{ "title": "IMF Executive Board Concludes 2023 Article IV Consultation with Kiribati", "publication": "IMF News, September 15, 2023", "sourceUrl": "https://www.imf.org/en/news/articles/2023/09/15/pr23314-imf-concludes-2023-article-iv-consultation-with-kiribati", "canonical": "https://www.imf.org/en/news/articles/2023/09/15/pr23314-imf-concludes-2023-article-iv-consultation-with-kiribati", "overlayPath": "/en/news/articles/2023/09/15/pr23314-imf-concludes-2023-article-iv-consultation-with-kiribati/index.md", "summary": "The economy continued to expand after the removal of all COVID 19 restrictions in the second half of 2022. Due to supportive fiscal policies, the economy recovered strongly in 2021, with real GDP growing 7.9 percent from a contraction of 1.4 percent in 2020.", "publishDate": "2023-09-15", "sections": [ { "heading": "Economic performance and outlook", "content": "- Real GDP grew 7.9 percent in 2021 after a contraction of 1.4 percent in 2020.\n- Real GDP is estimated to have slowed to 1.2 percent in 2022 due to a domestic COVID‑19 outbreak, lockdown restrictions, and a severe drought affecting the agricultural sector.\n- Removal of COVID‑19 restrictions and border reopening in August 2022 boosted growth.\n- Real GDP growth is projected at 2.5 percent in 2023 as large infrastructure projects resume and weather conditions improve.\n- In the medium term, real GDP growth is projected to converge to its historical average of 2 percent.\n- Executive Directors assessed that risks to the outlook are mainly on the downside." }, { "heading": "Inflation and external position", "content": "- Inflation averaged 5.3 percent in 2022, driven by a recovery in domestic demand, supply shortages, elevated commodity prices, and freight costs.\n- Headline inflation is projected to increase to 8.6 percent in 2023 due to a low base in the first half of 2022 and delayed pass‑through of normalizing global commodity prices and freight costs.\n- The current account is expected to swing from a surplus to a deficit of 4 percent of GDP in 2022 because of higher import prices and lower fishing revenues.\n- The current account is expected to return to a surplus of 8 percent of GDP in 2023, though the surplus will remain below the historical average owing to increased imports for infrastructure projects.\n- Kiribati’s external position is assessed to be broadly in line with the level implied by fundamentals and desirable policies." }, { "heading": "Fiscal position and policy recommendations", "content": "- IMF staff and Executive Directors recommend fiscal consolidation to reduce fiscal risks stemming from volatile fishing revenues and dependence on donor grants.\n- Policy recommendations include:\n - Consolidating recurrent spending.\n - Improving targeting and efficiency of the social safety net.\n - Greater revenue mobilization.\n - Development of a sustainable medium‑term fiscal framework that integrates rules‑based withdrawals from the Revenue Equalization Reserve Fund (RERF).\n - Provisioning for climate change adaptation costs in the budget.\n- Authorities’ ongoing public financial management reforms are commended and should continue, including:\n - Timely implementation of the Integrated Financial and Management Information System (IFMIS) for budget execution.\n - Strengthening cash flow management.\n - Finalizing an updated Public Financial Management Act.\n - Strengthening budget planning and publishing fiscal reports more regularly.\n - Executing effective controls over cash balances and improving procurement controls." }, { "heading": "State-owned enterprises and structural reforms", "content": "- It is essential to place SOEs on a commercial and sustainable footing to reduce fiscal pressures.\n- Recommendations for SOEs include:\n - Recalibrating SOE tariffs to improve financial viability while protecting the most vulnerable.\n - Strengthening the SOE monitoring unit’s capacity to analyze and monitor SOE activities, risks, and performance.\n - Ensuring SOEs improve financial management and publish audited financial statements in a timely manner.\n - Continuing efforts to divest and outsource SOE activities.\n - Phasing out SOE tax exemptions to level the playing field with the private sector.\n- Structural reform recommendations to boost export competitiveness and private sector development:\n - Reform the copra subsidy program.\n - Improve connectivity through better air transport, ports, and shipping services.\n - Boost the telecommunications network.\n - Build a skilled workforce.