## 1. Climate Risks in Kiribati

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### A. Context and policy challenge
- Kiribati is a collection of archipelagos made of 32 atolls and one island spanning 3,441,810 km2 of ocean with total land area equal to only 811 km2.
- Approximately half of the total population of 130,000 lives in the atoll of South Tarawa; the most densely populated area in South Tarawa is approximately 500 m wide.
- Most land is less than two meters above sea level, making Kiribati susceptible to storm surges, overwash, inundation from sea-level rise, and saltwater intrusion affecting freshwater lenses and food security.
- Remoteness compounds vulnerability: Kiritimati Island is approximately 3,000 kilometers east of Tarawa (about one week by cargo ship).
- Kiribati’s productive capacity is limited and the economy is highly dependent on imports, increasing vulnerability to exogenous events.
- Public development expenditure averaged 47 percent of GDP per year during 2013-2019, yet substantial additional public investment is required to build climate resilience.
- Investment needed to build protection against rising sea levels by 2100 is estimated to be over 25 percent of GDP annually, which could jeopardize fiscal sustainability.

### B. Recent adaptation actions and institutional framework
- Ongoing investments: South Tarawa Water & Sanitation Project and the Kiribati Outer Island Transport Infrastructure Investment Project.
- Legal and planning frameworks: Kiribati Disaster Risk Management and Climate Change Act (2019); Kiribati National Expert Group (KNEG); Kiribati Joint Implementation Plan (KJIP 2019-2028); revised Building Act and new building code expected to take effect in 2025.
- Financing constraints: Much adaptation investment will need to be public given limited private sector development and remoteness.

### C. Key climate projections and adaptation cost ranges (Box 1)
- Climate and temperature:
  - Annual average temperatures are mostly stable around 27.5°C; extreme heat (days above 35 °C) is never observed.
  - Mean annual temperature is expected to increase between 1.2 and 2.6 °C at the end of the century, depending on emissions scenario.
  - No indication extreme temperature thresholds will be crossed even in warmer scenarios.
- Precipitation and extremes:
  - Precipitation and intense precipitation are projected to increase with high confidence; number of consecutive dry days is projected to decline in most scenarios (though a modest increase cannot be excluded).
  - More intense precipitation events may increase risks from localized floods and land erosion.
- Sea-level rise:
  - End-of-century projections indicate sea levels will increase from 0.51 to 0.97 m, depending on emissions scenario and ice melt speed.
  - Higher sea levels cannot be excluded in the event of low-likelihood, catastrophic melting of the West Antarctic Ice Sheet.
- Cumulative cost of adaptation to sea-level rise until 2100 (undiscounted):
  - Moderate scenario (approximately +0.5m with respect to 2020): US$3 billion (equivalent to 10 times present GDP).
  - High scenario (+1.3 to 2.0m with respect to 2020): US$45 billion (equivalent to 150 times present GDP).
- Additional ecological risks: Ocean warming and acidification threaten coral reefs and fisheries, generating uncertainty in a key source of government revenue.

### D. Magnitude of disaster shock used in simulations
- Natural-disaster macro shock parameters (consistent with most extreme historical disaster in Kiribati):
  - 4.6 percent loss in output.
  - 12 percent decrease in exports.
  - 10 percent increase in fiscal outlay.

### E. Prepared by
- Prepared by Emanuele Massetti (FAD).

*Source: IMF staff paper "1. Climate Risks in Kiribati" (June 18, 2025).*

### B. Macroeconomic analysis and scenarios (DIGNAD model)
- Model used:
  - The DIGNAD (Debt-Investment-Growth and Natural Disasters) toolkit is used to analyze macroeconomic trade-offs of resilience-building investment.
  - DIGNAD is a general equilibrium model that captures impacts of natural disasters, public investments in standard and climate-resilient infrastructure, and debt dynamics.
- Key modeling insights:
  - Climate-resilient infrastructure mitigates output losses and physical damages, requires lower maintenance, delivers larger returns than standard infrastructure, and crowds in private investment.
  - Climate-resilient infrastructure is more expensive due to specialized skills and imported components, creating a tradeoff for governments.
  - Simulations incorporate staff-recommended fiscal consolidation of 3.5 percent of GDP (enhanced VAT and excise revenues, slight increase in fishing revenues, rationalized subsidies).

