The Executive Board of the International Monetary Fund (IMF) has concluded its Article IV Consultation with Tuvalu, marking an assessment of the country's economic performance and policy outlook. The review, completed on September 3, 2025, comes as Tuvalu’s economy continues to recover from the effects of the COVID-19 pandemic.
After a significant downturn during 2020-22, Tuvalu's real GDP grew by 4 percent in 2023 and by 3.1 percent in 2024. This growth was supported by the reopening of domestic activities and major infrastructure projects such as coastal adaptation efforts, improvements in maritime transportation, and investments in renewable energy. However, both fiscal and external balances remain subject to volatility due to Tuvalu’s dependence on fishing license fees and international grants. Inflation has declined from a peak of 14 percent in late 2022 to 1.2 percent in 2024.
Looking ahead, economic growth is expected to continue but at a slower pace. Projections indicate GDP growth rates of 3 percent for 2025 and 2.6 percent for 2026, driven by ongoing public investment projects like the next phase of the Coastal Adaptation Project. Over the medium term, growth is anticipated to fall below 2 percent because of slow productivity increases, rising emigration rates, and vulnerability to climate-related events.
Tuvalu’s population stands at just under 10,000 people as of 2024 estimates. The country faces a poverty rate of about 26 percent based on data from 2017, with per capita GDP estimated at AU$8,680 for this year. Life expectancy reached about 65 years in 2023. Fish remains Tuvalu's main export commodity, with key markets including Australia, Fiji, and New Zealand.
During their assessment, IMF Executive Directors welcomed Tuvalu’s economic recovery but noted that the nation continues to face “increased downside risks and significant structural challenges stemming from its remoteness, high dependence on external revenue and grants, rising emigration, and vulnerability to climate change.” They highlighted the importance of enhancing fiscal sustainability through reforms aimed at reducing bottlenecks and boosting resilience.
“Capacity development and close engagement with the Fund and development partners remain essential,” Directors stated.
The Board recommended a multi-pronged fiscal strategy focused on deficit reduction while ensuring adequate financial buffers are maintained alongside development priorities. “Noting Tuvalu’s high spending pressures and volatile fiscal revenue,” they said there is a need “to mobilize revenues, rationalize expenditure, and reprioritize resources.” Improvements in public financial management were also encouraged to address volatility in fiscal accounts.
Directors stressed establishing effective regulatory frameworks for financial supervision while working towards greater financial inclusion. They acknowledged steps taken by authorities to improve global payment connectivity—such as joining the Asia Pacific Group on Money Laundering—and modernizing financial services infrastructure. Further strengthening anti-money laundering/counter-financing terrorism measures was deemed important for maintaining correspondent banking relationships.
On structural reform priorities, Directors emphasized focusing limited resources on developing reclaimed land; improving public service efficiency; strengthening governance within state-owned enterprises; upgrading infrastructure; exploring options for economic diversification; investing in human capital; supporting female labor force participation; enhancing disaster preparedness; and increasing resilience against climate change impacts.
The Article IV consultation process involves annual bilateral discussions between IMF staff teams and member countries' officials regarding economic developments—a standard practice under Article IV of the IMF's Articles of Agreement (http://www.IMF.org/external/np/sec/misc/qualifiers.htm).