The International Monetary Fund published an end-of-mission statement for its 2026 Article IV consultation with Kiribati, finding that economic activity remains strong but fiscal and external deficits are large and downside risks are elevated. Staff urged a growth-friendly fiscal consolidation anchored in a strengthened fiscal framework, alongside measures to raise revenues, improve spending efficiency, and build institutional capacity including public financial management, public debt management, and stronger governance and transparency for state-owned enterprises and joint ventures. Real GDP growth was estimated at 4.3 percent in 2025 after 4.6 percent in 2024, while inflation rose to around 6.5 percent in 2025 following fuel and electricity tariff reforms and is expected to moderate. The overall fiscal deficit was 14 percent of GDP in 2025 and financed by withdrawals from the Revenue Equalization Reserve Fund, and the current account deficit was estimated at 18.8 percent of GDP; public debt fell to 8 percent of GDP and was assessed as sustainable, but with a high risk of debt distress due to long-term climate vulnerabilities. Staff projected growth moderating to about 3.2 percent in 2026 and converging to around 2 percent over the medium term, with both fiscal and current account deficits projected at around 15 percent of GDP in 2026. Recommendations included adopting a balance-based Revenue Equalization Reserve Fund withdrawal rule and integrating fund operations into a medium-term fiscal framework, increasing fishing revenues and excise taxes while reducing tax expenditures, reviewing broad social benefits to improve targeting, strengthening debt-management capacity and risk monitoring across state entities, and building financial sector supervisory capacity. IMF staff will prepare a report for the IMF’s Executive Board, subject to management approval.
International Monetary Fund 2026-03-04
International Monetary Fund staff completes Kiribati Article IV mission and calls for fiscal framework reforms as deficits stay large
The IMF's 2026 Article IV consultation with Kiribati noted strong economic activity but significant fiscal and external deficits, with elevated downside risks. Recommendations include growth-friendly fiscal consolidation, enhanced fiscal frameworks, increased revenues, improved spending efficiency, and strengthened governance for state-owned enterprises. Real GDP growth was 4.3% in 2025, with inflation at 6.5%, and public debt at 8% of GDP, though long-term climate vulnerabilities pose a high risk of debt distress.