Press Release No. 08/87

Press Release: Statement at the Conclusion of an IMF Staff Mission to Kiribati

April 21, 2008

The following statement was issued in Tarawa on February 26, 2008, after the conclusion of an International Monetary Fund (IMF) staff mission to Kiribati:

"An IMF mission completed an interim staff visit to Tarawa, Kiribati on February 26. For countries on 24-month Article IV Consultation cycle, these interim staff visits provide a chance for the authorities and IMF staff to discus recent macroeconomic developments and emerging policy issues. The IMF team met with the President, the Minister of Finance and Economic Development, various ministries and government agencies, public enterprises, the business community and donors.

"Private sector economic activity appears to be picking up, especially in the construction and retail trade sectors. Inflation increased to 3¾ percent in 2007, reflecting higher food and transportation costs, the latter due to an increase in domestic fuel prices. The fiscal deficit remains high amounting to some 28 percent of GDP last year. As a result, the Revenue Equalization Reserve Fund (RERF), the principal source of budget financing, saw further withdrawals. Since 2000, the RERF has declined by 30 percent but remains somewhat above the government's informal benchmark (i.e., maintaining the real capita value of the RERF at the 1996 level).

"Discussions focused on measures to improve the government's fiscal position and support for private sector growth. The Government indicated that their new policy strategy focuses on measures to reduce the fiscal deficit through improvements in the tax collections, reviewing the role of public enterprises, with the aim of limiting their activities to areas that are not viable for the private sector, and policies to encourage private sector development. The mission supports this focus of the government's new policy strategy. The mission also noted that the Government has already opened up the telecommunication sector to foreign investors. The Government is also trying to attract private foreign and domestic investors to develop fish processing and tourism on Kiritimati Island. The National Sustainable Development Plan 2008-2011, which is in its final preparatory stage, contain further measures to help achieve sustainable economic growth.

"The mission thanks the authorities for constructive discussions and wishes them success in their endeavors."