Regions and Countries

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Country Strategy and Program Update 2005–2006: Kiribati

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I. Country Strategy

1. The Asian Development Bank (ADB) strategy for Kiribati supports, and is consistent with, the objective of the new Government, as stated in the National Development Strategy (NDS) 2004–2007, to enhance and ensure the equitable distribution of development benefits to the people of Kiribati according to principles of good governance.¹ ADB’s strategy is anchored in its Pacific Strategy for the New Millennium.²

2. This recognizes the following unique advantages of Kiribati: (i) large foreign reserves in the Revenue Equalization Reserve Fund (RERF), (ii) a history of sound fiscal management, and (iii) a strong traditional culture that promotes social stability and family welfare. However, the country faces some major development constraints: (i) limited natural resources, especially land and fresh water for development; (ii) a small domestic market with little potential for economies of scale; (iii) widely scattered and sparsely populated islands (where the economy of the outer islands exists basically at subsistence level, with limited cash employment opportunities outside government and council employment); (iv) difficult and expensive access to major international markets; (v) an increasingly competitive international environment for tourism and investment; (vi) a population that has limited understanding of, and experience with, business concepts and practices; (vii) a labor force lacking in education and job skills; (viii) social and cultural constraints to the development of land; and (ix) low absorptive capacity for major investments.

3. The Government has given priority to growth centers in which key government services and infrastructure will likely be concentrated. The NDS is currently being operationalized by preparation of annual ministry operational plans and public enterprise business plans (PEBPs), which led to a multiyear budget framework and a Development Partners Meeting coordination meeting of aid agencies in Tarawa in August 2004. The Government agrees with the appropriateness of ADB’s intention to assist Kiribati in its key development objectives through ADB’s strategy for fighting poverty region-wide, including: (i) creating the conditions for pro-poor economic growth by promoting sustainable resource management and employment opportunities, (ii) enhancing social development, and (iii) promoting good governance.³ ADB’s assistance strategy for Kiribati is summarized in Appendix 1.

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