\n - Enhance access to finance." }, { "heading": "Natural resource management and data/statistics", "content": "- Authorities should continue to better utilize natural resources:\n - Build on approvals of the Environment Act and Fisheries Act by developing regulations and monitoring capacity for enforcement.\n - Reopening the Phoenix Islands Protected Area (PIPA) to commercial fishing should be carefully designed with a fully developed marine spatial plan to ensure sustainability and preserve marine biodiversity.\n- Continued efforts to build statistical capacity are encouraged to facilitate data‑based policy making:\n - Strengthen institutional capacity to produce high‑quality national accounts, government finance statistics, and financial sector data in a timely manner.\n - Implement the IMF’s Enhanced General Data Dissemination System (e‑GDDS) by publishing economic data on a National Summary Data Page." }, { "heading": "Key statistics (Table 1 highlights, 2019–28 where shown)", "content": "- Real GDP (percent change):\n - 2019: -2.1\n - 2020: -1.4\n - 2021: 7.9\n - 2022 (Prel. Est.): 1.2\n - 2023 (Proj.): 2.5\n - 2024 (Proj.): 2.4\n - 2025 (Proj.): 2.3\n - 2026 (Proj.): 2.1\n- Consumer prices (percent change, average):\n - 2019: -1.8\n - 2020: 2.6\n - 2021: 5.3\n - 2022 (Prel. Est.): 8.6\n - 2023 (Proj.): 4.5\n - 2024 (Proj.): 1.9\n - 2025 (Proj.): 1.8\n- Central government finance (percent of GDP):\n - Revenue and grants: 2019: 147; 2020: 132; 2021: 100; 2022: 91; 2023: 102; 2024: 105; 2025: 104; 2026: 98; 2027: 97\n - Total domestic revenue: 2019: 110; 2020: 94; 2021: 81; 2022: 67; 2023: 70; 2024: 71; 2025: 72; 2026: 74; 2027: 73\n - Of which: fishing revenue: 2019: 90; 2020: 56; 2021: 44; 2022: 45; 2023: 47; 2024: 49; 2025: 48\n - External grants: 2019: 37; 2020: 38; 2021: 19; 2022: 25; 2023: 33; 2024: 34; 2025: 29; 2026: 24\n - Expenditures: 2019: 134; 2020: 127; 2021: 112; 2022: 111; 2023: 114; 2024: 117; 2025: 116; 2026: 113\n - Current: 2019: 79; 2020: 85; 2021: 83; 2022: 78; 2023: 77\n - Development: 2019: 26; 2020: 28; 2021: 35; 2022: 36\n - Domestic recurrent balance 1/: 2019: -46; 2020: -56; 2021: -60; 2022: -61; 2023: -55; 2024: -53; 2025: -52\n - Recurrent fiscal balance (incl. budget support grants): 2019: 18; 2020: 0; 2021: -9; 2022: -1; 2023: -2; 2024: 2; 2025: -3\n - Overall balance 2/: 2019: 13; 2020: 4; 2021: -11; 2022: -20; 2023: -12; 2024: -10; 2025: -15\n - Financing: 2019: -13; 2020: -4; 2021: 11; 2022: 20; 2023: 12; 2024: 10; 2025: 15\n - Of which: Revenue Equalization Reserve Fund (RERF): 2019: 6\n- RERF closing balance (millions of A$):\n - 2019: 1,153\n - 2020: 1,172\n - 2021: 1,353\n - 2022: 1,194\n - 2023 (Proj.): 1,115\n - 2024 (Proj.): 1,200\n - 2025 (Proj.): 1,291\n - 2026 (Proj.): 1,390\n - 2027 (Proj.): 1,512\n - 2028 (Proj.): 1,640\n- RERF per capita value (2006 A$):\n - 2019: 7,322\n - 2020: 7,262\n - 2021: 8,032\n - 2022: 6,547\n - 2023 (Proj.): 5,713\n - 2024 (Proj.): 5,871\n - 2025 (Proj.): 6,053\n - 2026 (Proj.): 6,262\n - 2027 (Proj.): 6,550\n - 2028 (Proj.): 6,829\n- RERF balance (in percent of GDP):\n - 2019: 457\n - 2020: 454\n - 2021: 447\n - 2022: 370\n - 2023: 311\n - 2024: 313\n - 2025: 323\n - 2026: 334\n - 2027: 350\n - 2028: 365\n- Cash reserve buffer 3/ (millions of A$):\n - 2019: 180\n - 2020: 278\n - 2021: 216\n - 2022: 198\n - 2023 (Proj.): 175\n - 2024 (Proj.): 172\n - 2025 (Proj.): 168\n - 2026 (Proj.): 163\n - 2027 (Proj.): 159\n - 2028 (Proj.): 155\n- Closing balance (in percent of GDP): 108; 61; 42; 39 (periods as shown in table)\n- In excess of 3‑months of current spending and LCDF (millions of A$): 118; 219; 144; 122; 95; 86; 80; 62; 54 (periods as shown in table)\n- Balance of payments - Current account including official transfers (In millions of US$): 87; 21; 27; 32 (periods as shown in table)\n- Current account (In percent of GDP): 40; 9; 8 (periods as shown in table)\n- External debt (millions of US$) 4/: 157; 195; 22; 17; 23; 41; 53; 63 (periods as shown in table)\n- External debt service (millions of US$): 1.5; 3.0; 3.5 (periods as shown in table)\n- External debt service (In percent of exports of goods and services): 0.8; 1.3; 1.0; 1.1 (periods as shown in table)\n- Nominal GDP (millions of A$): 2019: 252; 2020: 258; 2021: 303; 2022: 322; 2023 (Proj.): 358; 2024 (Proj.): 383; 2025 (Proj.): 400; 2026 (Proj.): 416; 2027 (Proj.): 432; 2028 (Proj.): 449\n- Nominal GDP (millions of US$): 2019: 178; 2020: 228; 2021: 224; 2022: 248; 2023 (Proj.): 263; 2024 (Proj.): 273; 2025 (Proj.): 284; 2026 (Proj.): 295; 2027 (Proj.): 306\n\nIMF Communications Department, Press Release No. 23/314, September 15, 2023 — Executive Board endorsed the staff appraisal on a lapse-of-time basis.