### Scenarios analyzed
- Baseline scenario:
  - Public adaptation investment: 12 percent of GDP.
  - Conventional public investment: 29 percent of GDP.
  - Financing: international grants, concessional loans, and withdrawals from the Revenue Equalization Reserve Fund (RERF).
- Moderate resilience scenario:
  - Public adaptation investment steps up from 12 to 25 percent of GDP (to build moderate resilience for approximately 0.5m sea-level rise by 2100).
  - Financing assumptions:
    - Additional annual withdrawal of 5.5 percent of GDP from the RERF.
    - Fiscal consolidation yielding annual savings of 3.5 percent of GDP.
    - Additional concessional loan issuances of around 4 percent of GDP per year.
- High resilience scenario:
  - Public adaptation investment increases to 45 percent of GDP (to build higher resilience for approximately 2m sea-level rise by 2200).
  - No additional RERF withdrawal relative to the moderate scenario (to illustrate burden); concessional loans bridge the financing gap relative to the moderate scenario.
  - Note: This level still falls short of the lower-end estimate required to adapt to a 1.3m sea-level rise by 2100.

### D. Simulation results — growth, debt, and investment
- GDP and debt projections (summary findings):
  - All scenarios show real output drops immediately after a natural disaster in 2040, but recovery is faster with more climate-resilient infrastructure.
  - Moderate resilience: modest increase in debt-to-GDP ratio relative to baseline; with prudent fiscal policy and appropriate RERF use, fiscal burden of moderate resilience-building can be manageable.
  - High resilience: extremely quick ramp-up in public investment leads to debt rising fast to several times GDP, indicating significant debt sustainability risks if financed by borrowing without substantially more grants.
  - In the long run, higher output resulting from public investment dampens the debt-to-GDP increase in the moderate resilience scenario.
- Private investment effects:
  - Public adaptation infrastructure crowds in private investment by improving the risk-return profile and complementing private firm productivity.
  - Adaptation infrastructure reduces exposure of public and private capital stocks to disaster damages, lowering scarring and supporting higher private investment compared with baseline despite reconstruction lags for private capital.

### E. Policy implications and recommended fiscal approach
- To achieve moderate resilience without substantial worsening of debt dynamics, combine:
  - Measured consolidation of 3.5 percent of GDP through revenue and current expenditure measures (VAT and excise enhancements, subsidy rationalization, slight fishing revenue increase).
  - Further improvements in public financial management to raise public investment efficiency and enable access to climate finance.
  - Appropriate use of RERF withdrawals (example: an additional annual 5.5 percent of GDP withdrawal in the moderate scenario).
  - Reliance on concessional loan issuances (around 4 percent of GDP per year in moderate scenario) and international grants where possible.
- Avoid financing large high-resilience investment primarily through borrowing without substantially more grants, given the risk of debt rising to several times GDP.
- Consider trade-offs between protection, planned retreat, and incentivized migration to reduce long-term investment needs, acknowledging societal costs of permanent land loss.

*Source: IMF staff simulations and analysis in "1. Climate Risks in Kiribati" (June 18, 2025).*

### 10.      The efficiency of public investment matters.

### Simulations and macroeconomic implications
- For illustration purposes, additional simulations assume that deep reforms decrease the public investment efficiency gap from 80 to about 50 percent for Kiribati.
- The efficiency gap measures how much the capital stock falls short compared to the best performing LIDC peer given the same level of public investment.
- Increased efficiency stemming from PFM and investment management reforms leads to higher output and private investment, given the same public investment as in the resilience-building scenarios without efficiency reforms.
- The economy is more resilient against natural disaster shocks, exhibiting faster post-disaster recovery. A natural disaster is assumed to occur in 2040.
- The increase in debt-to -GDP ratio is lower with efficiency-inducing PFM reforms than without, due to higher GDP growth.
- In the moderate resilience scenario, debt-to -GDP ratio even drops below the baseline level around 2045.
- In the long-run, debt stabilizes in the moderate resilience scenario with PFM reforms.
- Source of simulation: IMF staff simulations using the DIGNAD toolkit.

### Measurement and current assessment of public investment efficiency
- Public investment efficiency measures how much infrastructure output results from a given level of public investment.
- In the absence of such a measure for Kiribati, it is approximated with the left-tail estimate of the cross-country analysis of Kapsoli et al. (2023), i.e. an efficiency gap of about 80 percent to best-performing LIDC peers.
- The approximation is based on the IMF public investment management assessment (PIMA) in 2018 that Kiribati’s PFM institution had notable weaknesses compared with the average LIDC, especially in planning, selection, procurement, and asset monitoring.
- Kiribati is taking steps to strengthen its PFM institutions, having published a national infrastructure investment plan and working on a three-year PFM roadmap.

