IMF Executive Board Concludes 2026 Article IV Consultation with Kiribati
IMF News, May 15, 2026
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- Published: May 15, 2026
Overview
- Kiribati’s recent GDP growth has exceeded that of other Pacific Island countries and poverty has declined significantly.
- Real GDP growth in 2025 is estimated at 4.3 percent, supported by consumption and public investment.
- Growth is projected to moderate to about 3.1 percent in 2026 but the outlook remains highly uncertain amid external shocks and persistent structural challenges.
- Average inflation rose to 6.5 percent in 2025 following a needed one‑off adjustment of domestic energy tariffs and, after beginning to recede, is under renewed pressure amid higher fuel and shipping costs triggered by the Middle East war.
- External public debt declined to 8 percent of GDP in 2025, but Kiribati’s risk of debt distress is assessed to be high due to climate-related vulnerabilities and implicit contingent liabilities.
Economic outlook and risks
- Short- and medium-term growth projections:
- Real GDP (percent change): 2024: 4.6; 2025: 4.3; 2026: 3.1; 2027: 2.4; 2028: 2.2.
- Real GDP growth is expected to gradually decline to around 2 percent over the medium term.
- Inflation and drivers:
- Consumer prices (percent change, average): 2024: 2.5; 2025: 6.5; 2026: 4.5.
- Inflation (end of period): 2024: 2.9; 2025: 6.3; 2026: 3.3.
- Inflation projected to remain elevated in 2026 due to the war in the Middle East but subside over the medium term as Kiribati shifts to using more solar power for electricity generation.
- External and downside risks:
- Risks primarily from a prolonged war in the Middle East and associated trade disruptions, as well as from a sharp tightening in financing conditions.
- Downside tilt from persistently high commodity prices, trade disruptions, potential financial market volatility, and climate shocks.
- Balance of payments:
- Current account including official transfers (in millions of US$): 2024: -60; 2025: -66; 2026: -71; 2027: -70; 2028: -68.
- Current account (In percent of GDP): 2024: -17.4; 2025: -18.8; 2026: -17.7; 2027: -16.8; 2028: -15.7.
Fiscal policy, public finances, and sovereign assets
- Fiscal stance and recent developments:
- Fiscal policy was broadly neutral in 2025.
- The fiscal deficit is expected to widen in 2026 with increased subsidies to manage the impact of higher oil prices.
- Key fiscal indicators (in percent of GDP unless otherwise noted):
- Revenue and grants: 2024: 72; 2025: 74; 2026: 100; 2027: 79; 2028: 81.
- Total domestic revenue: 2024: 62; 2025: 58; 2026: 60; 2027: 59.
- Of which: fishing revenue: 2024: 40; 2025: 38; 2026: 39.
- External grants: 2024: 10; 2025: 15; 2026: 20; 2027: 22.
- Expenditures: 2024: 86; 2025: 88; 2026: 116; 2027: 94; 2028: 93.
- Current expenditures: 2024: 63; 2025: 66; 2026: 64; 2027: 61.
- Development expenditures: 2024: 23; 2025: 52; 2026: 32.
- Domestic recurrent balance 1/: 2024: -42; 2025: -45; 2026: -43; 2027: -41.
- Recurrent fiscal balance (incl. budget support grants): 2024: 0; 2025: -1; 2026: -2.
- Overall balance 2/: 2024: -14; 2025: -17; 2026: -15; 2027: -13.
- Financing: 2024: 14; 2025: 17; 2026: 13.
- Of which: Revenue Equalization Reserve Fund (RERF): 2024: 7; 2025: 6.
- Sovereign wealth fund (RERF) indicators:
- RERF closing balance (in millions of A$): 2024: 1600; 2025: 1677; 2026: 1708; 2027: 1773; 2028: 1855.
- Per capita value (in 2006 A$): 2024: 7786; 2025: 7811; 2026: 7642; 2027: 7617; 2028: 7655.
