent of GDP | 1.6 | 1.3 | 1.3 | 1.3 | 1.2 | |||
Loans are calendar year data.
Federated States of Micronesia: Vulnerability Indicators, FY2021–25
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | ||||
|---|---|---|---|---|---|---|---|---|
| Est. | Est. | Proj. | ||||||
| Deposit money banks | ||||||||
| Deposits (in percent of GDP) | 111.7 | 99.5 | 96.2 | 94.2 | 92.9 | |||
| Deposits (Year-on-year percent change) | 13.4 | -1.7 | 3.4 | 2.9 | 3.3 | |||
| Loans (in percent of GDP) | 13.3 | 12.8 | 11.1 | 11.3 | 11.5 | |||
| Loans (Year-on-year percent change) | 1.9 | 6.4 | -6.9 | 7.0 | 6.6 | |||
| Loan to deposit ratio (in percent) | 11.9 | 12.8 | 11.6 | 12.0 | 12.4 | |||
| Foreign assets (in percent of GDP) | 78.0 | 92.7 | 92.6 | … | … | |||
| Equity capital (in percent of total asset) | 5.9 | 5.4 | 6.8 | … | … | |||
| FSM Development Bank | ||||||||
| Loans (in percent of GDP) 1/ | 8.8 | 9.0 | 7.3 | … | … | |||
| External indicators | ||||||||
| Exports (goods & services, y/y percent change) | 21.9 | 15.4 | 39.0 | 2.9 | 4.5 | |||
| Imports (goods & services, y/y percent change) | 3.7 | 4.2 | 13.2 | 4.9 | 8.8 | |||
| Current account balance (percent of GDP) | ||||||||
| Including official transfers | 2.2 | 8.5 | 3.3 | 0.8 | 0.8 | |||
| Excluding official transfers | -31.3 | -18.7 | -22.4 | -24.7 | -26.6 | |||
| Total external debt | ||||||||
| In millions of U.S. dollars | 62.9 | 59.4 | 54.3 | 49.2 | 51.3 | |||
| In percent of exports of goods and services | 80.2 | 65.7 | 43.2 | 38.0 | 37.9 | |||
| In percent of GDP | 16.1 | 13.8 | 11.8 | 10.2 | 10.1 | |||
| Debt service | ||||||||
| In millions of U.S. dollars | 6.1 | |||||||