\n\n---\n\n\n References\n\n- Kiribati and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/09/15/pr23314-imf-concludes-2023-article-iv-consultation-with-kiribati" } ], "bullets": [ "[Markdown version](/en/news/articles/2023/09/15/pr23314-imf-concludes-2023-article-iv-consultation-with-kiribati/index.md)", "[Structured JSON version](/en/news/articles/2023/09/15/pr23314-imf-concludes-2023-article-iv-consultation-with-kiribati/index.json)", "[Bundle manifest](/en/news/articles/2023/09/15/pr23314-imf-concludes-2023-article-iv-consultation-with-kiribati/bundle-manifest.json)", "Published: September 15, 2023", "Real GDP grew 7.9 percent in 2021 after a contraction of 1.4 percent in 2020.", "Real GDP is estimated to have slowed to 1.2 percent in 2022 due to a domestic COVID‑19 outbreak, lockdown restrictions, and a severe drought affecting the agricultural sector.", "Removal of COVID‑19 restrictions and border reopening in August 2022 boosted growth.", "Real GDP growth is projected at 2.5 percent in 2023 as large infrastructure projects resume and weather conditions improve.", "In the medium term, real GDP growth is projected to converge to its historical average of 2 percent.", "Executive Directors assessed that risks to the outlook are mainly on the downside.", "Inflation averaged 5.3 percent in 2022, driven by a recovery in domestic demand, supply shortages, elevated commodity prices, and freight costs.", "Headline inflation is projected to increase to 8.6 percent in 2023 due to a low base in the first half of 2022 and delayed pass‑through of normalizing global commodity prices and freight costs.", "The current account is expected to swing from a surplus to a deficit of 4 percent of GDP in 2022 because of higher import prices and lower fishing revenues.", "The current account is expected to return to a surplus of 8 percent of GDP in 2023, though the surplus will remain below the historical average owing to increased imports for infrastructure projects.", "Kiribati’s external position is assessed to be broadly in line with the level implied by fundamentals and desirable policies.", "IMF staff and Executive Directors recommend fiscal consolidation to reduce fiscal risks stemming from volatile fishing revenues and dependence on donor grants.", "Policy recommendations include:", "Authorities’ ongoing public financial management reforms are commended and should continue, including:", "It is essential to place SOEs on a commercial and sustainable footing to reduce fiscal pressures.", "Recommendations for SOEs include:", "Structural reform recommendations to boost export competitiveness and private sector development:", "Authorities should continue to better utilize natural resources:", "Continued efforts to build statistical capacity are encouraged to facilitate data‑based policy making:", "Real GDP (percent change):", "Consumer prices (percent change, average):", "Central government finance (percent of GDP):", "RERF closing balance (millions of A$):", "RERF per capita value (2006 A$):", "RERF balance (in percent of GDP):", "Cash reserve buffer 3/ (millions of A$):", "Closing balance (in percent of GDP): 108; 61; 42; 39 (periods as shown in table)", "In excess of 3‑months of current spending and LCDF (millions of A$): 118; 219; 144; 122; 95; 86; 80; 62; 54 (periods as shown in table)", "Balance of payments - Current account including official transfers (In millions of US$): 87; 21; 27; 32 (periods as shown in table)", "Current account (In percent of GDP): 40; 9; 8 (periods as shown in table)", "External debt (millions of US$) 4/: 157; 195; 22; 17; 23; 41; 53; 63 (periods as shown in table)", "External debt service (millions of US$): 1.5; 3.0; 3.5 (periods as shown in table)", "External debt service (In percent of exports of goods and services): 0.8; 1.3; 1.0; 1.1 (periods as shown in table)", "Nominal GDP (millions of A$): 2019: 252; 2020: 258; 2021: 303; 2022: 322; 2023 (Proj.): 358; 2024 (Proj.): 383; 2025 (Proj.): 400; 2026 (Proj.): 416; 2027 (Proj.): 432; 2028 (Proj.): 449", "Nominal GDP (millions of US$): 2019: 178; 2020: 228; 2021: 224; 2022: 248; 2023 (Proj.): 263; 2024 (Proj.): 273; 2025 (Proj.): 284; 2026 (Proj.): 295; 2027 (Proj.): 306", "[Kiribati and the IMF](http://www.imf.org/external/country/KIR/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/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2023/09/15/pr23314-imf-concludes-2023-article-iv-consultation-with-kiribati/index.md", "json": "/en/news/articles/2023/09/15/pr23314-imf-concludes-2023-article-iv-consultation-with-kiribati/index.json", "bundleManifest": "/en/news/articles/2023/09/15/pr23314-imf-concludes-2023-article-iv-consultation-with-kiribati/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T02:20:59.165Z" }