IMF Staff Country Reports

This Selected Issues explores Kiribati’s critical needs for public investment in climate-resilient infrastructure to safeguard the nation's long-term prosperity and assesses the macroeconomic implications of such investments. In order to build moderate resilience, carefully designed fiscal policies and enhanced public investment efficiency are needed to alleviate the fiscal burden, maximize output gains from better infrastructure, and crowd in private investment, while maintaining debt sustainability. This paper analyzes the macroeconomic impacts of stepping up public investment in climate resilience. Results indicate that the moderate adaptation investment dampens the negative impact of natural disasters on gross domestic product (GDP), with a manageable debt-to-GDP increase. To illustrate the impacts of adaptation investment, we compare the real GDP projections in the event of a natural disaster in 2040. Efforts should continue to strengthen local capacity for project execution and infrastructure management. Kiribati can also continue to tap into the expertise offered by development partners through knowledge transfer and technical assistance.