Kiribati
Recent Economic Developments
Author:
International Monetary Fund
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Publication Date:
19 Dec 1995
eISBN:
9781451814354
Language:
English
Keywords:
ISCR; CR; Kiribati; price; company; Kiribati authorities; export; rate
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This report describes recent economic developments in Kiribati. Developments over the decade through 1992 were characterized by a fall in real per capita income, as economic development was constrained by a shortage of skilled manpower, weak infrastructure, and remoteness from major international markets. However, inflation was held broadly in line with price increases in major trading partners. The overall external balance was in large surplus, as substantial trade deficits in part reflecting small export earnings were more than offset by service account surpluses and external grant receipts.

Abstract

This report describes recent economic developments in Kiribati. Developments over the decade through 1992 were characterized by a fall in real per capita income, as economic development was constrained by a shortage of skilled manpower, weak infrastructure, and remoteness from major international markets. However, inflation was held broadly in line with price increases in major trading partners. The overall external balance was in large surplus, as substantial trade deficits in part reflecting small export earnings were more than offset by service account surpluses and external grant receipts.

I. Introduction and Summary

Kiribati consists of 33 atolls widely dispersed in the central Pacific Ocean. Both nominal GDP and capital income are the smallest among the South Pacific Fund member countries. The production base is narrow, with the subsistence sector accounting for a substantial portion of economic activity and employment. The financial sector is at an early stage of development; the Australian dollar is used as the legal tender; there is no central bank or monetary authority; and domestic financial intermediation is limited, with the bulk of deposits transferred abroad because of the lack of investment opportunities.

Developments over the decade through 1992 were characterized by a fall in real per capita income, as economic development was constrained by a shortage of skilled manpower, weak infrastructure, and remoteness from major international markets. However, inflation was held broadly in line with price increases in major trading partners. The overall external balance was in large surplus, as substantial trade deficits in part reflecting small export earnings were more than offset by service account surpluses and external grant receipts. Official external assets, mainly held in the Revenue Equalization Reserve Fund (RERF), stood at the equivalent of more than six years of imports at end-1992. External borrowing was limited to a small amount of concessional loans and debt service was modest.

The financial stability primarily reflected prudent fiscal management. Under a policy to increase the value of the RERF on a per capita basis, current expenditure was tightly restrained so as to contain the drawdown from the fund to a fraction of its annual investment income. Development expenditure was limited almost entirely to the availability of external resources. Consequently, the overall fiscal balance, adjusted for reinvested income from the RERF, registered substantial surpluses and virtually no recourse was made to borrowing from domestic sources.

Developments in 1993-94 were broadly in line with the medium-term trend exhibited in the previous years. Real GDP growth was limited to about 1.5 percent, on average, as a recovery in copra production was partly offset by a fall in the fish catch and stagnation in commerce and tourism. Inflation was moderate, averaging slightly over 5 percent. The overall external balance remained strong, partly aided by substantial surpluses on the service account primarily reflecting high fishing license fees and investment income from the RERF. External assets increased to almost nine years of imports at end-1994, although the RERF suffered a large valuation loss in 1994 owing to an appreciation of the Australian dollar and a sharp fall in bond and equity prices. Fiscal policy remained cautious; the adjusted overall balance was in large surplus, as current and development expenditures were limited within conservative budget appropriations and available external resources, respectively. Monetary developments continued to be characterized by relatively low domestic lending, but the spread between lending and deposit rates narrowed after a marked widening in the previous years.

In 1995, the budget prepared by the new Government, which came to office in October 1994, assumed a considerably expansionary stance, marking a major departure from the past. Expenditure was budgeted to increase sharply to counter an erosion in real wages/salaries and social services as a result of the tight expenditure policy over the years, while at the same time strengthening public sector investment; the overall balance (adjusted for KERF reinvestment) was thus budgeted to shift to a deficit for the first time in recent years. The expansionary fiscal policy is projected to provide a temporary stimulus to the economy, but to generate inflationary pressures while narrowing the external surplus considerably.

II. Output and Prices

A. Production

Kiribati’s production base is narrow, with copra, fish, and seaweed representing major products, and there is little industrial activity. More than 60 percent of the labor force is employed in the subsistence sector and economic activities in the formal sector are dominated by the public sector. During the decade through 1992, real GDP growth, fluctuating widely with climatic conditions, averaged about 1 percent, falling short of the population growth of more than 2 percent.1 The decline in real per capita GDP, however, was offset by the steady growth of investment income from external assets and transfers from workers abroad, and real per capita GNP registered a positive, albeit modest, annual growth.

During 1993-94, real GDP growth averaged about 1.5 percent, following a decline in 1992 (Table 1 and Chart 1). The improved growth performance reflected a continued recovery in copra production from the decline of 1990, which more than offset a fall in the fish catch and a limited expansion in commerce and tourism. For 1995, real GDP growth is estimated to reach 2.7 percent on account of a projected expansion in commerce, construction, and government administration in response to the 1995 budget, as well as a likely recovery in fish production.

Table 1.

Kiribati: Gross Domestic Product by Economic Activity, 1990-94 1/

(In thousands of Australian dollars at 1991 constant prices)

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Preliminary estimates; figures may not add up to totals owing to rounding.

Chart 1
Chart 1

KIRIBATI: KEY INDICATORS FOR PRODUCTION AND INFLATION, 1987-94 1/

Citation: IMF Staff Country Reports 1995, 117; 10.5089/9781451814354.002.A001

Sources: Data provided by the Kiribati authorities; and staff estimates.1/ Figures for 1993-94 are provisional.2/ Percentage changes in the consumer price index.

The producer price for copra is set by the Kiribati Copra Cooperative Society (KCCS), the sole entity to export copra, under a price stabilization scheme designed to ensure a minimum price to producers in the face of sudden and large fluctuations in the world market prices. The producer price has been adjusted frequently, taking into account developments in the net export price 3 and the availability of the KCCS’s resources for price support, 4 and tends to be set at a level substantially above the minimum support price. 5 In 1993, the KCCS reduced the producer price from $A 350 per ton to $A 220-260 per ton, primarily in response to a precipitous fall in the net export price and the need to avoid potentially large drawdowns of its reserves (Table 3). This was followed by a significant increase during the course of 1994, reaching to $A 400 per ton by October, reflecting a major recovery in the net export price as well as the Government’s intention to stimulate copra production. 6

Among main products, the production of copra, which constitutes a principal cash crop, increased by 22 percent during 1993-94, reaching more than 12.2 thousand tons, well above the historical average (Table 2). The bulk of the increase occurred in 1994 in response to favorable weather and a sharp increase in producer prices (see below). 2 On the basis of the actual outcome during the first five months of 1995, copra production for the year is estimated to reach at least the 1994 level. A further substantial increase, however, is considered to require steps to increase productivity, including the replacement of the aging tree stocks by new hybrid seedlings and improvement in extension services.

