Economy - overview: A remote country of 33 scattered coral atolls, Kiribati has few natural resources and is one of the least developed Pacific Island countries. Commercially viable phosphate deposits were exhausted by the time of independence from the United Kingdom in 1979. Earnings from fishing licenses and seafarer remittances are important sources of income, however, remittances and the number of seafarers employed declined in the global crisis, but has since improved. In 2013, fishing license revenues contributed close to half of government’s total revenue and total remittances from seafarers were equivalent to 6% of GDP.
Economic development is constrained by a shortage of skilled workers, weak infrastructure, and remoteness from international markets. The public sector dominates economic activity, with ongoing capital projects in infrastructure including the road rehabilitation, water and sanitation projects, and renovations to the international airport, spurring some growth. Public debt increased from less than 10% of GDP in 2014 to 23% of GDP at the end of 2015 due to the Bonriki International Airport repair and upgrade project financed by development partner concessional loans.
Kiribati is dependent on foreign aid, which was estimated to have contributed over 43% in 2013 to the government’s finances. The country’s sovereign fund, the Revenue Equalization Reserve Fund (RERF), which is held offshore, had an estimated balance of $571 million (A$756 million) in 2015, equivalent to 344% of GDP. The RERF seeks to avoid exchange rate risk by holding investments in more than 20 currencies, including the Australian dollar, US dollar, the Japanese yen, and the Euro. Drawdowns from the RERF helped finance the government’s annual budget.
Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.
Source: CIA World Factbook - This page was last updated on July 9, 2017