IMF Executive Board Concludes 2025 Article IV Consultation with Kiribati

IMF News, July 10, 2025

Source details

Canonical URL: IMF Executive Board Concludes 2025 Article IV Consultation with Kiribati

Real GDP grew by an estimated 5.3 percent in 2024 and is now close to its pre-COVID trend.
Real GDP growth is expected to moderate to around 3.9 percent in 2025 and to gradually decline to around 2 percent over the medium term.
Inflation:
- Moderated in 2024 in line with global commodity prices.
- Has started to rise in 2025Q1 due to long-overdue increases in fuel prices and electricity tariffs.
- Inflation is expected to increase to 7.8 percent in 2025 and then moderate over the medium term, in line with trading partners’ inflation.
Drivers of 2025 activity: largely public consumption and continuation of infrastructure projects.
Current account: expected to narrow to 0.6 percent of GDP in 2025, mostly owing to lower global commodity prices.
Fiscal: fiscal policy was expansionary in 2024; the fiscal deficit is projected to narrow in 2025, thanks to efforts to contain current expenditures.
External position in 2024 is assessed to be weaker than the level implied by fundamentals and desirable policies, with government spending contributing to high demand for imports.

The Kiribati economy has been resilient, despite repeated shocks.
Global trade policy changes in 2025 are expected to have only a small impact on GDP growth in the baseline, given Kiribati’s limited exports of goods and services.
Significant increases in the electricity tariff and fuel price in 2025 were needed to align them with market prices and are projected to temporarily increase inflation.
Risks have increased and are tilted to the downside:
- Domestic risk: under the current return-based withdrawal rule, weak financial market returns in 2025 could jeopardize the sovereign wealth fund withdrawal budgeted for 2026, possibly forcing an unplanned fiscal consolidation and a decline in public investment.
- External risks: commodity price volatility; intensification of conflicts that could raise shipping costs; systemic financial instability — all could increase risks to fiscal and external sustainability via effects on the import bill, sovereign wealth fund interest revenues, remittances, and growth.
- Climate vulnerability: Kiribati remains highly vulnerable to the effects of climate change and natural disasters.

Integrate countercyclical fiscal policy with a balance-based RERF withdrawal rule to better meet development needs and provide social benefits.
Integrate RERF withdrawals and deposits into a more developed medium-term fiscal framework to offset revenue volatility and support macroeconomic stabilization.
Adjust the RERF withdrawal rule so that annual withdrawals are capped at 3 to 5 percent of the RERF balance to preserve RERF’s long-term value and ensure withdrawals remain possible even when RERF returns are low.
A credible fiscal consolidation over the medium term, accompanied by improved public investment efficiency, is needed to anchor debt and support higher investment in climate adaptation.
Consolidation measures already implemented in 2025 and recommended further steps:
- Implemented in 2025: freezing nominal wages, reforming VAT, and streamlining subsidies.
- Further measures: gradually reduce SOE and other tax exemptions; increase the excise tax rate; enhance fishing revenue; further rationalize copra subsidies; streamline SOE subsidies.

To improve public investment efficiency:
- Supplement the prioritized list of infrastructure projects with detailed costing, timelines, and transparent criteria for project selection.
- Plan to integrate the recurrent budget with the development budget.
- Enhance oversight and procurement procedures and maintain a fixed asset register.
Establish a debt management framework with strong governance, transparency, and accountability:
- Strengthen capacity to analyze and manage potential new debt and assess sources of risk.
- Clarify the purposes of new borrowing or issuing guarantees and ensure consistency with debt sustainability and development priorities, with a requirement of detailed annual reporting.
- Maintain or expand access to grants and highly concessional loans to finance infrastructure investment as the preferred way to preserve debt sustainability.

Strengthen institutional capacity and raise human capital:
- Continue fiscal structural reforms focused on public financial management and revenue administration.
- Continue building monetary and financial sector regulatory and supervisory institutions and make the new Kiribati Financial Supervisory Authorities fully operational.
- Improve quality of education and health to strengthen the labor force and public health.
- Enhance financial inclusion, the business regulatory environment, and quality of infrastructure to promote private sector development.
Continue capacity building to enhance the quality of national statistics:
- Address shortcomings in real and external sector statistics and government finance statistics.
- Gradually address new challenges related to the recording of Joint Venture activities through capacity development by PFTAC and other development partners.

Per capita GDP (2024e): US$2,419.
Population (2024e): 127,317.
Life expectancy at birth (2022): 67.7.
Poverty (2019): Below $2.15 a day: 1.7 percent; Below the national poverty line: 21.9 percent.
Inequality (2019, income shares): Top 10 percent: 22.9; Bottom 20 percent: 9.5.
IMF quota: SDR 11.2 million.
Main export products: Frozen yellowfin tunas, crude coconut oil, self-propelled works trucks, petroleum oil, and copra.
Selected macro indicators (2024–25):
- Real GDP (percent change): 2024: 5.3; 2025 proj.: 3.9.
- Inflation (percent change, average): 2024: 3.0.
- Inflation (end of period): 2024: 6.5.
- Current account including official transfers (in percent of GDP): 2024: -2.0; 2025 proj.: -0.6.
- RERF closing balance (in millions of A$): 2024: 1509; 2025 proj.: 1540.
- Nominal GDP (in millions of A$): 2024: 467; 2025 proj.: 498.
- Nominal GDP (in millions of US$): 2024: 308; 2025 proj.: 313.

Press Release No. 25/247, July 10, 2025.