Table 2.

Kiribati: Copra Production by Island, 1990-95

(In metric tons)

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Source: Data provided by the Kiribati authorities.

Preliminary actual for January-May.

Table 3.

Kiribati: Prices Paid to Growers by the Kiribati Copra Cooperative Society, 1990-95

(In thousands of Australian dollars per ton)

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Defined as the difference between the export price (f.o.b. unit value) and domestic costs other than payments to growers (including freight, commissions, stevedoring, wharfage, and other operating costs), which is equivalent to net price received by growers in the absence of price support.

In terms of export unit value (f.o.b.).

The difference in the producer price compared with the Gilbert Island reflects differences in the average quality of copra and production costs.

Following a recovery in 1992, the commercial fish catch by Te Mautari Limited (TML), the national fishing company, declined by 47 percent in 1993 and further by 26 percent in 1994 notwithstanding favorable weather conditions and an increase in export prices (Table 4). The disappointing performance was attributable to a decline in the number of vessels in operation owing to poor maintenance and accidents. These technical problems were compounded by the continued serious financial difficulties facing the company7 which hampered the timely maintenance and repair of its vessels. The company’s financial problems have been alleviated to some extent since mid-1994 as a result of the provision of government grants totaling $A O.S million. During the first five months of 1995, the fish catch increased sharply, reflecting the resumption of operation by the grounded vessels and the favorable impact of a new incentive system introduced early in the year that links attractive bonus payments to the fish catch above a relatively low base level.

Table 4.

Kiribati: Fish Statistics, 1990-94 1/

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Excludes the fish catch made by private fishermen for local sales and consumption.

Preliminary staff estimates.

To develop Kiribati’s fishery resources and make deeper inroads into international markets, consideration is currently given to restructuring the TML’s vessels from the current pole-and-line fishing to long-line fishing. In addition, a proposal has been put forward to form a joint venture with foreign partners to improve management, acquire capital, and develop infrastructure and marketing for long-line fishing. To assist local fishermen in increasing and diversifying fish production and supplement TML’s own catch for export, efforts are being made to strengthen the implementation of the Outer Islands Fisheries Project partly under donor assistance.

Seaweed has become an increasingly important commercial cash crop since the commencement of its production in 1986. Following a decline in 1993, production almost doubled to 395 tons in 1994, mainly on account of an increase in the producer price and the strengthening of staffing for procurement. Since 1992, procurement and marketing have been exclusively undertaken by the Atoll Seaweed Company (ASC), fully owned by the Government, which sets the producer price, purchases seaweed from producers, and exports all products to Denmark under a five-year contract concluded in 1993. Under the contract, the export price was initially set at $553 per ton, which was raised to $590 per ton in November 1994. Corresponding to this adjustment, the producer price was increased from $A 350 per ton to $A 400 per ton, which helped to reduce an emerging shift from seaweed to copra production as a result of the sharp increase in the producer price for copra in 1994. The ASC is currently engaged in two grant-supported projects to strengthen extension services and expand seaweed production.

Tourism remained stagnant in 1993-94, primarily reflecting infrequent air services, inadequate hotel accommodation, and limited marketing efforts. However, efforts have recently been stepped up to tap substantial potential for tourism, especially to Christmas Island. Since early 1994, air service between Christmas Island and Honolulu was improved with increased reliability in flight schedule. The Ministry of Commerce, Industry, and Tourism is in the process of preparing a national plan for tourism, with its role primarily focusing on marketing. In addition, discussions are taking place with the Governments of Marshall Islands, Nauru, and Tuvalu to provide joint air services to develop regional tourism.

B. Development Planning and Foreign Investment

The Seventh National Development Plan (1992-95) envisaged an annual real growth rate of 5.5 percent, considerably higher than the historical average. This objective was to be achieved through increased investment to develop infrastructure and encourage the expansion in key sectors, including agriculture, fisheries, and tourism. Public investment, primarily funded through external aid, was to continue to account for the principal portion of development outlays. However, the Plan envisioned greater participation by the private sector which was to be promoted through privatization, foreign investment, and increased fiscal incentives.

Available information suggests that the outcome of the Seventh National Development Plan to date has been disappointing, especially in terms of economic growth and investment. This was mainly attributable to the ambitious targets, the absence of appropriate monitoring schemes, and weak implementation capacity owing to the limited number of skilled project officers and accountants. These problems were compounded by the absence of a formal link between the National Development Plan and the annual development budget; a dominance of recurrent components in the development budget; and the endorsement of an investment program which included numerous small projects without clear priorities. To address these problems, the Government has recently decided to set up a new inter-ministerial committee in conjunction with the preparation of the Eighth National Development Plan (1996-99). The committee is to take over part of the functions currently assumed by the Development Committee and address key development policy issues to be considered in the next Plan. In addition, steps are expected to be taken to strengthen the Macroeconomic Division of the Ministry of Finance and Economic Planning so as to improve economic forecasting and better monitor the implementation of public investment projects.

Given the scarcity of capital and managerial skills, foreign investment has an important role to play, especially in developing fisheries and tourism. At present, foreign private investment is governed by the Foreign Investment Act of 1985, under- which all applications for foreign investment are required to be submitted to the Foreign Investment Commission (FIC). Under the Act, the FIC is authorized to function as a one-stop investment center and approve investments up to $A 250,000, although Cabinet approval is necessary for those exceeding this limit. Various incentives are also available to encourage foreign investment under several regulations,8 including import duty exemptions for capital goods and raw materials, tax holidays for pioneer industries, and the free repatriation of profits. However, foreign investment in Kiribati has been relatively limited thus far, reflecting not only the country’s less advantageous economic and geographical conditions but also cumbersome approval procedures in practice. The latter includes the lack of clear codification of the FIC’s practices; the de facto need for approval or consent by other ministries which nullify the FIC’s role as a one-stop investment center; and lengthy delays in approvals owing to the background checking of investors. These problems are compounded by difficulties in securing or leasing land under the customary land ownership system where boundary disputes are generally pervasive.

