{
  "title": "IMF Executive Board Concludes 2023 Article IV Consultation with Tuvalu",
  "publication": "IMF News, July 21, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/07/21/pr23272-tuvalu-imf-executive-board-concludes-2023-article-iv-consultation-with-tuvalu",
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  "summary": "A successful vaccination strategy allowed Tuvalu to lift COVID containment measures at the end of 2022, but the economic cost of the pandemic has been significant. Real GDP growth was -4.",
  "publishDate": "2023-07-21",
  "sections": [
    {
      "heading": "Economic impact and near-term outlook",
      "content": "- Real GDP growth: -4.3 percent in 2020; 1.8 percent in 2021; 0.7 percent estimated for 2022.\n- Growth projection: 3.9 percent in 2023; 3.5 percent in 2024; 2.4 percent in 2025; 2.2 percent in 2026; 2.1 percent in 2027; 2.0 percent in 2028.\n- Inflation: Headline inflation rose to 11.5 percent in 2022. Projected: 5.9 percent in 2023; 3.7 percent in 2024; 3.4 percent in 2025; 3.2 percent in 2026; 2.9 percent in 2027; 2.8 percent in 2028.\n- Drivers: A successful vaccination strategy allowed lifting of COVID containment measures at end-2022; pandemic caused significant economic costs including delays in infrastructure projects and elevated non-capital spending. Recovery expected as construction resumes, shipping bottlenecks ease, and trade and hospitality recover."
    },
    {
      "heading": "Fiscal position, grants, and financing",
      "content": "- Fiscal balance: Overall balance was 8.8 percent of GDP in 2022; projected 1.1 percent of GDP in 2023; -3.3 percent in 2024; -3.8 percent in 2025; -4.4 percent in 2026; -4.9 percent in 2027; (table shows negatives earlier: -1.1 in 2019; 8.2 in 2020; -13.8 in 2021).\n- Revenue and grants (percent of GDP): 111.8 in 2019; 129.4 in 2020; 102.6 in 2021; 119.8 in 2022; 110.5 in 2023; 107.0 in 2024; 101.4 in 2025; 100.5 in 2026; 100.2 in 2027; 99.8 in 2028.\n- Revenue (percent of GDP): 82.9 in 2019; 95.6 in 2020; 86.4 in 2021; 89.0 in 2022; 67.9 in 2023; 72.9 in 2024; 71.0 in 2025; 71.1 in 2026; 71.2 in 2027; 71.0 in 2028.\n- Fishing license fees (percent of GDP): 49.0 in 2019; 58.8 in 2020; 49.2 in 2021; 45.6 in 2022; 38.6 in 2023; 43.6 in 2024; 41.7 in 2025; 41.8 in 2026; 41.9 in 2027; 42.0 in 2028.\n- Grants (percent of GDP): 28.9 in 2019; 33.7 in 2020; 16.2 in 2021; 30.7 in 2022; 42.6 in 2023; 34.2 in 2024; 30.4 in 2025; 29.4 in 2026; 28.6 in 2027.\n- Total expenditure (percent of GDP): 112.9 in 2019; 121.2 in 2020; 116.5 in 2021; 111.0 in 2022; 109.3 in 2023; 105.9 in 2024; 104.7 in 2025; 104.3 in 2026; 104.6 in 2027.\n- Current expenditure (percent of GDP): 70.8 in 2019; 78.6 in 2020; 93.3 in 2021; 98.2 in 2022; 94.7 in 2023; 93.1 in 2024; 92.4 in 2025; 92.0 in 2026.\n- Capital expenditure (percent of GDP): 42.1 in 2019; 46.1 in 2020; 30.1 in 2021; 20.9 in 2022; 24.0 in 2023; 26.1 in 2024; 26.0 in 2025; 25.9 in 2026; 25.7 in 2027.\n- Fiscal support: Fiscal spending in 2023 is supported by strong grant flows, including additional one-off flows estimated at 40 percent of GDP in 2023.\n- Financing components: Consolidated Investment Fund (net, -=increase) entries include -2.0 (2019), 7.0 (2020), -14.2 (2021), 8.4 (2022), 0.3 (2023), 0.0 (2024)."
