{
  "title": "IMF Executive Board Concludes 2016 Article IV Consultation with Tuvalu",
  "publication": "IMF News, October 4, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2016/10/04/pr16445-tuvalu-imf-executive-board-concludes-2016-article-iv-consultation",
  "canonical": "https://www.imf.org/en/news/articles/2016/10/04/pr16445-tuvalu-imf-executive-board-concludes-2016-article-iv-consultation",
  "overlayPath": "/en/news/articles/2016/10/04/pr16445-tuvalu-imf-executive-board-concludes-2016-article-iv-consultation/index.md",
  "summary": "Real GDP growth:",
  "publishDate": "2016-10-04",
  "sections": [
    {
      "heading": "Macroeconomic outlook",
      "content": "- Real GDP growth:\n  - 2015: 2.6 percent (estimated)\n  - 2016: 4 percent (projected) — \"on account of several large infrastructure projects and recovery spending following Cyclone Pam\"\n  - 2017: 2.3 percent (projected)\n- Inflation (period average):\n  - 2015: 3.2 percent (remained steady)\n  - 2016: 3.5 percent (expected to rise slightly)\n  - 2017: 2.9 percent (projected)\n- Assessment: \"The macroeconomic outlook is stable.\" Recovery spending following Cyclone Pam contributed to near-term pickup."
    },
    {
      "heading": "Fiscal position and public finances",
      "content": "- Fiscal outcomes:\n  - 2015: \"The budget achieved a substantial surplus\" — fourth consecutive year of surplus.\n  - 2016: Fiscal position expected to turn into a small deficit and projected to remain in deficit over the medium term.\n- Drivers of revenues (in percent of GDP):\n  - Revenue and grants: 2015: 123.5; 2016: 124.5; 2017: 113.3\n  - Revenue: 2015: 105.5; 2016: 91.7; 2017: 80.9\n  - Tax revenue: 2015: 19.4; 2016: 17.1; 2017: 17.3\n  - Fishing license fees: 2015: 60.9; 2016: 53.2; 2017: 43.0\n  - Grants: 2015: 32.9; 2016: 32.4\n- Expenditure (in percent of GDP):\n  - Total expenditure: 2015: 86.8; 2016: 116.3; 2017: 127.3\n  - Current expenditure: 2015: 81.0; 2016: 86.6; 2017: 116.1\n  - Wages and salaries (of which): 2015: 31.9; 2016: 32.2; 2017: 36.1\n  - Special Development Expenditure: 2015: 6.2; 2016: 7.4; 2017: 9.2\n- Overall balance (in percent of GDP):\n  - 2012: 9.3\n  - 2013: 26.3\n  - 2014: 36.3\n  - 2015: 7.2\n  - 2016: -2.7\n  - 2017: -4.2\n- Fiscal buffers and funds (stocks in A$ million):\n  - Tuvalu Trust Fund: 2012: 131; 2013: 141; 2014: 144; 2015: 149; 2016: 151; 2017: 155\n  - Consolidated Investment Fund: 2012: 4.5; 2013: 12.2; 2014: 24.3; 2015: 30.8; 2016: 28.9; 2017: 26.2\n  - Tuvalu Survival Fund: 2015: 5.0\n- IMF note: \"With four years of budget surpluses, fiscal buffers have been rebuilt and remain at a comfortable level, even though expenditures have increased rapidly.\""
    },
    {
      "heading": "Balance of payments and reserves",
      "content": "- Selected items (in millions of Australian dollars, unless otherwise indicated):\n  - Nominal GDP: 2012: 38.5; 2013: 39.7; 2014: 43.5; 2015: 46.1; 2016: 48.1\n  - Current account balance: 2012: 6.6; 2013: 0.5; 2014: 8.0; 2015: 3.3; 2016: -1.8; 2017: 17.2\n  - Exports of goods: 2012: 1.2; 2013: 19.3; 2014: 7.6; 2015: -4.0; 2016: -5.7\n  - Exports of goods (percent of GDP): 2012: 19.9; 2013: 18.8; 2014: 19.2; 2015: 19.7; 2016: 20.1; 2017: 20.6\n  - Imports of goods (percent of GDP): 2012: -21.4; 2013: -32.2; 2014: -29.3; 2015: -33.6; 2016: -38.6; 2017: -39.9\n  - Current transfers (net): 2012: 21.2; 2013: 25.6; 2014: 14.9; 2015: 17.8\n  - Capital and financial account balance: 2012: -3.4; 2013: 8.7; 2014: -4.9; 2015: 2.1\n  - .TV domain license fees (component): 2012: 3.7; 2013: 4.4; 2014: 6.3\n  - Capital transfers (net): 2012: 4.7; 2013: 5.1; 2014: 5.8; 2015: 11.3; 2016: 8.6\n  - Gross official reserves (A$ million): 2012: 27.5; 2013: 37.9; 2014: 41.0; 2015: 46.4; 2016: 42.7; 2017: 41.3\n  - Reserves (in months of next year's imports): 2012: 5.4; 2013: 8.3; 2014: 7.1; 2015: 6.5; 2016: 6.1\n- Debt indicators (in percent of GDP unless otherwise indicated):\n  - Gross public debt: 2012: 25.9; 2013: 57.2; 2014: 64.4; 2015: 58.2; 2016: 53.7; 2017: 44.3\n  - External debt: 51.8; 59.8; 54.5; 51.7\n  - Domestic debt: 4.6; 3.8; 0.0"
    },
    {
      "heading": "Risks and vulnerabilities",
      "content": "- Identified risks to the outlook:\n  - Effects of climate change\n  - Volatility in fishing revenues\n  - Volatile global financial conditions that could affect distributions to the budget from the Tuvalu Trust Fund\n- Structural challenges highlighted:\n  - Sustaining investment to mitigate the effects of climate change\n  - Strengthening fiscal frameworks\n  - Public enterprise reform\n  - Financial sector oversight"
    },
    {
      "heading": "Executive Board assessment and recommendations",
