## IMF Executive Board Concludes 2025 Article IV Consultation with Vanuatu _IMF News, September 25, 2025_ ## Source details **Canonical URL:** [IMF Executive Board Concludes 2025 Article IV Consultation with Vanuatu](https://www.imf.org/en/news/articles/2025/09/25/pr-25314-vanuatu-imf-executive-board-concludes-2025-article-iv-consultation) ## Other formats - [Markdown version](/en/news/articles/2025/09/25/pr-25314-vanuatu-imf-executive-board-concludes-2025-article-iv-consultation/index.md) - [Structured JSON version](/en/news/articles/2025/09/25/pr-25314-vanuatu-imf-executive-board-concludes-2025-article-iv-consultation/index.json) - [Bundle manifest](/en/news/articles/2025/09/25/pr-25314-vanuatu-imf-executive-board-concludes-2025-article-iv-consultation/bundle-manifest.json) ## Bibliographic details - Published: September 25, 2025 --- ### Overview - The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Vanuatu and endorsed the staff appraisal without a meeting on a lapse-of-time basis. - Vanuatu’s growth is expected to recover to 1.7 percent in 2025 and 2.8 percent in 2026 following recent shocks. - Headline inflation has returned to the Reserve Bank of Vanuatu (RBV)’s target band and is projected to edge higher, remaining within the band. - Foreign reserves are supported by external grants, remittances, and a gradual recovery in tourism earnings, though reserves are on a downward trajectory. - The outlook is subject to significant downside risks and structural challenges, reflecting heightened global uncertainties and domestic vulnerabilities. ### Economic Outlook and Risks - Growth forecasts: - 2025: 1.7 percent - 2026: 2.8 percent - Key recent shocks affecting the outlook: - Major earthquake in Port Vila in December 2024 - Liquidation of Air Vanuatu in May 2024 - Three cyclones in 2023 - Inflation: - Consumer prices (period average) projections: 2.2 for 2025 (table shows 2.2) and unspecified for 2026 in prose; table lists 2.2 (2025) and blank for 2026 column header presents 2.8 for GDP but consumer prices (period average) shows 2.2 (2025) and 2.2 (2026) in table - Consumer prices (end period) historical values: 0.7 (2021), 7.0 (2022), -0.7 (2023) - Balance of risks: - Tilted to the downside - Domestic vulnerabilities: uncertain future of Air Vanuatu, sustainability of the Citizenship program, capacity constraints in public investment execution, delays in reconstruction, domestic connectivity issues - External vulnerabilities: exposure to natural disasters, commodity price volatility, weaker-than-expected global demand, rising global trade tensions ### Fiscal Developments and Policy Recommendations - Fiscal outlook and pressures: - Fiscal deficit projected to widen in 2025 due to weaker revenues and increased post-earthquake rebuilding expenditures, support for households, and Air Vanuatu’s operational needs. - VAT revenues have held up; other revenue streams weakened. - Economic Citizenship Program (ECP) revenues remain significant but face a structural decline. - Planned increases in public employee compensation and allowances are substantial and risk setting a negative precedent on expenditure prioritization. - Heavy reliance on relatively expensive domestic debt and increased monetary financing by the RBV. - Key fiscal figures (table excerpts, in percent of GDP): - Total revenue: 33.0 (2025), 31.9 (2026) - Taxes: 16.1 (2025), 16.8 (2026) - Other revenue: 7.6 (2025), 6.5 (2026) - Grants: 8.6 (2025) - Expenditure: 38.0 (2025), 36.6 (2026) - Expense: 33.1 (2025), 32.4 (2026) - Net acquisition of non financial assets: 4.9 (2025), 4.2 (2026) - Net lending (+)/borrowing (-): -5.0 (2025), -4.7 (2026) - Public and publicly-guaranteed debt (end of period): 49.4 (2025), 52.2 (2026) - Domestic debt: 19.6 (2025) - External debt: 33.2 (2025), 32.5 (2026) - Fiscal policy recommendations: - Deploy careful prioritization and expenditure management in the remainder of 2025 to avoid excessive fiscal expansion. - Implement a medium-term consolidation plan urgently to restore policy buffers and safeguard medium-term fiscal sustainability. - Strengthen the management and financial standing of Air Vanuatu by adopting a credible business plan to avoid a protracted budgetary burden. - Reinforce the fiscal responsibility framework with a clear anchor and credible operational rules. - Rebuild policy buffers through a comprehensive package of robust revenue mobilization and expenditure rationalization measures. - Adopt a prudent debt management strategy to address government funding vulnerabilities and alleviate domestic financing