    },
    {
      "heading": "Balance of payments, reserves, and debt indicators",
      "content": "- Current account balance (percent of GDP): -22.2 in 2019; 16.3 in 2020; 24.1 in 2021; 4.6 in 2022; 2.3 in 2023; -1.3 in 2024; -4.8 in 2025; -5.3 in 2026.\n- Goods and services balance (percent of GDP): -118.7 in 2019; -104.1 in 2020; -101.7 in 2021; -93.4 in 2022; -108.3 in 2023; -105.3 in 2024; -103.4 in 2025; -102.8 in 2026; -102.9 in 2027; -101.9 in 2028.\n- Capital and financial account balance (percent of GDP): 44.7 in 2019; 20.3 in 2020; 32.5 in 2021; 32.7 in 2022; 29.2 in 2023; 19.4 in 2024; 15.5 in 2025; 25.5 in 2026; 24.8 in 2027; 31.9 in 2028.\n- Gross reserves (In $A million): 88.2 in 2019; 98.0 in 2020; 126.3 in 2021; 114.2 in 2022; 119.3 in 2023; 129.5 in 2024; 123.3 in 2025; 122.5 in 2026; 124.4 in 2027.\n- Reserves in months of prospective imports of goods and services: 13 (2019); 14 (2020); 18 (2021); 12 (2022); 11 (2023); 10 (2024); 9 (2025).\n- Gross public debt (percent of GDP): 12.3 in 2019; 10.1 in 2020; 8.0 in 2021; 6.8 in 2022; 5.8 in 2023; 9.3 in 2024; 13.2 in 2025; 17.4 in 2026.\n- External public debt (percent of GDP): 9.4 in 2019; 9.2 in 2020; 6.9 in 2021; 3.6 in 2022; 7.4 in 2023; 11.4 in 2024; 15.8 in 2025.\n- Domestic SOE debt (percent of GDP): 2.7 (2019); 1.6 (2020).\n- Tuvalu Trust Fund (percent of GDP): 237.3 in 2019; 243.7 in 2020; 258.7 in 2021; 224.5 in 2022; 214.8 in 2023; 206.1 in 2024; 199.5 in 2025; 193.7 in 2026; 188.8 in 2027; 184.3 in 2028.\n- Consolidated Investment Fund (percent of GDP): 47.4 in 2019; 51.4 in 2020; 46.3 in 2021; 43.5 in 2022; 39.8 in 2023; 37.6 in 2024; 31.5 in 2025; 29.8 in 2026; 28.3 in 2027; 26.9 in 2028.\n- Tuvalu Survival Fund (percent of GDP): 6.4 in 2019; 6.6 in 2020; 5.6 in 2021; 5.3 in 2022; 5.0 in 2023; 4.8 in 2024.\n- Credit growth (percent change): -6.8 in 2019; 4.5 in 2020; 8.7 in 2021; 14.2 in 2022; 3.1 in 2023.\n- Nominal GDP (In $A million): 77.9 in 2019; 75.2 in 2020; 80.1 in 2021; 85.2 in 2022; 93.8 in 2023; 100.9 in 2024; 107.4 in 2025; 113.5 in 2026; 119.6 in 2027; 125.6 in 2028."
