## IMF Executive Board Concludes 2026 Article IV Consultation with The Federated States of Micronesia _IMF News, May 5, 2026_ ## Source details **Canonical URL:** [IMF Executive Board Concludes 2026 Article IV Consultation with The Federated States of Micronesia](https://www.imf.org/en/news/articles/2026/05/05/pr26138-micronesia-imf-executive-board-concludes-2026-article-iv-consultation) ## Other formats - [Markdown version](/en/news/articles/2026/05/05/pr26138-micronesia-imf-executive-board-concludes-2026-article-iv-consultation/index.md) - [Structured JSON version](/en/news/articles/2026/05/05/pr26138-micronesia-imf-executive-board-concludes-2026-article-iv-consultation/index.json) - [Bundle manifest](/en/news/articles/2026/05/05/pr26138-micronesia-imf-executive-board-concludes-2026-article-iv-consultation/bundle-manifest.json) ## Bibliographic details - Published: May 5, 2026 --- ### Growth, inflation, and near-term outlook - 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): - FY2023: 1.1 - FY2024: 2.3 - FY2025: 1.1 - FY2026: 0.7 - FY2027: 1.4 - FY2028: 1.0 - Recent inflation (consumer prices, annual percent change): - FY2022: 5.0 - FY2023: 6.2 - FY2024: 5.4 - FY2025: 3.2 - FY2026: 4.0 - FY2027: 1.7 - FY2028: 2.0 - Drivers: - Downside pressures: real income compression, higher import costs (notably for the relatively fuel intensive fishing sector). - Support to activity: gradual pickup in public investment funded by the Compact of Free Association with the United States. - Risks: slower than envisaged implementation of infrastructure projects, intensifying climate change, prolonged conflict. - Upside: reforms to ease bottlenecks could ignite private sector activity, create jobs and reduce aid dependency. ### Fiscal position, public investment, and trust funds - Fiscal developments: - Fiscal surplus narrowed as revenues normalized following windfall gains and states increased expenditure in response to a greater share of fishing fees. - Public debt declined to 8.9 percent of GDP in FY2025. - Trust funds and public investment: - Balance of trust funds (Compact Trust Fund and FSM Trust Fund) reached 509.6 percent of GDP in FY2025. - Balance of trust funds time series (percent of GDP): - FY2022: 298.1 - FY2023: 325.6 - FY2024: 412.9 - FY2025: 509.6 - FY2026: 517.3 - FY2027: 518.2 - FY2028: 528.4 - FY2029: 539.2 - FY2030: 551.5 - FY2031: 563.0 - Gross Public Investment (percent of GDP): - FY2022: 5.9 - FY2023: 7.3 - FY2024: 9.0 - FY2025: 8.3 - FY2026: 10.2 - FY2027: 18.0 - FY2028: 18.1 - FY2029: 14.5 - FY2030: 12.5 - FY2031: (not provided) - Consolidated government finance highlights (percent of GDP): - Revenue and grants: - FY2022: 76.1 - FY2023: 61.3 - FY2024: 61.5 - FY2025: 60.6 - FY2026: 62.4 - FY2027: 66.6 - FY2028: 69.3 - Revenue: - FY2022: 47.5 - FY2023: 32.2 - FY2024: 32.3 - FY2025: 32.9 - FY2026: 32.4 - Grants: - FY2022: 28.6 - FY2023: 29.1 - FY2024: 29.2 - FY2025: 27.7 - FY2026: 29.9 - Expenditure: - FY2022: 59.4 - FY2023: 63.2 - FY2024: 59.8 - FY2025: 60.2 - FY2026: 62.0 - Net acquisition of nonfinancial assets: - FY2022: 0.4 - FY2023: 2.1 - FY2024: 4.4 - FY2025: 3.9 - FY2026: 6.1 ### External sector, financial sector, and macro indicators - Balance of payments (millions of U.S. dollars): - Trade balance: - FY2022: -183.8 - FY2023: -189.2 - FY2024: -207.7 - FY2025: -204.3 - FY2026: -227.4 - Net services and income: - FY2022: 34.1 - FY2023: 21.4 - FY2024: 17.9 - FY2025: 10.5 - FY2026: 12.1 - Private and official transfers: - FY2022: 218.3 - FY2023: 192.1 - FY2024: 206.5 - FY2025: 212.7 - FY2026: 221.0 - Current account (millions of U.S. dollars): - FY2022: 68.6 - FY2023: 24.4 - FY2024: 16.6 - FY2025: 5.7 - FY2026: -2.2 - Current account (percent of GDP): - FY2022: 16.5 - FY2023: 5.5 - FY2024: 3.5 - FY2025: 3.8 - FY2026: -0.4 - External debt (millions of U.S. dollars; outstanding stock, end of period): - FY2022: 49.8 - FY2023: 45.3 - FY2024: 40.2 - FY2025: 35.1 - FY2026: 37.0 - Financial sector and banking (percent of GDP; end of period): - Loans: - FY2022: 13.2 - FY2023: 10.3 - FY2024: 10.6 - FY2025: 10.8 - FY2026: 11.2 - Deposits: - FY2022: 103.1 - FY2023: 100.0 - FY2024: 92.0 - FY2025: 96.4 - FY2026: 94.3 - Other macro indicators: - Nominal GDP (in millions of U.S. dollars): - FY2022: 415.2 - FY2023: 443.0 - FY2024: 481.1 - FY2025: 501.8 - FY2026: 521.3 - Real effective exchange rate (calendar year, 2010=100): - FY2023: 108.0 - FY2024: 115.1 - FY2025: 126.1 - FY2026: 136.3 ### Key policy recommendations and priorities - 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 Board assessment and next steps - 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. ### Snapshot statistics (selected) - 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 *Source: IMF Executive Board Concludes 2026 Article IV Consultation with The Federated States of Micronesia (Press Release No. 26/138; May 5, 2026).* --- ## References - [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) _Source: https://www.imf.org/en/news/articles/2026/05/05/pr26138-micronesia-imf-executive-board-concludes-2026-article-iv-consultation_