For a third consecutive year, high fishing license revenues have spurred economic growth and improved fiscal balances in Kiribati and other small Pacific island economies. Externally funded infrastructure projects have contributed to higher growth. Inflation has risen with currency depreciation. With higher revenues, all three economies have approved expansionary budgets for 2015. Access to finance remains a key challenge.
|Selected Economic Indicators (%) - Kiribati||2015||2016|
|Current Account Balance (share of GDP)||-53.0||-48.4|
Source: ADB estimates.
In 2014, the Kiribati economy grew by 3.0%. Growth was sustained by construction projects funded by development partners and continuing high revenue from fishing license fees. As a party to the Nauru Agreement, Kiribati has benefitted from rising rates under the vessel day scheme.
Revenues from fishing licenses outperformed budget expectations for the third year running as they soared by 34% in Kiribati. Revenue collections have been boosted as well by improved tax collection in Kiribati and higher dividends paid out by a joint venture of the National Fishing Corporation of Tuvalu and overseas investors.
Growth is expected to slow in Kiribati. Tropical Cyclone Pam caused tidal surges that damaged infrastructure and private property in Kiribati in mid-March. The Betio-Tarawa causeway in Kiribati - a key transport link - was extensively damaged. Growth in Kiribati’s economy is projected to halve to 1.5% in both 2015 and 2016 as projects funded by development partners are completed.
Source: ADB. 2015. Asian Development Outlook 2015. Manila.