{
  "title": "IMF Executive Board Concludes 2026 Article IV Consultation with The Federated States of Micronesia",
  "publication": "IMF News, May 5, 2026",
  "sourceUrl": "https://www.imf.org/en/news/articles/2026/05/05/pr26138-micronesia-imf-executive-board-concludes-2026-article-iv-consultation",
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  "summary": "Growth is expected to moderate to 0.7 percent in FY2026 as real income compression and elevated import costs weigh on activity, while inflation is projected at 3.2 percent.",
  "publishDate": "2026-05-05",
  "sections": [
    {
      "heading": "Growth, inflation, and near-term outlook",
      "content": "- Growth is expected to moderate to 0.7 percent in FY2026 as real income compression and elevated import costs weigh on activity.\n- Inflation is projected at 3.2 percent in 2026 reflecting gradual passthrough of higher oil prices due to the conflict in the Middle East.\n- Recent historical and projected real GDP (annual percent change):\n  - FY2023: 1.1\n  - FY2024: 2.3\n  - FY2025: 1.1\n  - FY2026: 0.7\n  - FY2027: 1.4\n  - FY2028: 1.0\n- Recent inflation (consumer prices, annual percent change):\n  - FY2022: 5.0\n  - FY2023: 6.2\n  - FY2024: 5.4\n  - FY2025: 3.2\n  - FY2026: 4.0\n  - FY2027: 1.7\n  - FY2028: 2.0\n- Drivers:\n  - Downside pressures: real income compression, higher import costs (notably for the relatively fuel intensive fishing sector).\n  - Support to activity: gradual pickup in public investment funded by the Compact of Free Association with the United States.\n  - Risks: slower than envisaged implementation of infrastructure projects, intensifying climate change, prolonged conflict.\n  - Upside: reforms to ease bottlenecks could ignite private sector activity, create jobs and reduce aid dependency."
    },
    {
      "heading": "Fiscal position, public investment, and trust funds",
      "content": "- Fiscal developments:\n  - Fiscal surplus narrowed as revenues normalized following windfall gains and states increased expenditure in response to a greater share of fishing fees.\n  - Public debt declined to 8.9 percent of GDP in FY2025.\n- Trust funds and public investment:\n  - Balance of trust funds (Compact Trust Fund and FSM Trust Fund) reached 509.6 percent of GDP in FY2025.\n  - Balance of trust funds time series (percent of GDP):\n    - FY2022: 298.1\n    - FY2023: 325.6\n    - FY2024: 412.9\n    - FY2025: 509.6\n    - FY2026: 517.3\n    - FY2027: 518.2\n    - FY2028: 528.4\n    - FY2029: 539.2\n    - FY2030: 551.5\n    - FY2031: 563.0\n  - Gross Public Investment (percent of GDP):\n    - FY2022: 5.9\n    - FY2023: 7.3\n    - FY2024: 9.0\n    - FY2025: 8.3\n    - FY2026: 10.2\n    - FY2027: 18.0\n    - FY2028: 18.1\n    - FY2029: 14.5\n    - FY2030: 12.5\n    - FY2031:  (not provided)\n- Consolidated government finance highlights (percent of GDP):\n  - Revenue and grants:\n    - FY2022: 76.1\n    - FY2023: 61.3\n    - FY2024: 61.5\n    - FY2025: 60.6\n    - FY2026: 62.4\n    - FY2027: 66.6\n    - FY2028: 69.3\n  - Revenue:\n    - FY2022: 47.5\n    - FY2023: 32.2\n    - FY2024: 32.3\n    - FY2025: 32.9\n    - FY2026: 32.4\n  - Grants:\n    - FY2022: 28.6\n    - FY2023: 29.1\n    - FY2024: 29.2\n    - FY2025: 27.7\n    - FY2026: 29.9\n  - Expenditure:\n    - FY2022: 59.4\n    - FY2023: 63.2\n    - FY2024: 59.8\n    - FY2025: 60.2\n    - FY2026: 62.0\n  - Net acquisition of nonfinancial assets:\n    - FY2022: 0.4\n    - FY2023: 2.1\n    - FY2024: 4.4\n    - FY2025: 3.9\n    - FY2026: 6.1"
    },
    {
      "heading": "External sector, financial sector, and macro indicators",