C. Prices

Inflation in Kiribati has been moderate as a result of restrained fiscal policy, a relatively open trading system, and price ceilings which are applicable to selected consumer goods.9 Reflecting a large share of import goods (about two thirds of the total) in the consumer price index, developments in consumer price inflation have tended to be closely related to price movements in major trading partners, especially Australia. In 1993, consumer prices rose by 6.1 percent, primarily reflecting the impact of an increase in customs duties on food, alcohol, and tobacco. In 1994, consumer inflation moderated to 5.1 percent, close to the historical average, as higher transportation and clothing prices were partly offset by smaller increases in food prices (Table 5).

Table 5.

Kiribati: Tarawa Retail Price Index, 1990-95

(Annual average percentage change; fourth quarter 1975 = 100)

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Source: Data provided by the Kiribati authorities.

III. Public Finance

A. Fiscal Developments in 1993-94

The central government budget continued to be managed prudently in 1993-94.10 Current expenditure was contained within conservative budget appropriations, while development expenditure was limited broadly to the availability of external resources (Table 6 and Chart 2). In the event, these expenditure policies were accompanied by buoyant revenues (exclusive of drawdowns from the RERF) primarily reflecting higher fishing license fees. Consequently, no recourse was made to the budgeted drawdowns of the RERF ($A 7.5 million for each year) and the overall balance, inclusive of reinvested RERF income, registered large surpluses.

Table 6.

Kiribati: Summary of Central Government Operations, 1990-95 1/

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Sources: Data provided by the Kiribati authorities; and staff estimates.

On the basis of official presentation; figures may not add up to totals owing to rounding.

Includes supplementary budget appropriations ($A 2.3 million).

Excludes technical assistance.

Government deposit balances for fiscal operations.

Chart 2
Chart 2

KIRIBATI: CENTRAL GOVERNMENT BUDGET, 1987-94 1/

(In millions of Australian dollars)

Citation: IMF Staff Country Reports 1995, 117; 10.5089/9781451814354.002.A001

Sources: Data provided by the Kiribati authorities; and staff estimates.1/ Figures for 1993-94 are provisional.2/ Includes reinvested income from the Revenue Equalization Reserve Fund and net transactions in the STABEX account.

1. Developments in 1993

Total revenue, exclusive of RERF drawdowns, increased by 18 percent in 1993, owing to a strong expansion in both tax and nontax revenues (Table 7). Tax revenue grew by 15 percent, reflecting revenue measures (an increase in selected customs duties by 10-25 percentage points11 and an upward adjustment of hotel tax from 5 percent to 10 percent) and higher company taxes12 aided by exceptionally large dividend and provisional tax payments;13 however, personal income tax receipts fell as a result of a change in the tax structure with a higher threshold for the zero tax bracket.14 Nontax revenue, excluding RERF drawdown, rose by 20 percent on account of an increase in fishing license fees, dividend receipts from the Bank of Kiribati, interest receipts, and NASDA user fees (fees received from Japan for its use of Christmas Island facilities to gather meteorological information.) External grants fell sharply following the completion of major projects, including the development of telecommunications and the construction of a multipurpose cargo vessel. Total expenditure declined by 12 percent, reflecting a cut in development expenditure in line with lower external grants. Current expenditure was only slightly higher than the previous year’s level, mainly owing to restraint in purchases of goods and services (Tables 8-9). With all RERF investment income reinvested, the adjusted overall balance surplus increased to $A 21 million (44 percent of GDP) from $15.6 million (35 percent of GDP) in 1992.

Table 7.

Kiribati: Central Government Revenue, 1990-95

(In thousands of Australian dollars)

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Amounts drawn.

Excludes interest on STABEX deposits.

User fees paid by the Japanese space agency for the use of Christmas Island facilities to obtain meteorological information.

Includes extraordinary income associated with the capture and disposal of ships illegally fishing in Kiribati waters in 1990 ($A 1.9 million). Excludes a bookkeeping entry in 1991 associated with regularizing accumulated unauthorized expenditures in previous years ($A 5 million) and a bookkeeping entry in 1992 reflecting the conversion of some statutory companies into public limited companies ($A 2 million).

Net of management charges.

Table 8.

Kiribati: Central Government Expenditure (Economic Classification), 1990-95 1/

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Includes supplementary budget appropriations.

Includes purchases of new equipment

The figure for 1995 refers to supplementary budget appropriations of $A. 2.3 million, of which $A 0.7 million is included in subsidies and purchases of goods and services.

Table 9.

Kiribati: Central Government Expenditure (Functional Classification), 1990-95 1/

(In thousands of Australian dollars)

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Includes supplementary budget appropriations.

The figure for 1995 refers to supplementary budget appropriations.

Beginning of period.

2. Developments in 1994

The adjusted overall position registered a surplus of $A 12 million (24 percent of GDP) in 1994, more than four times larger than budgeted. This outcome was attributable to a smaller expansion in expenditure than budgeted and, more importantly, to a considerably. stronger increase in fishing license fees, which permitted the Government to forego the budgeted drawdown from the RERF. The continued rise in fishing license fees reflected the extension of a five-year multilateral fisheries treaty with the United States;15 climatic changes in the South Pacific (the £1 Nirio effect) which led to increased fishing activities by foreign vessels in Kiribati’s territorial waters; and higher fee payments by Japan and Korea under the annual fishing agreements.

In comparison with the 1993 outcome, revenue was broadly unchanged, as both tax and nontax revenues showed little increase, in part reflecting the absence of new revenue measures in the 1994 budget. With regard to tax revenue, higher import duties and a recovery in personal income tax were accompanied by a fall in company tax owing to lower dividend and provisional tax payments and retroactive tax reimbursements to companies for losses incurred in 1993. As for nontax revenue, the further substantial increase in fishing license fees was offset by a decline in dividend and interest receipts from the exceptionally high level of 1993 and lower NASDA fees. Total expenditure grew by 8 percent, primarily reflecting a 17 percent increase in current expenditure. The relatively substantial increase in current expenditure by past standards was associated with higher appropriations for goods and services (especially purchases of new equipment) and subsidies to public enterprises. Development expenditure remained broadly at the 1993 level, as a further fall in external grants was offset by higher local contributions to development projects.

