An International Monetary Fund (IMF) team, led by Natalija Novta, visited Tarawa, Kiribati for the 2025 Article IV Consultation from April 21-30, 2025. The discussions concluded virtually on May 19, 2025. The team discussed recent developments, economic outlook, and policy priorities with the authorities.
In a statement issued at the end of the visit, Ms. Novta noted that "the Kiribati economy has remained resilient amid repeated shocks." In 2024, real GDP grew by an estimated 5.3 percent and inflation moderated to 2.5 percent. However, fiscal policy was expansionary and procyclical in nature.
Looking ahead, real GDP growth is projected to moderate to 3.9 percent in 2025 and further to 3.2 percent in 2026 due to strong public consumption and infrastructure projects. Inflation is expected to rise temporarily to 7.8 percent in 2025 because of an increase in fuel and electricity prices but should decline to 3.5 percent in 2026.
The current account deficit is anticipated to remain at around two percent of GDP in both years amid strong import demand and subdued fishing revenues. The fiscal deficit is expected to narrow from 22 percent of GDP in 2024 to 15 percent in 2025 due to a freeze on nominal wages and streamlining of subsidies.
Ms. Novta highlighted several risks that could impact the outlook: "Risks...include lower-than-budgeted RERF withdrawals if financial market volatility leads to low RERF returns," among others such as global trade disruptions and climate-related natural disasters.
To address these challenges, Ms. Novta suggested a multi-pronged approach including building resilient infrastructure, calibrating fiscal policy for long-term development despite revenue volatility, and strengthening institutional capacity through structural reforms.
She emphasized that "calibrating fiscal policy...would help support macroeconomic stability" and recommended integrating RERF withdrawals into a medium-term fiscal framework for better management during revenue shortfalls.
The IMF team also advised on strengthening public financial management for more efficient spending and investment which would improve debt sustainability while supporting climate adaptation investments.
Ms. Novta concluded by expressing gratitude: “We would like to thank the authorities...for productive discussions.” She affirmed IMF's readiness to support Kiribati’s development goals through macroeconomic policy advice and capacity development.