      "content": "- Balance of payments (millions of U.S. dollars):\n  - Trade balance:\n    - FY2022: -183.8\n    - FY2023: -189.2\n    - FY2024: -207.7\n    - FY2025: -204.3\n    - FY2026: -227.4\n  - Net services and income:\n    - FY2022: 34.1\n    - FY2023: 21.4\n    - FY2024: 17.9\n    - FY2025: 10.5\n    - FY2026: 12.1\n  - Private and official transfers:\n    - FY2022: 218.3\n    - FY2023: 192.1\n    - FY2024: 206.5\n    - FY2025: 212.7\n    - FY2026: 221.0\n  - Current account (millions of U.S. dollars):\n    - FY2022: 68.6\n    - FY2023: 24.4\n    - FY2024: 16.6\n    - FY2025: 5.7\n    - FY2026: -2.2\n  - Current account (percent of GDP):\n    - FY2022: 16.5\n    - FY2023: 5.5\n    - FY2024: 3.5\n    - FY2025: 3.8\n    - FY2026: -0.4\n- External debt (millions of U.S. dollars; outstanding stock, end of period):\n  - FY2022: 49.8\n  - FY2023: 45.3\n  - FY2024: 40.2\n  - FY2025: 35.1\n  - FY2026: 37.0\n- Financial sector and banking (percent of GDP; end of period):\n  - Loans:\n    - FY2022: 13.2\n    - FY2023: 10.3\n    - FY2024: 10.6\n    - FY2025: 10.8\n    - FY2026: 11.2\n  - Deposits:\n    - FY2022: 103.1\n    - FY2023: 100.0\n    - FY2024: 92.0\n    - FY2025: 96.4\n    - FY2026: 94.3\n- Other macro indicators:\n  - Nominal GDP (in millions of U.S. dollars):\n    - FY2022: 415.2\n    - FY2023: 443.0\n    - FY2024: 481.1\n    - FY2025: 501.8\n    - FY2026: 521.3\n  - Real effective exchange rate (calendar year, 2010=100):\n    - FY2023: 108.0\n    - FY2024: 115.1\n    - FY2025: 126.1\n    - FY2026: 136.3"
    },
    {
      "heading": "Key policy recommendations and priorities",
      "content": "- Expedite climate-resilient public investment and improve project quality, with the support of development partners.\n- Build consensus to reignite reforms that would support a vibrant private sector and help create high-quality jobs.\n- Carefully balance the medium-term fiscal strategy to preserve fiscal buffers while financing development goals and climate adaptation needs.\n- Anchor fiscal policy in a credible medium-term framework and strengthen public financial and investment management, particularly at the state level.\n- Foster private sector investments and strengthen revenue mobilization, including plans to modernize the tax system.\n- Continue reliance on grants and concessional borrowing to safeguard long-term fiscal sustainability; prudent use of trust funds to finance public investment is appropriate.\n- Strengthen monitoring of the financial sector given a recent increase in nonperforming loans; promote financial deepening through digital banking and measures to close information gaps.\n- Strengthen coordination across national and state governments to accelerate structural reforms, including streamlining laws and regulations related to foreign direct investment, business regulations, and land use.\n- Support job creation and address skill mismatches to mitigate emigration pressures.\n- Integrate climate‑specific provisions in infrastructure planning and continue improvements in disaster risk financing layering and development of the National Adaptation Plan.\n- Support effective decision‑making through timely publication of statistics."
    },
    {
      "heading": "Executive Board assessment and next steps",
      "content": "- Executive Directors agreed with the thrust of the staff appraisal and highlighted the country’s progress on development goals, under challenging circumstances.\n- Directors welcomed the renewal of the Compact of Free Association but noted medium‑term growth prospects remain subdued due to capacity constraints, sustained emigration, and intensifying effects of climate change.\n- Directors underscored the importance of IMF and development partner support to strengthen capacity and reform implementation.\n- It is expected that the next Article IV consultation with the Federated States of Micronesia will be held on a 24‑month cycle."