B. Budget for 1995

In a major departure from the past, the 1995 budget assumed a considerably expansionary stance. Total revenue and grants were budgeted to increase by 36 percent on account of the resumption of RERF drawdowns and continued strength of other nontax revenue. However, total expenditure, inclusive of a supplementary appropriation approved in July, were budgeted to expand by 49 percent, reflecting large increases in both current and development expenditures. With reinvested RERF income projected to fall substantially, the adjusted overall balance was budgeted to shift to a deficit of $A 4 million (6 percent of GDP) for the first time in recent years.

Tax revenue was estimated to decline by 10 percent, owing to lower taxes on international trade as a result of a reduction in customs duties on rice, flour, and sugar,16 and the abolition of the 15 percent export duties on scrap iron and aluminum cans. Nontax revenue was estimated to increase by 51 percent on a premise of drawdowns from the RERF ($A 7.5 million), continued high fishing license fees, and a rebound in dividend receipts and NASDA user fees. External grants were envisioned to recover from the sharp decline of recent years.

Current expenditure was budgeted to increase by 56 percent to counter an erosion in real wages/salaries for civil servants and the prolonged neglect of maintenance and repair as a result of the tight expenditure policy over the past years. Wages and salaries were budgeted to rise by 47 percent, reflecting an upward adjustment of the salary structure ($A 2 million), an across-the-board increase in remuneration for all civil servants ($A 1.2 million), full provisions for vacancies and regrading ($A 1 million), and higher appropriations for allowances and overtime payments (Table 10). Purchases of goods and services were budgeted to increase by 59 percent, owing to higher appropriations for travel and transport, hire of vehicles and vessels, maintenance of equipment and buildings, and purchases of new equipment, especially for the education and health sectors. Subsidies to public enterprises were budgeted to increase further, albeit moderately, and larger transfers were envisaged, especially to local councils.

Table 10.

Kiribati: Central Government Salary Structure, 1989-95 1/

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Source: Data provided by the Kiribati authorities.

Includes central government contributions to the Kiribati Provident Fund.

Maximum of range.

Development expenditure was budgeted to increase by 40 percent in line with the projected rebound in external grants. Of the budget estimate, about 45 percent represented appropriations for new investment earmarked for the public investment program, while the remainder reflected the recurrent components of development projects implemented in the past. At the time of the budget presentation to Parliament, full funding was not secured, especially for public investment projects, and the total amount of funding identified by midyear was limited to only two thirds of the budget estimate.

C. Nonfinancial Public Enterprises

Public enterprises play a dominant role in Kiribati, engaged in a variety of economic activities. Governmental supervision is exercised through official participation in boards of directors and approval of tariffs. To encourage increased operational efficiency, government subsidies were progressively reduced through 1991. However, they have began to increase since then, reaching $A 0.9 million (about 2 percent of GDP) in 1994. Most of the increase was attributable to rental subsidies for public houses managed by the Kiribati Housing Corporation and financial assistance to operations undertaken by Te Mautari Limited and Air Tungaru (Table 11). In addition, continued government subsidies were provided to the Public Utilities Board to cover losses in sewerage and water services.17

Table 11.

Kiribati: Central Government Budgetary Subsidies to Public Enterprises, 1990-95

(In thousands of Australian dollars)

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Source: Data provided by the Kiribati authorities.

Appropriations provided in the supplementary budget

In recognition of the constraints on economic development resulting from extensive public ownership and management, the Government adopted in 1990 a policy framework for corporatization and privatization of selected public enterprises. Under this policy, three statutory corporations and four departmental enterprises were converted to public limited companies; two government-owned enterprises entered into private management arrangement; and about one quarter of shares in a state-owned trading company was sold to private investors and an Island Council. In 1993, 12 state-owned enterprises were examined for possible privatization under technical assistance from the Asian Development Bank and 4 enterprises were identified for privatization.18 The technical assistance study also examined legal and administrative issues to be addressed in connection with privatization, including possible redundancy payments to be made to employees, the transfer of land lease to privatized companies, and the resolution of outstanding debts owned by public enterprises. Under the new Government, however, greater emphasis is now given to corporatization and commercialization of public enterprises as the first step, with privatization to be considered after these enterprises became financially sound. To this end, a unit was established within the Ministry of Finance and Economic Planning in 1994 to review their operations, identify problems, and recommend corrective actions.

IV. Financial Sector

The financial sector consists of the Bank of Kiribati (the sole commercial bank jointly owned by the Government and Westpac Banking Corporation of Australia), the Development Bank of Kiribati, the Kiribati Provident Fund, and the Kiribati Insurance Company. There is no central bank or monetary authority and the Australian dollar is used as the legal tender. Under these circumstances, the authorities influence monetary and credit developments mainly through government participation in the operations of the Bank of Kiribati as part owner.

While broadly following movements in overseas rates (especially those in Australia) reflecting the open financial system, the level and structure of domestic interest rates set by the Bank of Kiribati (BOK) have recently undergone some noticeable changes. Domestic interest rates exhibited a marked declining trend in 1990-93 in response to a fall in overseas rates, but the reduction was substantially larger for deposit rates than lending rates, resulting in an increasing spread between them (Table 12 and Chart 3). In 1994, interest rates on large term deposits (accounts for about 90 percent of total deposits) were raised substantially in an effort to stem increasing deposit transfers to overseas; however, the rates on small deposits (mainly saving deposits) were mostly unchanged and set at levels well below overseas rates because of relatively high operating costs associated with these deposits. In contrast to the increase in the average deposit rate, key lending rates were kept unchanged at the 1993 level, reflecting administrative consideration to keep interest costs to borrowers low and encourage domestic borrowing, and the spread between deposit and lending rates narrowed substantially. To alleviate the rigidity associated with lending rates, the BOK is considering a rationalization of the level and structure of lending rates by introducing a greater differentiation according to risk premia.

Table 12.

Kiribati: Commercial Bank Interest Rates, 1990-94

(ID percent per annum)

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Sources: Data provided by the Kiribati authorities; and International Finance Statistics, IMF.

Minimum deposit $A 100; no restrictions on withdrawals.

Minimum deposit $A 500.

