Tuvalu: 2021 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Tuvalu
IMF Staff Country Reports, August 4, 2021
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- Tuvalu: 2021 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Tuvalu
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Bibliographic details
- Published: August 4, 2021
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513591476.002
Economic impact of COVID-19 and near-term outlook
- Swift implementation of containment measures and limited spillovers from tourism allowed Tuvalu to avoid a recession in 2020.
- COVID-related fiscal spending was financed by buoyant fishing revenues and donor grants.
- The economy is expected to expand by 2.5 percent in 2021.
- The 2021 expansion is supported by fiscal expenditures and resumption of infrastructure projects.
Fiscal situation and risks
- Fiscal support in 2020 was financed by:
- Buoyant fishing revenues.
- Donor grants.
- Uncertainty around donor commitments complicates fiscal planning.
Structural vulnerabilities
- Tuvalu is characterized as a fragile Pacific micro-state.
- Key structural weaknesses:
- Vulnerability to the effects of climate change.
- An economy dominated by the public sector.
- A narrow revenue base.
Policy implications and priorities
- Maintain fiscal flexibility given uncertainty in donor funding.
- Prioritize resumption and efficient execution of infrastructure projects to support the recovery.
- Address long-term structural challenges including diversification of the revenue base and resilience to climate change.
Tuvalu: 2021 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Tuvalu
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