## IMF Staff Completes 2019 Article IV Mission to Nauru

_IMF News, September 25, 2019_

## Source details

**Canonical URL:** [IMF Staff Completes 2019 Article IV Mission to Nauru](https://www.imf.org/en/news/articles/2019/09/25/pr19353-nauru-imf-staff-completes-2019-article-iv-mission)

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## Bibliographic details
- Published: September 25, 2019

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### Mission overview
- IMF team led by Stella Kaendera visited Nauru during September 16-26 to hold discussions with the Nauruan authorities and other stakeholders on the 2019 Article IV Consultation.
- This is the second consultation since Nauru became the 189th member of the IMF in April 2016.
- End-of-Mission press releases convey preliminary findings; staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

### Economic outlook and key findings
- Growth picked up to 5.7 percent in FY2018, boosted by RPC related activity, fisheries and preparations for the Pacific Island Forum.
- Growth slowed in FY2019; the medium-term outlook depends on:
  - the level of RPC activity in the future,
  - fishing revenues,
  - completion of infrastructure projects.
- The outlook is subject to downside risks, including volatility in commodity prices growth and climate change.
- The reduction in RPC activity will reduce revenue available to the government to finance its programs.

### Fiscal policy, buffers, and debt
- Fiscal spending would have to adjust to maintain sufficient cash buffers and continue contributing to the Trust Fund.
- The FY2021 budget offers an opportunity to:
  - begin reorienting spending priorities,
  - reduce spending in non-priority areas,
  - better manage subsidies and social programs.
- Implementing public finance management reforms would improve the efficiency of spending.
- Resolving and reconciling old debts should be expedited to bring down the level of debt.

### Tax reform and revenue mobilization
- Continued focus on tax reform is welcome and would help in generating revenue to partially cover the loss in the RPC revenue.
- Tax reform offers an opportunity to make the tax system more efficient, fair and equitable.
- The focus on introducing a consumption tax in the near term is appropriate.
- For the reform to yield expected results, clear policy guidance is needed on:
  - goals of policy change,
  - sequencing and timing for implementation,
  - tax administration modernization including tax payer services.

### Climate change fiscal implications
- Costs of adapting to climate change will weigh on the budget.
- Developing a medium-term fiscal framework that can enhance economic resilience to climate change is important.
- Transparent budget management would help secure climate change financing from donors.

### Private sector, SOEs, and structural reforms
- Private sector development is needed to:
  - promote inclusive growth,
  - broaden the base of the economy,
  - create jobs,
  - develop skills.
- Steps should be taken to improve the ease of doing business in Nauru, based on regularized dialogue with the private sector.
- Improving SOE performance through more effective management and monitoring would create efficient enterprises and reduce the burden on the budget.
- Financial sector reforms should continue.
- The undersea cable is expected to improve Nauru’s connectivity and offer new growth opportunities.

### IMF support
- The IMF stands ready to support the government’s reform efforts through policy advice and the development of better capacity for economic analysis and policy formulation.

*Press Release No. 19/353 — IMF Communications Department, September 25, 2019.*

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## References

- [Republic of Naoero and the IMF](https://www.imf.org/en/news/searchnews)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Press Release 16/167](http://www.imf.org/external/np/sec/pr/2016/pr16167.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2019/09/25/pr19353-nauru-imf-staff-completes-2019-article-iv-mission_