    },
    {
      "heading": "Downside risks and vulnerabilities",
      "content": "- Key downside risks identified:\n  - Delays in donor grants pose large risks to the fiscal outlook and the economy.\n  - Loss of correspondent banking relationships would create severe balance of payments problems.\n  - Lack of effective financial supervision creates contingent risks for the government via the financial sector.\n  - Higher global commodity prices could raise inflation and fiscal expenditure pressures.\n  - Natural disasters and climate change threaten fishing license revenues, human and physical capital, and food and water security."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Executive Directors broadly agreed with staff appraisal, commending effective containment policy and successful vaccine rollout that supported reopening.\n- Directors noted high economic cost of the pandemic, compounded by inflationary pressures, and high dependency on grants, weak financial supervision, fragile correspondent banking relationships, and vulnerability to climate change.\n- Fiscal policy guidance:\n  - Gradual fiscal consolidation necessary to ensure sustainability and build buffers against downside risks.\n  - Consolidation can be achieved through rationalizing expenditures and mobilizing domestic revenues.\n  - Continued Public Financial Management reforms would support easier access to climate finance.\n- Financial sector and payments guidance:\n  - Strengthen financial regulation and supervision.\n  - Support Tuvalu’s connectivity to the global payments system.\n  - Encourage authorities’ plan to join the Asia-Pacific Group on Money Laundering and implement AML/CFT reforms, including through technical assistance.\n  - Pursue digitalization plans mindful not to exacerbate correspondent banking relationship pressures.\n- Structural and resilience measures:\n  - Promote structural reforms to diversify the economy, increase trade integration, and expand exports.\n  - Commendation for ratification of the PACER Plus agreement.\n  - Revamp the Disaster Risk Management Act and enforce building codes to enhance disaster resilience.\n  - Align overseas scholarship strategy with domestic needs to promote human capital development.\n- Capacity building:\n  - Strengthen capacity through technical assistance and training from the Fund and other partners.\n  - Improve data collection and statistical capabilities.\n\nIMF Press Release No. 23/272 — July 21, 2023; IMF Executive Board summary as presented in the Article IV consultation with Tuvalu.\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/2023/07/21/pr23272-tuvalu-imf-executive-board-concludes-2023-article-iv-consultation-with-tuvalu"
    }
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    "Published: July 21, 2023",
    "Real GDP growth: -4.3 percent in 2020; 1.8 percent in 2021; 0.7 percent estimated for 2022.",
    "Growth projection: 3.9 percent in 2023; 3.5 percent in 2024; 2.4 percent in 2025; 2.2 percent in 2026; 2.1 percent in 2027; 2.0 percent in 2028.",
    "Inflation: Headline inflation rose to 11.5 percent in 2022. Projected: 5.9 percent in 2023; 3.7 percent in 2024; 3.4 percent in 2025; 3.2 percent in 2026; 2.9 percent in 2027; 2.8 percent in 2028.",
    "Drivers: A successful vaccination strategy allowed lifting of COVID containment measures at end-2022; pandemic caused significant economic costs including delays in infrastructure projects and elevated non-capital spending. Recovery expected as construction resumes, shipping bottlenecks ease, and trade and hospitality recover.",
    "Fiscal balance: Overall balance was 8.8 percent of GDP in 2022; projected 1.1 percent of GDP in 2023; -3.3 percent in 2024; -3.8 percent in 2025; -4.4 percent in 2026; -4.9 percent in 2027; (table shows negatives earlier: -1.1 in 2019; 8.2 in 2020; -13.8 in 2021).",
    "Revenue and grants (percent of GDP): 111.8 in 2019; 129.4 in 2020; 102.6 in 2021; 119.8 in 2022; 110.5 in 2023; 107.0 in 2024; 101.4 in 2025; 100.5 in 2026; 100.2 in 2027; 99.8 in 2028.",
