Federated States of Micronesia: Selected Issues

IMF Staff Country Reports, March 4, 2024

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Federated States of Micronesia: Selected Issues

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Bibliographic details

• Published: March 4, 2024
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400269103.002

Overview

• Focus: model based approach to study public investment, economic growth, and resilience in the Federated States of Micronesia (FSM).
• Central premise: Enhancing public investment management (selection, planning, and implementation) could significantly improve the efficiency of public investment and support economic growth.
• Context: FSM starts a new boost to public investment financed by foreign grants.

Model, Scenarios, and Key Analytical Tools

• Methodology: Uses a dynamic Debt, Investment, Growth, and Natural Disasters model to illustrate effects of policy options.
• Scenario focus:
  • Higher and more resilient growth scenarios under different public investment management reforms.
  • Scenarios assessing private sector participation improvements.
  • Scenarios comparing impacts of different types of public investment on resilience to climate shocks.

Major Findings

• Improving public investment management can significantly raise the efficiency of public investment and support economic growth.
• Reforms that improve public investment management can enhance private sector participation.
• The reforms can produce fiscal benefits through a higher growth dividend.
• Larger investment in climate-resilient infrastructure minimizes gross domestic product loss and allows the economy to bounce back faster after a large natural disaster.

Policy Implications and Recommendations

• Strengthen public investment management across selection, planning, and implementation to:
  • Improve efficiency of public investment.
  • Support higher and more resilient economic growth.
  • Encourage greater private sector participation.
  • Realize fiscal benefits from higher growth dividends.
• Prioritize larger investment in climate-resilient infrastructure to:
  • Minimize GDP losses from climate shocks.
  • Accelerate post-disaster economic recovery.

Subject Areas and Keywords

• Subject: Climate change, Environment, Expenditure, International organization, Monetary policy, National accounts, Natural disasters, Private investment, Public investment spending
• Keywords: B. climate change vulnerabilities in FSM, B. climate change vulnerability, Climate change, climate vulnerability, efficiency scenario, Global, infrastructure investment, Natural disasters, Pacific Islands, Private investment, Public investment spending

Content in this bundle

• Federated States of Micronesia: Selected Issues; IMF Country Report No. 24/67; February 7, 2024
  • Federated States of Micronesia: Selected Issues; IMF Country Report No. 24/67; February 7, 2024 (Markdown version)
  • Federated States of Micronesia: Selected Issues; IMF Country Report No. 24/67; February 7, 2024 (PDF)