A weighted average rate of short-term loans.

A weighted average yield on 13-week treasury notes.

Chart 3
Chart 3

KIRIBATI: FINANCIAL SECTOR, 1987-94 1/

(In millions of Australian dollars)

Citation: IMF Staff Country Reports 1995, 117; 10.5089/9781451814354.002.A001

Sources: Data provided by the Kiribati authorities: and staff estimates.1/ Figures for 1993-94 are provisional.2/ Six-month term deposits, over $A 50,000.

The movements in deposit rates exerted a substantial influence on developments in bank deposits in 1993-94. Total deposits declined by 6 percent in 1993, as major depositors transferred part of their funds overseas in search of more remunerative rates, while they recovered somewhat in 1994 in response to the upward adjustment of domestic deposit rates (Table 13). As in the past, the BOK reinvested the bulk of its deposits abroad and foreign assets remained its predominant portfolio. Domestic credit, which consisted primarily of loans to the private sector, remained relatively modest, reflecting the lack of attractive projects, the scarcity of acceptable collateral, and the generally weak credit demand. Nonetheless, the share of domestic credit to total assets increased slightly during 1994, reflecting increased lending to public enterprises. This trend was further reinforced during the first half of 1995, as a result of the extension of additional loans to public enterprises under government guarantees.19 A further rise in domestic credit is also expected in response to the planned implementation of the Government’s decision to permit members of the Kiribati Provident Fund to pledge up to 70 percent of their contribution as collateral for housing loans.

Table 13.

Kiribati: Commercial Bank Balance Sheet, 1990-94 1/

(In millions of Australian dollars; end of period)

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Sources: Data provided by the Kiribati authorities; and staff estimates.

The balance sheet of the Bank of Kiribati Limited, the sole commercial bank in Kiribati.

Preliminary.

Excludes STABEX deposits.

After increasing sharply to $A 3.4 million in 1992, the total assets of the Development Bank of Kiribati (DBK) remained stagnant during 1993-94, primarily owing to write-offs of nonperforming loans and an erosion in the capital base (Table 14). Beginning from 1992, steps were taken to reclassify loan portfolios and write off bad loans, while efforts were intensified to improve the collection of loans and interest due. By end-1994, $A 0.4 million of loans were written off and the amount of nonperforming loans was reduced to $A 0.3 million, of which about half is expected to be written off in 1995. General commercial and noncommercial loans, the DBK’s main portfolio, continued to consist mostly of small-scale loans averaging $A 2,000, and carried a uniform lending rate of 12 percent. It is viewed that the average size of loans is too small to generate sufficient profit margins, while the current lending rate is on a low side in view of the scarcity of credit. To put the DBK on a sounder financial footing, its operations have recently been reviewed under donor technical assistance and recommendations are to be made shortly on recapitalization, a reduction in the number of staff, a rationalization of lending rates, and a diversification in lending operations toward medium- and large-scale projects.

Table 14.

Kiribati: Assets and Liabilities of the Development Bank of Kiribati, 1990-94 1/

(In thousands of Australian dollars; end of period)

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Source: Data provided by the Kiribati authorities.

The National Loans Board became the Development Bank of Kiribati on August 1, 1987.

Preliminary.

The total assets of the Kiribati Provident Fund (KPF), which operates a compulsory superannuation scheme,20 increased by 15 percent in 1993-94 (Table 15). Investment in foreign assets remained the predominant form of assets, accounting for more than 90 percent of the total at end-1994. The increase in the value of foreign assets, however, moderated substantially in 1994, owing to a worldwide fall in bond prices. Reflecting this development, as well as increasing preference for equities, the relative share of equities in total investment rose further, reaching almost 55 percent by end-1994. The total value of member’s accounts increased significantly in 1993-94, partly reflecting the redistribution of accumulated reserves totaling $A 2.2 million in 1994. The annual rate of interest payments on members’ accounts was kept unchanged at 13.5 percent, well above the actual portfolio returns. In view of the less favorable outcome of foreign investment in 1994, however, consideration is being given to reducing the interest rate.

Table 15.

Kiribati: Assets and Liabilities of the Kiribati Provident Fund, 1990-94 1/

(In thousands of Australian dollars; end of period)

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Book value, including reinvested interest income.

Preliminary.

Includes interest stabilization reserves, special death benefit reserves, accumulated surpluses, and reserves.

The Kiribati Insurance Corporation (KIC), a government corporation, provides all types of insurance. To minimize its risks, the KIC reinsures almost all of its business. Since 1993, the KIC has been under contract with a new external reinsurer which has beat providing managerial and technical assistance to expand the KIC’s activity. The corporation’s financial position deteriorated in 1992 as a result of the termination of marine insurance by the Kiribati Shipping Services Ltd., but has improved somewhat since then, although general underinsurance continues to constrain the KIC’s profitability. The KIC’s financial assets, which stood at $A 1 million at end-1994, are mostly held domestically, especially in deposits with the BOK.

V. External Sector

In 1993-94, Kiribati’s external payments position remained strong. The current account surplus further widened from $A 10 million (22 percent of GDP) in 1992 to $A 18 million (35 percent of GDP) in 1994, as large trade deficits continued to be offset by substantial services account surpluses and high, albeit declining, levels of official transfers (Table 16 and Chart 4). The capital account was in near balance, on average, as capital outflows reflecting the reinvestment of interest earnings by financial institutions offset concessional aid inflows. Consequently, the overall balance remained in large surplus averaging $A 16 million (31 percent of GDP). Gross official foreign assets increased from $A 323 million (6.4 years of imports) at end-1992 to $A 358 million (8.7 years of imports) at end-1994, despite a large valuation loss in the RERF. Between June 1993 and April 1995, the real effective exchange rate deprecited by 3 percent, accompanied by fairly large fluctuations, primarily reflecting developments in the Australian dollar against other key currencies (Chart 5).

Table 16.

Kiribati: Balance of Payments Summary, 1990-94 1/

(In millions of Australian dollars)

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Figures may not add up to totals owing to rounding.

Includes technical assistance.

Excludes valuation changes.

Comprises the Consolidated Fund, Import Levy, Dai Nippon Causeway, and Leper Trust Funds.

On the basis of market value, including valuation changes.