      "content": "- Near-term view: Directors \"noted that the near-term macroeconomic outlook is stable and growth is picking up, partly owing to recovery spending following Cyclone Pam.\"\n- Commendations: Progress under the Policy Reform Matrix, 2012-15, and commitment to continue under the national strategy for sustainable development, 2016-2020.\n- Fiscal recommendations:\n  - Sustain adequate fiscal buffers given revenue volatility.\n  - Exercise restraint on recurrent expenditure to sustain buffers and enhance debt sustainability.\n  - Adopt a medium-term fiscal framework that targets a small structural budget surplus to boost resilience.\n  - Continue seeking access to global climate change funding, with the assistance of development partners.\n  - Develop and incorporate disaster costs into budget planning.\n- Public financial management and public enterprise reform:\n  - Improve public financial management, particularly the framework for capital budgeting.\n  - Public enterprise reform to improve corporate management and clearly define and price social services.\n- Financial sector oversight:\n  - Banking commission should conduct a review of non-performing assets and on-site supervision of banks, in collaboration with external advisors.\n- Exchange rate and competitiveness:\n  - \"Directors welcomed the assessment that the exchange system is free of restrictions.\"\n  - Real exchange rate: 2005=100 series — 2012: 103.8; 2013: 102.1; 2014: 97.3; 2015: 91.9 — \"in line with fundamentals.\"\n  - Recommendation: continue to implement the national development strategy to strengthen competitiveness.\n- Statistics and technical assistance:\n  - Directors urged the authorities to make use of technical assistance to improve economic statistics."
    },
    {
      "heading": "Selected social and economic indicators (key levels)",
      "content": "- Population (2014): 9,893\n- Poverty rate (2010): 26.3 percent\n- Per capita GDP (2014 est.): US$3,827\n- Life expectancy (2014): 66 years\n- Main export: Fish\n- Primary school enrollment (2006): 100 percent\n- Key export markets: Fiji, Australia, Japan\n- Secondary school enrollment (2001): 79.5 percent\n- Lending interest rate (in percent): 9.1\n- Exchange rates:\n  - Australian dollars per U.S. dollar (period average): 1.0 (end-period)\n- Sources cited on the page: Tuvalu authorities; PFTAC; SPC; ADB; World Bank; and IMF staff estimates and projections.\n\nPress Release No. 16/445, October 4, 2016, IMF Communications Department.\n\n---\n\n\n References\n\n- Tuvalu and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2016/10/04/pr16445-tuvalu-imf-executive-board-concludes-2016-article-iv-consultation"
    }
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    "Published: October 4, 2016",
    "Real GDP growth:",
    "Inflation (period average):",
    "Assessment: \"The macroeconomic outlook is stable.\" Recovery spending following Cyclone Pam contributed to near-term pickup.",
    "Fiscal outcomes:",
    "Drivers of revenues (in percent of GDP):",
    "Expenditure (in percent of GDP):",
    "Overall balance (in percent of GDP):",
    "Fiscal buffers and funds (stocks in A$ million):",
    "IMF note: \"With four years of budget surpluses, fiscal buffers have been rebuilt and remain at a comfortable level, even though expenditures have increased rapidly.\"",
    "Selected items (in millions of Australian dollars, unless otherwise indicated):",
    "Debt indicators (in percent of GDP unless otherwise indicated):",
    "Identified risks to the outlook:",
    "Structural challenges highlighted:",
    "Near-term view: Directors \"noted that the near-term macroeconomic outlook is stable and growth is picking up, partly owing to recovery spending following Cyclone Pam.\"",
    "Commendations: Progress under the Policy Reform Matrix, 2012-15, and commitment to continue under the national strategy for sustainable development, 2016-2020.",
    "Fiscal recommendations:",
    "Public financial management and public enterprise reform:",
    "Financial sector oversight:",
    "Exchange rate and competitiveness:",
    "Statistics and technical assistance:",
    "Population (2014): 9,893",
    "Poverty rate (2010): 26.3 percent",
    "Per capita GDP (2014 est.): US$3,827",
    "Life expectancy (2014): 66 years",
    "Main export: Fish",
    "Primary school enrollment (2006): 100 percent",
    "Key export markets: Fiji, Australia, Japan",
    "Secondary school enrollment (2001): 79.5 percent",
    "Lending interest rate (in percent): 9.1",
    "Exchange rates:",
    "Sources cited on the page: Tuvalu authorities; PFTAC; SPC; ADB; World Bank; and IMF staff estimates and projections.",
    "[Tuvalu and the IMF](http://www.imf.org/external/country/TUV/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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