Kiribati: 2015 Article IV Consultation-Press Release; and Staff Report
IMF Staff Country Reports, July 29, 2015
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- Kiribati: 2015 Article IV Consultation-Press Release; and Staff Report
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Bibliographic details
- Published: July 29, 2015
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513526805.002
Context
- Donor-financed large infrastructure projects, increased public spending, and a pick-up in credit to households have boosted real GDP growth to close to 4 percent in 2014 and to about 3 percent in 2015.
- Inflation remains low, underpinned by lower food and commodity prices.
- Structural constraints to private growth cited: high transportation and communication costs, and an increasing impact of climate change.
- Steps are being taken to reduce the many hurdles to private growth.
Fiscal policy and sustainability
- The recurrent balance was in large surplus in 2014 and is expected to remain positive in 2015, reflecting high revenue from license fees, notwithstanding a large increase in expenditures.
- Under the historic pace of spending the sovereign wealth fund (Revenue Equalization Reserve Fund—RERF) would be depleted in about 20 years.
- Policy recommendation: contain nominal expenditure growth to around 1½ per annum over the next five years (after accommodating climate-change-related costs).
- Policy recommendation: implement transparent and symmetric transfers and withdrawals from the RERF around the specified expenditure path to ensure sustainability.
Structural reforms and public enterprises
- Consensus among donors that significant progress has been achieved on reforms.
- The State-Owned Enterprise (SOE) Reform Act is being implemented in a satisfactory way, as illustrated by the recent successful privatization of the telecommunication company.
- Key outstanding issues include further reforming the energy and copra sectors and improving the investment climate.