Chart 4
Chart 4

KIRIBATI: EXTERNAL DEVELOPMENTS, 1987-94 1/

(In millions of Australian dollars)

Citation: IMF Staff Country Reports 1995, 117; 10.5089/9781451814354.002.A001

Sources: Data provided by the Kiribati authorities; and staff estimates.1/ Figures for 1993-94 are provisional.
Chart 5
Chart 5

KIRIBATI: REAL AND NOMINAL EFFECTIVE EXCHANGE RATES, 1985-95

(1980=100)

Citation: IMF Staff Country Reports 1995, 117; 10.5089/9781451814354.002.A001

Source: IMF, Information Notice System.

A. Developments in Current and Capital Accounts

While narrowing from the high level of $A 44 million in 1992, the deficit of trade balance remained large at an average of $A 36 million in 1993-94. Notwithstanding a strong expansion in 1994, exports averaged less than 15 percent of imports. After remaining little changed in 1993, the terms of trade improved in 1994, reflecting a combination of a sharp rise in export prices for copra and fish and a moderate increase in import prices.

Total exports exhibited a large fluctuation (a 30 percent decline in 1993, followed by a 62 percent increase in 1994), primarily reflecting developments in earnings from copra (Table 17). Copra exports fell by 47 percent to $A 2.3 million in 1993 owing to large drops in the volume and the world price from the high level of 1992 (see Section II-A). However, the decline was followed by a sharp recovery to $A 4.5 million in 1994 in response to a rebound in export prices and higher domestic production. Fish exports declined by a total of 17 percent in 1993-94 owing to a continued fall in export volume as a result of adverse weather and technical and financial problems facing the national fishing company; the export price, however, showed a recovery from the decline of 1992. Nontraditional exports remained relatively strong in 1993-94. Seaweed exports recovered from the low level of 1992, as prices increased substantially following the conclusion in 1992 of the five-year export contract with Denmark. Exports of pet fish, shark fins, and sea cucumber rose in response to rising demand. The European Union became the principal export market for Kiribati in 1993-94, reflecting its renewed purchase of copra (Table 18).

Table 17.

Kiribati. Composition of Exports, 1990-94

(Value in thousands of Australian dollars; volume in metric tons; unit value in Australian dollars par ton)

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Exports of pet fish up to 1990 are included in “other.”

The figure for 1990 includes proceeds from sale of a confiscated foreign fishing vessel caught in Kiribati waters ($A 1.9 million).

Table 18.

Kiribati: Direction of Trade, 1990-94

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Excludes re-exports.

The increase in 1991 and 1992 reflects a shift in copra exports from Europe to Bangladesh.

The term “country,” as used in this table, does not in call cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.

Import payments declined by 18 percent to SA 41 million in 1993-94, primarily reflecting a sharp fall in imports of machinery and transport equipment in response to the completion of large donor-assisted projects (Table 19); domestic imports unrelated to aid disbursements, especially food, beverages, and tobacco, increased during the period. The structure of imports remained broadly unchanged from previous years, with food items and capital equipment together accounting for about 55 percent of the total. Australia remained the largest supplier of food items and beverage and tobacco products, while Japan continued to be the principal supplier of capital equipment.

Table 19.

Kiribati: Composition of Imports, 1990-94

(In thousands of Australian dollars)

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Sources: Data provided by the Kiribati authorities; and staff estimates.

The surplus of the services account (net) widened further by 34 percent to $A 22 million in 1993-94, owing to a sharp increase in fishing license fees and a reduction in freight and insurance payments associated with lower imports (Table 20). Interest income on financial assets and fishing license fees remained the predominant items, accounting for about 85 percent of gross service receipts during the period. Private transfers (net) increased by 18 percent to $A 9 million, reflecting higher repatriation of earnings by I-Kiribati seamen abroad; the total number of seamen (working primarily with German ships) is estimated to have increased to more than 1,200 (more than 10 percent of total formal employment). While still remaining substantial, official transfers fell by 30 percent to $A 20 million between 1992 and 1994.

Table 20.

Kiribati: Services and Private Transfers, 1990-94 1/

Of millions of Australian dollars)

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Figures may not add up to totals owing to rounding.

Interest and dividends received.

Interest earnings on STABEX, Import Levy, Coinage, Dai Nippon Causeway, and Leper Trust Fund accounts held abroad.

Earnings received by Captain Cook Hotel and Christmas Island services.

Refers to travel allowances funded by grants.

Services components of aid-in-kind other than technical assistance.

Includes bank management fees, insurance premiums, and philatelic printing costs.

Transfers by expatriates.

Following the large surplus of 1992 owing to special factors, the capital account registered a small deficit in 1993; official aid inflows associated with an airport project were more than offset by the reinvestment of interest earnings by the Kiribati Provident Fund. The capital account shifted to a marginal surplus in 1994, primarily reflecting reduced reinvestment, together with further, albeit smaller, inflows of airport related aid.

B. External Assets and Debt

After increasing by 19 percent to $A 386 million in 1993, total official external assets, which are defined to consist of the KERF (see Box), government accounts held abroad, and net foreign assets held by the Bank of Kiribati declined by 7 percent to $A 358 million, reflecting a valuation loss of the KERF (Table 21); notwithstanding this decline, gross official foreign assets stood at the equivalent of 8.7 years of imports or more than six times annual GDP. Among official external assets, the RERF remained predominant, accounting for more than 80 percent of the total at end-1994. After increasing by 22 percent in 1993, the net value of the RERF fell by $A 30 million in 1994, owing to a valuation loss of $A 45 million (a $A 28 million loss on account of a decline in bond and equity prices and a $A 17 million exchange rate loss resulting from the appreciation of the Australian dollar vis-a-vis major currencies, especially the U.S. dollar). Other external assets, comprising those held by the National Provident Fund and the Kiribati Copra Cooperative Society, increased by 15 percent over the period, reflecting favorable returns from investments in Australia.

Kiribati: Revenue Equalization Reserve Fund

Origin. The Revenue EqualizationReserve Fund (RERF) was established by the British colonial administration in 1956 to hold royalties from phosphate mining in trust for the people of Kiribati in light of foreseeable depletion of the deposits. The RERF began with an initial contribution of $AO. 5 million from the administration and, by 1979, when Kiribati gained independence, the value of the fund increased to $A 69 million, as all investment income was reinvested. After independence, the fund began to be drawn down to provide the residual financing to the recurrent budget, but drawdowns generally have been limited to a fraction of annual investment income.

