Vanuatu: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Vanuatu

IMF Staff Country Reports, March 22, 2023

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Canonical URL: Vanuatu: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Vanuatu

Following a successful coronavirus disease 2019 containment strategy, the border reopened in July 2022, and tourism is returning to Vanuatu.
Economic activity is expected to be strong in the near term, with real gross domestic product growing around 3.4 percent in 2023, as tourism and construction activities resume.
High imported prices are likely to stoke inflation and push the current account into deficit, while fiscal policy will turn more expansionary.

Real GDP growth: around 3.4 percent in 2023.
Inflation: likely upward pressure due to high imported prices (no exact inflation rate provided).
Current account: projected to move into deficit due to import price pressures.
Fiscal policy stance: expected to become more expansionary as recovery proceeds.

Adopt a credible medium-term fiscal strategy and consolidate public finances.
Enact meaningful reforms to support sustainable recovery.
New revenue mobilization policies, explicitly including a well-designed income tax.
Implement an expenditure rationalization agenda while protecting productive and climate-critical infrastructure spending.
Coordinate fiscal and monetary policy carefully to:
- Keep inflation under control.
- Support growth.
Maintain the exchange rate as a shock absorber.

Exposure to imported price shocks contributing to inflation and external deficits.
Need to protect climate-critical infrastructure in reconstruction and development planning.
Policy areas covered in the consultation include: Anti-money laundering and combating the financing of terrorism (AML/CFT), Crime, Economic and financial statistics, Environment, External debt, External sector statistics, International organization, Monetary policy, Natural disasters, Public debt.