constraints. ### Monetary Policy and Financial Sector - Monetary policy stance: - Monetary policy is broadly appropriate to support the growth recovery amidst a stable inflation outlook and adequate foreign reserves. - RBV should remain prepared to respond if inflationary pressures arise. - To improve effectiveness of OMOs in reducing excess liquidity, monetary financing should be gradually phased out and allowed only under exceptional circumstances going forward. - Ongoing legislative reforms to the RBV Act to strengthen independence and autonomy in line with best practices are critical and should be prioritized. - Safeguards suggested: a strong balance sheet, transparent profit retention and distribution, and removal of political influence in policy decisions. - Financial sector stability: - The financial sector remains stable, but vulnerabilities persist, including elevated non-performing loans and low provisioning. - Strengthening supervisory capacity, enhancing loan recovery frameworks, implementing a modern bank resolution framework are recommended. - Effective implementation of the AML/CFT framework, targeted measures to address risks from the Economic Citizenship Program and virtual assets, and enhanced cross-border cooperation are essential to preserve correspondent banking relationships. - Expanding financial inclusion, particularly in underserved communities, should be pursued. ### Governance, Structural Challenges, and Resilience Building - Governance and transparency: - Improving governance and reducing corruption risks are critical for long-term development. - Effective implementation of the CGBE Act and adequate resourcing of the GBE unit will bolster oversight and evaluation of SOE performance. - Enhance transparency and governance of revenue streams, especially the Citizenship program, and digitize systems for compliance. - Implement the PFM Roadmap and the new financial management system to strengthen PFM transparency. - Structural reforms and resilience: - Strengthen resilience by investing in robust infrastructure and improving disaster preparedness. - Leverage overseas labor mobility programs to support skills development and entrepreneurship. - Invest in quality education and vocational training, promote women’s participation in the formal labor force, and foster an enabling business environment to support private sector growth. ### Key Statistics and Selected Indicators - Population (2021): 312,039 - Per Capita GDP (2021): US$ 2,952 - IMF quota: SDR 23.8 million (0.01 percent of total) - Literacy rate (2018): 87.5 percent - Main products and exports: Kava, coconut oil, copra, cocoa, beef - Key export markets: New Caledonia, Australia, New Zealand - Selected table figures (annual percent change or levels where indicated): - Real GDP: -1.6 (2021), 5.2 (2022), 2.1 (2023), 0.9 (2024), 1.7 (2025), 2.8 (2026) - Consumer prices (period average): 2.3 (2021), 6.7 (2022), 11.2 (2023), 1.2 (2024), 2.2 (2025) - Consumer prices (end period): 0.7 (2021), 7.0 (2022), -0.7 (2023) - Total revenue (percent of GDP): 46.8 (2021), 35.5 (2022), 40.6 (2023), 38.7 (2024), 33.0 (2025), 31.9 (2026) - Net lending (+)/borrowing (-) (percent of GDP): 2.4 (2021), -6.5 (2022), -0.9 (2023), -2.3 (2024), -5.0 (2025), -4.7 (2026) - Public and publicly-guaranteed debt (end of period, percent of GDP): 49.5 (2021), 43.6 (2022), 42.6 (2023), 46.2 (2024), 49.4 (2025), 52.2 (2026) - Gross international reserves (in millions of U.S. dollars): 664.8 (2021), 638.5 (2022), 604.5 (2023), 622.9 (2024), 577.6 (2025), 515.6 (2026) - Gross international reserves (in months of prospective G&S imports): 11.7 (2021), 11.6 (2022), 10.5 (2023), 8.1 (2024) - Current account (percent of GDP): -11.7 (2021), -17.6 (2022), -6.6 (2023), -15.4 (2024), -11.6 (2025) - Travel receipts (percent of GDP): 0.2 (2021), 3.8 (2022), 12.0 (2023), 10.0 (2024), 12.6 (2025) - Gross Remittances (percent of GDP): 20.6 (2021), 17.8 (2022), 15.2 (2023), 15.8 (2024) - Nominal GDP (in millions of U.S. dollars): 921 (2021), 1,035 (2022), 1,125 (2023), 1,090 (2024), 1,119 (2025), 1,176 (2026) - GDP per capita (U.S. dollars): 2951.7 (2021), 3206.3 (2022), 3371.2 (2023), 3156.5 (2024), 3132.9 (2025), 3184.8 (2026) *Executive Board of the International Monetary Fund, Press Release No. 25/314, September 25, 2025.* --- ## References - [Vanuatu and the IMF](http://www.imf.org/external/country/VUT/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) _Source: https://www.imf.org/en/news/articles/2025/09/25/pr-25314-vanuatu-imf-executive-board-concludes-2025-article-iv-consultation_