    "Revenue (percent of GDP): 82.9 in 2019; 95.6 in 2020; 86.4 in 2021; 89.0 in 2022; 67.9 in 2023; 72.9 in 2024; 71.0 in 2025; 71.1 in 2026; 71.2 in 2027; 71.0 in 2028.",
    "Fishing license fees (percent of GDP): 49.0 in 2019; 58.8 in 2020; 49.2 in 2021; 45.6 in 2022; 38.6 in 2023; 43.6 in 2024; 41.7 in 2025; 41.8 in 2026; 41.9 in 2027; 42.0 in 2028.",
    "Grants (percent of GDP): 28.9 in 2019; 33.7 in 2020; 16.2 in 2021; 30.7 in 2022; 42.6 in 2023; 34.2 in 2024; 30.4 in 2025; 29.4 in 2026; 28.6 in 2027.",
    "Total expenditure (percent of GDP): 112.9 in 2019; 121.2 in 2020; 116.5 in 2021; 111.0 in 2022; 109.3 in 2023; 105.9 in 2024; 104.7 in 2025; 104.3 in 2026; 104.6 in 2027.",
    "Current expenditure (percent of GDP): 70.8 in 2019; 78.6 in 2020; 93.3 in 2021; 98.2 in 2022; 94.7 in 2023; 93.1 in 2024; 92.4 in 2025; 92.0 in 2026.",
    "Capital expenditure (percent of GDP): 42.1 in 2019; 46.1 in 2020; 30.1 in 2021; 20.9 in 2022; 24.0 in 2023; 26.1 in 2024; 26.0 in 2025; 25.9 in 2026; 25.7 in 2027.",
    "Fiscal support: Fiscal spending in 2023 is supported by strong grant flows, including additional one-off flows estimated at 40 percent of GDP in 2023.",
    "Financing components: Consolidated Investment Fund (net, -=increase) entries include -2.0 (2019), 7.0 (2020), -14.2 (2021), 8.4 (2022), 0.3 (2023), 0.0 (2024).",
    "Current account balance (percent of GDP): -22.2 in 2019; 16.3 in 2020; 24.1 in 2021; 4.6 in 2022; 2.3 in 2023; -1.3 in 2024; -4.8 in 2025; -5.3 in 2026.",
    "Goods and services balance (percent of GDP): -118.7 in 2019; -104.1 in 2020; -101.7 in 2021; -93.4 in 2022; -108.3 in 2023; -105.3 in 2024; -103.4 in 2025; -102.8 in 2026; -102.9 in 2027; -101.9 in 2028.",
    "Capital and financial account balance (percent of GDP): 44.7 in 2019; 20.3 in 2020; 32.5 in 2021; 32.7 in 2022; 29.2 in 2023; 19.4 in 2024; 15.5 in 2025; 25.5 in 2026; 24.8 in 2027; 31.9 in 2028.",
    "Gross reserves (In $A million): 88.2 in 2019; 98.0 in 2020; 126.3 in 2021; 114.2 in 2022; 119.3 in 2023; 129.5 in 2024; 123.3 in 2025; 122.5 in 2026; 124.4 in 2027.",
    "Reserves in months of prospective imports of goods and services: 13 (2019); 14 (2020); 18 (2021); 12 (2022); 11 (2023); 10 (2024); 9 (2025).",
    "Gross public debt (percent of GDP): 12.3 in 2019; 10.1 in 2020; 8.0 in 2021; 6.8 in 2022; 5.8 in 2023; 9.3 in 2024; 13.2 in 2025; 17.4 in 2026.",
    "External public debt (percent of GDP): 9.4 in 2019; 9.2 in 2020; 6.9 in 2021; 3.6 in 2022; 7.4 in 2023; 11.4 in 2024; 15.8 in 2025.",
    "Domestic SOE debt (percent of GDP): 2.7 (2019); 1.6 (2020).",
    "Tuvalu Trust Fund (percent of GDP): 237.3 in 2019; 243.7 in 2020; 258.7 in 2021; 224.5 in 2022; 214.8 in 2023; 206.1 in 2024; 199.5 in 2025; 193.7 in 2026; 188.8 in 2027; 184.3 in 2028.",
    "Consolidated Investment Fund (percent of GDP): 47.4 in 2019; 51.4 in 2020; 46.3 in 2021; 43.5 in 2022; 39.8 in 2023; 37.6 in 2024; 31.5 in 2025; 29.8 in 2026; 28.3 in 2027; 26.9 in 2028.",
    "Tuvalu Survival Fund (percent of GDP): 6.4 in 2019; 6.6 in 2020; 5.6 in 2021; 5.3 in 2022; 5.0 in 2023; 4.8 in 2024.",
    "Credit growth (percent change): -6.8 in 2019; 4.5 in 2020; 8.7 in 2021; 14.2 in 2022; 3.1 in 2023.",
    "Nominal GDP (In $A million): 77.9 in 2019; 75.2 in 2020; 80.1 in 2021; 85.2 in 2022; 93.8 in 2023; 100.9 in 2024; 107.4 in 2025; 113.5 in 2026; 119.6 in 2027; 125.6 in 2028.",
    "Key downside risks identified:",
    "Executive Directors broadly agreed with staff appraisal, commending effective containment policy and successful vaccine rollout that supported reopening.",
    "Directors noted high economic cost of the pandemic, compounded by inflationary pressures, and high dependency on grants, weak financial supervision, fragile correspondent banking relationships, and vulnerability to climate change.",
    "Fiscal policy guidance:",
    "Financial sector and payments guidance:",
    "Structural and resilience measures:",
    "Capacity building:",
    "[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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