The International Monetary Fund released the press release, staff report and Executive Director statement for the Republic of Palau’s 2025 Article IV consultation, assessing that the recovery is underway with an improving fiscal balance, declining debt and well-contained inflation, while noting that output remains below pre-pandemic levels. The report states that FY2024 real GDP remained below pre-pandemic levels and that debt is still high. It highlights that the 2023 Compact Review Agreement and a successful tax reform have provided additional fiscal space to help Palau address long-term challenges, including adverse demographic shifts and climate vulnerability, and covers issues including fiscal risks, public debt, public financial management, the public sector and tourism.
International Monetary Fund 2026-01-30
International Monetary Fund publishes Palau Article IV consultation report pointing to improving fiscal balance and still-high debt
The International Monetary Fund's 2025 Article IV consultation for the Republic of Palau indicates an ongoing recovery with an improving fiscal balance, declining debt, and controlled inflation, though output remains below pre-pandemic levels. The report highlights the 2023 Compact Review Agreement and successful tax reform as key factors providing fiscal space to address long-term challenges such as demographic shifts and climate vulnerability.