Administration. The operation of the fund is administered by the Reserve Fund Investment Committee (RFIC), which consists of the Minister of Finance (Chairman) and five other senior officials. The RFIC is required to file quarterly and annual reports on operations with parliament, whose approval is necessary for all drawdowns. The RFIC is empowered to appoint fund managers, make decisions concerning the auditing and performance review of the fund, and set broad operational guidelines for investment, including currency composition, asset structure, and risk management The current operational guidelines are to be reviewed in 1995 by a specialist to be appointed by the RFIC.

Management. Until May 1995, the fund had been managed by one London-based brokerage firm, but the number of fund managers has been increased to two since then. Corresponding to changes in operational guidelines, the number of currencies in which the fund is held has been increased to more than 14, while remaining heavily weighted in the Australian dollar (about 50 percent at end-1994). The fund was originally invested entirely in bonds, but the share of equities has been raised to a maximum of 50 percent. To improve the monitoring of fund management, a custodial company was appointed in June 1995, and comprehensive audits are to be held every six years.

Recent Developments. During 1979-94, the nominal value of the fund grew at an average annual rate of 11 percent to $A 316 million, reflecting the authorities’ cautious policy with regard to drawdowns from the fund, generally buoyant international capital markets, and the depreciation of the Australian dollar against major currencies. In terms of the real per capita value (at 1995 prices), the fund increased by 3.5 percent per year to $A 4,300. The value of the fund, however, experienced a large decline in 1988 and 1994. The latter decline ($A 45 million) was associated with falling bond and equity prices and valuation losses reflecting in particular the appreciation of the Australian dollar against the U.S. dollar.

Table 21.

Kiribati: External Assets and Liabilities, 1990-94 1/

(In millions of Australian dollars)

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Sources: Data provided by the Kiribati authorities; and staff estimates.

Figures may not add up to totals owing to rounding.

Includes the Consolidated Fund, the Import Levy, Dai Nippon Causeway, and Leper Trust Fund accounts.

Includes accrued interest not received, unrealized capital gains, and the effects of exchange rate changes.

Includes contributions from the Government and payments of management fees.

At the end of period.

External debt rose to $A 4.9 million (11 percent of GDP) by 1992, all of which represented concessional loans from the Asian Development Bank to finance the Development Bank of Kiribati, the construction of a causeway, the renovation of a shipyard, and investment by the Public Utilities Board. In 1993-94, total debt increased by $A 4.4 million to $A 9.3 million (18 percent of GDP), reflecting highly concessional loans received from the People’s Republic of China for an airport upgrading project.21 External debt-service payments remained low, averaging less than 1 percent of exports of goods and services, reflecting the low level of loans contracted and their concessional nature.

C. Exchange and Trade System

1. Exchange arrangement

The official currency of Kiribati is the Australian dollar, although a small number of Kiribati coins are in circulation. There is no central monetary institution and the authorities do not buy or sell foreign exchange. Any purchases or sales of foreign currencies in exchange for Australian dollars must be undertaken with the Bank of Kiribati, the only authorized foreign exchange dealer; no forward cover is available for protection against exchange rate risk. There are no taxes or subsidies on the purchases or sales of foreign exchange. The Bank of Kiribati quotes daily rates for 15 currencies on the basis of their respective values against the Australian dollar. Kiribati formally accepted the obligations of Article Vm, Sections 2, 3, and 4 of the Fund agreement, effective August 22,1986.

2. Imports and import payments

Import licenses are normally not required. The importation of a limited range of goods is prohibited for health, safety, or environmental reasons. Tariffs apply to most private imports and range up to 80 percent. Specific duties exist on a small range of goods, including rice, flour, petroleum products, alcoholic beverages, and tobacco products.

3. Payments for invisibles

There are no restrictions or limits on payments for invisibles.

4. Exports and export proceeds

There are no surrender requirements for export proceeds. The 15 percent ad valorem export tax on scrap iron and aluminum cans was abolished in early 1995. There are no remaining taxes or quantitative restrictions on exports, except that copra can only be exported through the Kiribati Copra Cooperative Society.

5. Capital

The authorities maintain a liberal approach toward foreign direct investment. There are no restrictions on types of investment, but export-promoting and import-substituting investments are generally favored. All applications for foreign investment must be made to the Foreign Investment Commission, which approves applications for foreign investment up to $A 250,000; applications with a higher foreign capital contribution require Cabinet approval. Under the Foreign Investment Promotion Act, investors may be granted duty-free imports of capital goods and raw materials. Investments in pioneer industries are eligible for a tax holiday of up to six years. Repatriation of profits and capital is generally unrestricted.

References

  • International Monetary Fund, “Kiribati-Background Paper,” SM/93/191, August 19, 1993.

  • International Monetary Fund, “Kiribati–Staff Report for the 1993 Article IV Consultation,” SM/93/190, August 18, 1993.

  • International Monetary Fund, “Kiribati–Report on the Balance of Payments Statistics Mission,” (January 13-22, 1993), prepared by A.K. Siddique, May 26, 1993.

    • Search Google Scholar
    • Export Citation

  • Kiribati Publications, Government of the Republic of Kiribati, 1995 Output Budget, A Move Toward Productivity and Sustainable Development Through Greater Accountability, Transparency and Better Use of Our Limited Resources, February 1995.

  • Kiribati Publications, Government of the Republic of Kiribati, 1995 Development Budget, February 1995.

  • Kiribati Publications, Government of the Republic of Kiribati, Annual Accounts for the Year Ended December 31, 1993.

  • Kiribati Publications, Kiribati, Statistics Office, Ministry of Finance, Kiribati: Government Finance Statistics 1985-93, February 1995.

  • Kiribati Publications, Kiribati, Statistics Office, 1993 International Trade: Imports and Exports, October 1994.

  • World Bank, Pacific Island Economies: Building a Resilient Economic Base for the Twenty-First Century, Report No. 13803-EAP, June 1995.

  • World Bank, Pacific Island Economies: Toward Efficient and Sustainable Growth, Volume 3, Kiribati—Country Economic Memorandum, Report No. 11351-EAP, March 1993.

    • Search Google Scholar
    • Export Citation

  • Other, Australian International Development Assistance Bureau, The Kiribati Economy: Development Options and Prospects for Growth, No. 26, June 1992.