### Policy discussions: ensuring stable public capital expenditure
- Continued mainstreaming of resilience-building in budgeting and establishment of a medium-term fiscal framework can ensure stable public capital expenditure.
- With pre-COVID public development expenditure averaging 47 percent of GDP per year, Kiribati has been undertaking substantial public investment, a large share of which is financed by donors.
- Kiribati could benefit from better planning of public investment and management of fiscal surprises, especially volatility in fishing revenue, grants, and RERF returns that sometimes constrain development and adaptation spending.
- The establishment of a medium-term fiscal framework supported by an appropriate RERF withdrawal rule can ensure that resilience investment remains stable, consistent with multi-year planning.
- IMF 2025 Article IV Staff Report shows that, with a withdrawal rule that sets the limit at 5 percent of the RERF balance, Kiribati can help safeguard high priority investment from potential revenue volatility.
- Kiribati has a return-based rule for maximum RERF withdrawals—excess above a 2 percent nominal return in the previous year sets the upper bound for total withdrawal for the current year.

### Concrete steps to improve public investment efficiency
- Develop a centralized database of all ongoing and planned projects, including donor-funded ones.
  - The authorities do not have a centralized system to track spending on individual public investment projects.
  - Projects solely funded by donors often do not report their spending to the Ministry of Finance.
  - The Ministry of Infrastructure and Sustainable Energy is working on a tracking system for the projects under their purview. Such efforts should be broadened to include projects led by other line ministries, SOEs, and development partners, and include details on expenditures.
- Continue to mainstream operational and maintenance costs in project budgeting.
  - Geographical dispersion, remoteness, and limited domestic labor market add to the challenges of keeping infrastructure in a good shape.
  - Kiribati has made progress in recent years by establishing a maintenance fund designated for certain infrastructure projects.
  - It is important to set aside funds and plan for staffing for operation and maintenance when budgeting for new projects.
  - When it is difficult to secure local staff, arrangements such as the pooling of regional experts can be explored in coordination with other countries.
- Establish comprehensive public asset registries, including SOEs, for better public infrastructure management and governance.
  - Accurate asset data will facilitate identification of under-utilization, underperformance, and maintenance needs of public infrastructure.
  - Asset registries will improve transparency and accountability, thereby enhancing infrastructure governance.
  - IMF (2018) finds that revenue gains from better public asset management can be as high as 3 percent of GDP annually.
- Regularly review utility tariffs and align them with market prices, to maintain the SOEs’ financial health and their ability to undertake public investment.
  - In 2025, Kiribati revised its electricity tariff for the first time since 2009, while water tariff remains nil.
  - Sanitation charges are low and face low collection.
  - Tariff reviews should continue on a regular basis and be broadened to include utilities other than electricity, with a view to align the prices with supply-demand dynamics over time.
  - Correct price signals are important for the financial viability of SOEs such as the Public Utility Board and allow them more autonomy to make much-needed investment in utilities infrastructure, alongside donor-driven investment.
- Continue to strengthen the public procurement framework.
  - Kiribati amended the Procurement Act in 2021 to broaden its coverage to SOEs.
  - Further enhancements should support a more transparent procurement process, which includes disclosure of beneficiary ownership of the awarded companies and details of the bids, and allows sufficient public notification and time for bidding.
  - As Kiribati expands its network of development partners, domestic institutions for procurement should act as a backstop.

### Strengthening local capacity for project execution and infrastructure management
- Limited domestic capacity for project execution and lack of skilled personnel to maintain infrastructure have contributed to delays in project implementation and inadequate infrastructure governance.
- Kiribati has experienced difficulties in retaining staff from donor-financed projects.
- Efforts underway to address the skill shortage include career awareness programs targeting secondary schools, scholarships for engineering degrees abroad, and training workshops by the Ministry of Infrastructure and Sustainable Energy.
- Given that Kiribati spends a relatively large share of its government expenditure on education (16 percent in 2023, the fourth highest among PICs), it is important to target high-priority areas such as vocational training to support infrastructure.
- Kiribati can continue to tap into the expertise offered by development partners through knowledge transfer and technical assistance.

