IMF Staff Completes 2016 Article IV Mission to Kiribati
OREANDA-NEWS. An International Monetary Fund (IMF) team led by Mr. Ding Ding visited Kiribati during May 9-18 to conduct the 2016 Article IV consultation discussions. The team had fruitful discussions with President Honorable Taneti Maamau, Minister for Finance Honorable Dr. Teuea Toatu, other government officials, development partners, and private sector representatives. Staff from the World Bank and the Asian Development Bank joined the meetings.
At the end of the visit, Mr. Ding issued the following statement:
“Kiribati’s growth momentum remains strong. Record high fishing license fees in recent years have boosted growth, improved fiscal position and strengthened the current account. Real GDP growth is estimated to have reached 3.5 percent in 2015, supported by donor-financed infrastructure investment and reconstruction activities in the aftermath of natural disasters. Inflation remains subdued owing to low food and commodity prices. Growth is projected to moderate somewhat to around 3 percent this year as several large infrastructure projects come to completion and the weather conditions underlying the strong fishing activity starts to wane.
“Risks to the economic outlook are largely related to uncertainties of fishing revenue and external development. Global financial market volatility and commodity price shocks can feed into the domestic economy due to the sovereign wealth fund’s exposure to foreign assets and the country’s high reliance on imported goods. Kiribati is also susceptible to natural disaster and climate change related shocks. Continued engagement and support from development partners remains essential to mitigate the downside risks.
“Prudent management of resources and promoting private sector growth remain the key policy priorities. The authorities have made remarkable progress in restructuring the sovereign wealth fund and reforming SOEs. The newly launched 2016-19 Kiribati Development Plan identifies key priority areas for the medium term, building on the success of recent reforms. To support the government’s long run development agenda, budget decisions need to be taken in the context of a medium term fiscal framework assessing spending goals, revenue projections and wealth management targets. Further strengthening the sovereign wealth fund would also support its capacity to provide sustainable future income for intergenerational equity. Long run growth prospects depend on overcoming weaknesses in infrastructure, access to finance and business environment to create conditions for private sector growth and employment.
“The team would like to thank the Kiribati authorities for their warm hospitality and close cooperation. The IMF Executive Board is expected to discuss the 2016 Article IV Consultation in August 2016.”