    },
    {
      "heading": "Snapshot statistics (selected)",
      "content": "- Nominal GDP (FY2023): US$443 million\n- Population (FY2023): 94,654\n- GDP per capita (FY2023): US$4,680\n- IMF Quota: SDR 7.2 million\n- Public debt (FY2025): 8.9 percent of GDP\n- Balance of trust funds (FY2025): 509.6 percent of GDP\n\nSource: IMF Executive Board Concludes 2026 Article IV Consultation with The Federated States of Micronesia (Press Release No. 26/138; May 5, 2026).\n\n---\n\n\n References\n\n- Federated States of Micronesia and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- www.imf.org/fsm\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/2026/05/05/pr26138-micronesia-imf-executive-board-concludes-2026-article-iv-consultation"
    }
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    "Published: May 5, 2026",
    "Growth is expected to moderate to 0.7 percent in FY2026 as real income compression and elevated import costs weigh on activity.",
    "Inflation is projected at 3.2 percent in 2026 reflecting gradual passthrough of higher oil prices due to the conflict in the Middle East.",
    "Recent historical and projected real GDP (annual percent change):",
    "Recent inflation (consumer prices, annual percent change):",
    "Drivers:",
    "Fiscal developments:",
    "Trust funds and public investment:",
    "Consolidated government finance highlights (percent of GDP):",
    "Balance of payments (millions of U.S. dollars):",
    "External debt (millions of U.S. dollars; outstanding stock, end of period):",
    "Financial sector and banking (percent of GDP; end of period):",
    "Other macro indicators:",
    "Expedite climate-resilient public investment and improve project quality, with the support of development partners.",
    "Build consensus to reignite reforms that would support a vibrant private sector and help create high-quality jobs.",
    "Carefully balance the medium-term fiscal strategy to preserve fiscal buffers while financing development goals and climate adaptation needs.",
    "Anchor fiscal policy in a credible medium-term framework and strengthen public financial and investment management, particularly at the state level.",
    "Foster private sector investments and strengthen revenue mobilization, including plans to modernize the tax system.",
    "Continue reliance on grants and concessional borrowing to safeguard long-term fiscal sustainability; prudent use of trust funds to finance public investment is appropriate.",
    "Strengthen monitoring of the financial sector given a recent increase in nonperforming loans; promote financial deepening through digital banking and measures to close information gaps.",
    "Strengthen coordination across national and state governments to accelerate structural reforms, including streamlining laws and regulations related to foreign direct investment, business regulations, and land use.",
    "Support job creation and address skill mismatches to mitigate emigration pressures.",
    "Integrate climate‑specific provisions in infrastructure planning and continue improvements in disaster risk financing layering and development of the National Adaptation Plan.",
    "Support effective decision‑making through timely publication of statistics.",
    "Executive Directors agreed with the thrust of the staff appraisal and highlighted the country’s progress on development goals, under challenging circumstances.",
    "Directors welcomed the renewal of the Compact of Free Association but noted medium‑term growth prospects remain subdued due to capacity constraints, sustained emigration, and intensifying effects of climate change.",
    "Directors underscored the importance of IMF and development partner support to strengthen capacity and reform implementation.",
    "It is expected that the next Article IV consultation with the Federated States of Micronesia will be held on a 24‑month cycle.",
    "Nominal GDP (FY2023): US$443 million",
    "Population (FY2023): 94,654",
    "GDP per capita (FY2023): US$4,680",
    "IMF Quota: SDR 7.2 million",
    "Public debt (FY2025): 8.9 percent of GDP",
    "Balance of trust funds (FY2025): 509.6 percent of GDP",
    "[Federated States of Micronesia and the IMF](http://www.imf.org/external/country/FSM/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/)",
    "[www.imf.org/fsm](https://www.imf.org/en/countries/fsm)",
    "[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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