*Source: IMF staff simulations and country analysis as presented in "10.      The efficiency of public investment matters."*

### 1. Climate Risks in Kiribati ____________________________________________________________ 4

### 1. Climate Risks in Kiribati

### A. Context and policy challenge
- Kiribati is a collection of archipelagos made of 32 atolls and one island spanning 3,441,810 km2 of ocean with total land area equal to only 811 km2.
- Approximately half of the total population of 130,000 lives in the atoll of South Tarawa; the most densely populated area in South Tarawa is approximately 500 m wide.
- Most land is less than two meters above sea level, making Kiribati susceptible to storm surges, overwash, inundation from sea-level rise, and saltwater intrusion affecting freshwater lenses and food security.
- Remoteness compounds vulnerability: Kiritimati Island is approximately 3,000 kilometers east of Tarawa (about one week by cargo ship).
- Kiribati’s productive capacity is limited and the economy is highly dependent on imports, increasing vulnerability to exogenous events.
- Public development expenditure averaged 47 percent of GDP per year during 2013-2019, yet substantial additional public investment is required to build climate resilience.
- Investment needed to build protection against rising sea levels by 2100 is estimated to be over 25 percent of GDP annually, which could jeopardize fiscal sustainability.

### B. Recent adaptation actions and institutional framework
- Ongoing investments: South Tarawa Water & Sanitation Project and the Kiribati Outer Island Transport Infrastructure Investment Project.
- Legal and planning frameworks: Kiribati Disaster Risk Management and Climate Change Act (2019); Kiribati National Expert Group (KNEG); Kiribati Joint Implementation Plan (KJIP 2019-2028); revised Building Act and new building code expected to take effect in 2025.
- Financing constraints: Much adaptation investment will need to be public given limited private sector development and remoteness.

### C. Key climate projections and adaptation cost ranges (Box 1)
- Climate and temperature:
  - Annual average temperatures are mostly stable around 27.5°C; extreme heat (days above 35 °C) is never observed.
  - Mean annual temperature is expected to increase between 1.2 and 2.6 °C at the end of the century, depending on emissions scenario.
  - No indication extreme temperature thresholds will be crossed even in warmer scenarios.
- Precipitation and extremes:
  - Precipitation and intense precipitation are projected to increase with high confidence; number of consecutive dry days is projected to decline in most scenarios (though a modest increase cannot be excluded).
  - More intense precipitation events may increase risks from localized floods and land erosion.
- Sea-level rise:
  - End-of-century projections indicate sea levels will increase from 0.51 to 0.97 m, depending on emissions scenario and ice melt speed.
  - Higher sea levels cannot be excluded in the event of low-likelihood, catastrophic melting of the West Antarctic Ice Sheet.
- Cumulative cost of adaptation to sea-level rise until 2100 (undiscounted):
  - Moderate scenario (approximately +0.5m with respect to 2020): US$3 billion (equivalent to 10 times present GDP).
  - High scenario (+1.3 to 2.0m with respect to 2020): US$45 billion (equivalent to 150 times present GDP).
- Additional ecological risks: Ocean warming and acidification threaten coral reefs and fisheries, generating uncertainty in a key source of government revenue.

### D. Magnitude of disaster shock used in simulations
- Natural-disaster macro shock parameters (consistent with most extreme historical disaster in Kiribati):
  - 4.6 percent loss in output.
  - 12 percent decrease in exports.
  - 10 percent increase in fiscal outlay.

### E. Prepared by
- Prepared by Emanuele Massetti (FAD).

### *Source: IMF staff paper "1. Climate Risks in Kiribati" (June 18, 2025).*

### B. Macroeconomic analysis and scenarios (DIGNAD model)
- Model used:
  - The DIGNAD (Debt-Investment-Growth and Natural Disasters) toolkit is used to analyze macroeconomic trade-offs of resilience-building investment.
  - DIGNAD is a general equilibrium model that captures impacts of natural disasters, public investments in standard and climate-resilient infrastructure, and debt dynamics.
- Key modeling insights:
  - Climate-resilient infrastructure mitigates output losses and physical damages, requires lower maintenance, delivers larger returns than standard infrastructure, and crowds in private investment.
  - Climate-resilient infrastructure is more expensive due to specialized skills and imported components, creating a tradeoff for governments.
  - Simulations incorporate staff-recommended fiscal consolidation of 3.5 percent of GDP (enhanced VAT and excise revenues, slight increase in fishing revenues, rationalized subsidies).