- Balance (in percent of GDP): 2024: 308; 2025: 310; 2026: 300; 2027: 299; 2028: 301.
- Cash reserve buffer 3/: 2024: 264; 2025: 263; 2026: 240; Closing balance (in percent of GDP): 2024: 51; 2025: 49; 2026: 42.
- In excess of 3-months of current spending and LCDF (in millions of A$): 2024: 164; 2025: 156; 2026: 127; 2027: 128; 2028: 129.
- External debt and debt service (coverage is public external debt only):
- External debt (in millions of US$) 4/: 2024: 29; 2025: 31; 2026: 91; 2027: 9; 2028: 8; [table shows additional rows: 16, 21—preserve as in source].
- External debt service (in millions of US$): [values as in source table].
- External debt service (In percent of exports of goods and services): 2024: 0.6; 2025: 0.5.
- Recommendations on fiscal policy and sovereign assets:
- Use fiscal policy to mitigate the impact of the energy price shock on vulnerable households with temporary, targeted transfers, while allowing domestic fuel prices to gradually adjust.
- Implement a sustained growth-friendly fiscal consolidation over the medium term to rebuild buffers and safeguard debt sustainability while preserving priority spending.
- Adopt a balance-based withdrawal rule from the sovereign wealth fund to preserve its real value, facilitate countercyclical fiscal policy and support medium-term climate adaptation investments.
Institutional capacity, debt management, and structural reforms
- Institutional priorities:
- Strengthen institutional capacity by establishing a debt management framework.
- Improve public financial management, revenue administration, and the quality of national statistics.
- Strengthen regulatory and supervisory institutions to safeguard financial stability.
- Monitor risks from contingent liabilities and ensure borrowing by state-owned enterprises and joint ventures is consistent with development objectives and long-term debt sustainability.
- Structural reform priorities:
- Advance reforms to support private sector development and diversification.
- Strengthen human capital and build climate-resilient infrastructure.
- Improve governance, transparency, and statistical capacity, including through continued capacity building from the Fund.
Executive Board assessment and policy guidance
- Executive Directors welcomed Kiribati’s resilient economic growth and the authorities’ focus on improving human development outcomes that supported an impressive decline in poverty since 2019.
- Directors emphasized high vulnerability to external shocks and downside risks, calling for continued prudent policies and reforms and capacity development support from the Fund and development partners.
- Revenue and expenditure policy guidance:
- Gradually raise revenues and reduce tax expenditures in the fisheries sector and increase excise taxes.
- Fiscal response to the war-related shock should focus on protecting vulnerable households with targeted transfers while allowing domestic fuel prices to gradually adjust.
- Over the medium term, focus on rationalizing recurrent spending on subsidies, improving efficiency and sustainability of social benefits, and strengthening fiscal institutions.
Key statistics and memoranda
- Per capita GDP (2024e): US$2,695.
- Demographics:
- Population (2024e): 127,317.
- Life expectancy at birth (2022): 67.7.
- Poverty (2023-24):
- Below $2.15 a day: 0.04 percent of population.
- Below the national poverty line: 5.5 percent of population.
- IMF quota: SDR 11.2 million.
- Main export products: Crude coconut oil, frozen tuna, and copra.
- Credit to GDP (in percent of GDP): 2024: 12; 2025: …
- Exchange rate (A$/US$ period average): 2024: 1.5; 2025: 1.6.
- Real effective exchange rate (period average): 2024: 83; 2025: 87.
- Nominal GDP:
- (in millions of A$): 2024: 520; 2025: 542; 2026: 569; 2027: 593; 2028: 616.
- (in millions of US$): 2024: 343; 2025: 349; 2026: 401; 2027: 417; 2028: 431.
Source: IMF Executive Board Concluding Statement, "IMF Executive Board Concludes 2026 Article IV Consultation with Kiribati", May 15, 2026.