### Scenarios analyzed
- Baseline scenario:
  - Public adaptation investment: 12 percent of GDP.
  - Conventional public investment: 29 percent of GDP.
  - Financing: international grants, concessional loans, and withdrawals from the Revenue Equalization Reserve Fund (RERF).
- Moderate resilience scenario:
  - Public adaptation investment steps up from 12 to 25 percent of GDP (to build moderate resilience for approximately 0.5m sea-level rise by 2100).
  - Financing assumptions:
    - Additional annual withdrawal of 5.5 percent of GDP from the RERF.
    - Fiscal consolidation yielding annual savings of 3.5 percent of GDP.
    - Additional concessional loan issuances of around 4 percent of GDP per year.
- High resilience scenario:
  - Public adaptation investment increases to 45 percent of GDP (to build higher resilience for approximately 2m sea-level rise by 2200).
  - No additional RERF withdrawal relative to the moderate scenario (to illustrate burden); concessional loans bridge the financing gap relative to the moderate scenario.
  - Note: This level still falls short of the lower-end estimate required to adapt to a 1.3m sea-level rise by 2100.

### D. Simulation results — growth, debt, and investment
- GDP and debt projections (summary findings):
  - All scenarios show real output drops immediately after a natural disaster in 2040, but recovery is faster with more climate-resilient infrastructure.
  - Moderate resilience: modest increase in debt-to-GDP ratio relative to baseline; with prudent fiscal policy and appropriate RERF use, fiscal burden of moderate resilience-building can be manageable.
  - High resilience: extremely quick ramp-up in public investment leads to debt rising fast to several times GDP, indicating significant debt sustainability risks if financed by borrowing without substantially more grants.
  - In the long run, higher output resulting from public investment dampens the debt-to-GDP increase in the moderate resilience scenario.
- Private investment effects:
  - Public adaptation infrastructure crowds in private investment by improving the risk-return profile and complementing private firm productivity.
  - Adaptation infrastructure reduces exposure of public and private capital stocks to disaster damages, lowering scarring and supporting higher private investment compared with baseline despite reconstruction lags for private capital.

### E. Policy implications and recommended fiscal approach (as discussed in the chapter)
- To achieve moderate resilience without substantial worsening of debt dynamics, combine:
  - Measured consolidation of 3.5 percent of GDP through revenue and current expenditure measures (VAT and excise enhancements, subsidy rationalization, slight fishing revenue increase).
  - Further improvements in public financial management to raise public investment efficiency and enable access to climate finance.
  - Appropriate use of RERF withdrawals (example: an additional annual 5.5 percent of GDP withdrawal in the moderate scenario).
  - Reliance on concessional loan issuances (around 4 percent of GDP per year in moderate scenario) and international grants where possible.
- Avoid financing large high-resilience investment primarily through borrowing without substantially more grants, given the risk of debt rising to several times GDP.
- Consider trade-offs between protection, planned retreat, and incentivized migration to reduce long-term investment needs, acknowledging societal costs of permanent land loss.

*Source: IMF staff simulations and analysis in "1. Climate Risks in Kiribati" (June 18, 2025).*

### 10.      The efficiency of public investment matters.

### 10.      The efficiency of public investment matters.

### Simulations and macroeconomic implications
- For illustration purposes, additional simulations assume that deep reforms decrease the public investment efficiency gap from 80 to about 50 percent for Kiribati.
- The efficiency gap measures how much the capital stock falls short compared to the best performing LIDC peer given the same level of public investment.
- Increased efficiency stemming from PFM and investment management reforms leads to higher output and private investment, given the same public investment as in the resilience-building scenarios without efficiency reforms.
- The economy is more resilient against natural disaster shocks, exhibiting faster post-disaster recovery. A natural disaster is assumed to occur in 2040.
- The increase in debt-to -GDP ratio is lower with efficiency-inducing PFM reforms than without, due to higher GDP growth.
- In the moderate resilience scenario, debt-to -GDP ratio even drops below the baseline level around 2045.
- In the long-run, debt stabilizes in the moderate resilience scenario with PFM reforms.
- Source of simulation: IMF staff simulations using the DIGNAD toolkit.

### Measurement and current assessment of public investment efficiency
- Public investment efficiency measures how much infrastructure output results from a given level of public investment.
- In the absence of such a measure for Kiribati, it is approximated with the left-tail estimate of the cross-country analysis of Kapsoli et al. (2023), i.e. an efficiency gap of about 80 percent to best-performing LIDC peers.
- The approximation is based on the IMF public investment management assessment (PIMA) in 2018 that Kiribati’s PFM institution had notable weaknesses compared with the average LIDC, especially in planning, selection, procurement, and asset monitoring.
- Kiribati is taking steps to strengthen its PFM institutions, having published a national infrastructure investment plan and working on a three-year PFM roadmap.

### Policy discussions: ensuring stable public capital expenditure
- Continued mainstreaming of resilience-building in budgeting and establishment of a medium-term fiscal framework can ensure stable public capital expenditure.
- With pre-COVID public development expenditure averaging 47 percent of GDP per year, Kiribati has been undertaking substantial public investment, a large share of which is financed by donors.
- Kiribati could benefit from better planning of public investment and management of fiscal surprises, especially volatility in fishing revenue, grants, and RERF returns that sometimes constrain development and adaptation spending.
- The establishment of a medium-term fiscal framework supported by an appropriate RERF withdrawal rule can ensure that resilience investment remains stable, consistent with multi-year planning.
- IMF 2025 Article IV Staff Report shows that, with a withdrawal rule that sets the limit at 5 percent of the RERF balance, Kiribati can help safeguard high priority investment from potential revenue volatility.
- Kiribati has a return-based rule for maximum RERF withdrawals—excess above a 2 percent nominal return in the previous year sets the upper bound for total withdrawal for the current year.

### Concrete steps to improve public investment efficiency
- Develop a centralized database of all ongoing and planned projects, including donor-funded ones.
  - The authorities do not have a centralized system to track spending on individual public investment projects.
  - Projects solely funded by donors often do not report their spending to the Ministry of Finance.
  - The Ministry of Infrastructure and Sustainable Energy is working on a tracking system for the projects under their purview. Such efforts should be broadened to include projects led by other line ministries, SOEs, and development partners, and include details on expenditures.
- Continue to mainstream operational and maintenance costs in project budgeting.
  - Geographical dispersion, remoteness, and limited domestic labor market add to the challenges of keeping infrastructure in a good shape.
  - Kiribati has made progress in recent years by establishing a maintenance fund designated for certain infrastructure projects.
  - It is important to set aside funds and plan for staffing for operation and maintenance when budgeting for new projects.
  - When it is difficult to secure local staff, arrangements such as the pooling of regional experts can be explored in coordination with other countries.
- Establish comprehensive public asset registries, including SOEs, for better public infrastructure management and governance.
  - Accurate asset data will facilitate identification of under-utilization, underperformance, and maintenance needs of public infrastructure.
  - Asset registries will improve transparency and accountability, thereby enhancing infrastructure governance.
  - IMF (2018) finds that revenue gains from better public asset management can be as high as 3 percent of GDP annually.
- Regularly review utility tariffs and align them with market prices, to maintain the SOEs’ financial health and their ability to undertake public investment.
  - In 2025, Kiribati revised its electricity tariff for the first time since 2009, while water tariff remains nil.
  - Sanitation charges are low and face low collection.
  - Tariff reviews should continue on a regular basis and be broadened to include utilities other than electricity, with a view to align the prices with supply-demand dynamics over time.
  - Correct price signals are important for the financial viability of SOEs such as the Public Utility Board and allow them more autonomy to make much-needed investment in utilities infrastructure, alongside donor-driven investment.
- Continue to strengthen the public procurement framework.
  - Kiribati amended the Procurement Act in 2021 to broaden its coverage to SOEs.
  - Further enhancements should support a more transparent procurement process, which includes disclosure of beneficiary ownership of the awarded companies and details of the bids, and allows sufficient public notification and time for bidding.
  - As Kiribati expands its network of development partners, domestic institutions for procurement should act as a backstop.

### Strengthening local capacity for project execution and infrastructure management
- Limited domestic capacity for project execution and lack of skilled personnel to maintain infrastructure have contributed to delays in project implementation and inadequate infrastructure governance.
- Kiribati has experienced difficulties in retaining staff from donor-financed projects.
- Efforts underway to address the skill shortage include career awareness programs targeting secondary schools, scholarships for engineering degrees abroad, and training workshops by the Ministry of Infrastructure and Sustainable Energy.
- Given that Kiribati spends a relatively large share of its government expenditure on education (16 percent in 2023, the fourth highest among PICs), it is important to target high-priority areas such as vocational training to support infrastructure.
- Kiribati can continue to tap into the expertise offered by development partners through knowledge transfer and technical assistance.

*Source: IMF staff simulations and country analysis as presented in "10.      The efficiency of public investment matters."*

---


_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025104.pdf_