  • Other, HSBC Asset Management, Investment Manager’s Report for the Government of the Republic of Kiribati (RERF), December 1994 and March 1995.

1

Despite progress made in recent years, national accounts data suffer from serious weaknesses stemming from the lack of sufficient raw data and appropriate deflators. The data presented in this section represent preliminary estimates made by the authorities and the staff.

2

The price elasticity of copra production is high because of a strong substitution between copra and seaweed production.

3

Defined as the difference between the export price (f.o.b.) and domestic costs other than payments to growers (e.g., freight, commissions, stevedoring, wharfage, and other operating costs), which is equivalent to net income received by growers in the absence of price support. The domestic costs are estimated at about $A 190 per ton as of January 1995.

4

Producer price support is financed through two resources: STABEX funds from the European Union and the KCCS’s own reserves. Under the formula adopted since May 1991, STABEX funds finance the shortfall of the net export price over the minimum support price, while the KCCS largely meets the excess of the producer price over the minimum price.

5

The minimum support price is broadly related to what is perceived as the average production cost for growers.

6

The net export price at the end of 1994 is estimated at $A 288 per ton and the difference between this net export price and the producer price ($A 112 per ton) was financed by drawdowns from the KCCS’ reserves and the provision of government subsidies.

7

These financial difficulties partly stemmed from debt-service payments on an overdraft ($A 350,000) which the company incurred in 1990.

8

The Income Tax Act (Section 82: Pioneer Industries), Protected Industries Ordinance (1977), and Companies Ordinance (1979).

9

Under the Price Control Ordinance of 1976, the Ministry of Trade, Industry, and Labor regulates the maximum prices of basic consumer goods, which include flour, rice, sugar, corned beef, kerosene, gasoline, and twist tobacco. These ceilings are aimed at regulating the profit margins of the trading companies that import these goods (mostly government-owned).

10

The central government budget comprises the recurrent budget and the development budget. In general, recurrent budget deficits (surpluses) are financed through drawdowns (accumulations) of the Consolidated Fund held by the Ministry of Finance; the total balance of the Consolidated Fund reached $A 12 million at end-1994, reflecting surpluses of the recurrent budget in recent years’. To enhance the efficiency of current expenditure, the recurrent budget for 1995 was presented for the first time in a format which explicitly linked appropriations to fiscal objectives. The development budget presents budget estimates of capital expenditure mostly financed by external aid (including aid-in-kind). Data on development expenditure and external aid are highly incomplete and large discrepancies exist between them, because only cash transactions are recorded in the government account (the Development Fund) and no reliable information is available on the timing of aid disbursements.

11

At present, customs duty rates range up to 80 percent (mainly for luxury goods, including cars), with most rates falling in the 40-50 percent range. Aid-related imports are exempt from customs duty.

12

Corporate tax rates, which are applied to about 125 companies, comprise two rates at present: 25 percent (up to $A 50,000) and 35 percent (above $A 50,000).

13

The dividend payments were associated with the redistribution of accumulated profits by the Bank of Kiribati and the Telecommunications Services Kiribati Ltd. The former also boosted nontax revenue (dividend receipts) in 1993 because the bank is partly owned by the Government.

14

The new personal income tax schedule, which is applied to about 8,500 individuals, comprises four marginal rates: zero (up to $A 1,800); 25 percent ($A 1,800-15,000), 30 percent ($A 15,000-50,000), and 35 percent (above $A 50,000).

15

A new five-year fishing treaty was signed in April 1992 between the United States and members of the South Pacific Fisheries Forum, with the annual fishing license fees increased from $14 million to $18 million. Fifteen percent of the annual fees is distributed uniformly among the South Pacific Fisheries Forum members and the remainder distributed according to the fish caught in the respective national waters.

16

The customs duty was reduced from 4 cents to 2 cents per kilogram for rice, from 2 cents to 1 cent per kilogram for flour, and from 55 percent to 40 percent for sugar.

17

Because the direct subsidies received from the Government are not sufficient to cover losses in water and sewage services, electricity tariffs are kept high to cross-subsidize these losses.

18

These are the Kiribati Supply Company, the Captain Cook Hotel, the Kiribati Marine Export Ltd., and the Otintaai Hotel.

19

’Government guarantees were also provided prior to 1995, but the total amount of bank loans extended to public enterprises under such guarantees was modest.

20

The number of the members is currently 12,000 and the contribution rate by employees is set at 5 percent of their salaries and wages, with a matching contribution by employers.

21

The loans are interest free and have a maturity of 20 years, with a 10-year grace period.

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Cover IMF Staff Country Reports
Kiribati: Recent Economic Developments
Author:
International Monetary Fund
Volume/Issue:
Volume 1995: Issue 117
Publisher:
International Monetary Fund
ISBN:
9781451814354
ISSN:
1934-7685
Pages:
48
DOI:
https://doi.org/10.5089/9781451814354.002
  • Chart 1
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    Chart 1

    KIRIBATI: KEY INDICATORS FOR PRODUCTION AND INFLATION, 1987-94 1/

  • Chart 2
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    Chart 2

    KIRIBATI: CENTRAL GOVERNMENT BUDGET, 1987-94 1/

    (In millions of Australian dollars)

  • Chart 3
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    Chart 3

    KIRIBATI: FINANCIAL SECTOR, 1987-94 1/

    (In millions of Australian dollars)

  • Chart 4
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    Chart 4

    KIRIBATI: EXTERNAL DEVELOPMENTS, 1987-94 1/

    (In millions of Australian dollars)

  • Chart 5
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    Chart 5

    KIRIBATI: REAL AND NOMINAL EFFECTIVE EXCHANGE RATES, 1985-95

    (1980=100)

Chart 1

KIRIBATI: KEY INDICATORS FOR PRODUCTION AND INFLATION, 1987-94 1/
Chart 2

KIRIBATI: CENTRAL GOVERNMENT BUDGET, 1987-94 1/

(In millions of Australian dollars)
Chart 3

KIRIBATI: FINANCIAL SECTOR, 1987-94 1/

(In millions of Australian dollars)
Chart 4

KIRIBATI: EXTERNAL DEVELOPMENTS, 1987-94 1/

(In millions of Australian dollars)
Chart 5

KIRIBATI: REAL AND NOMINAL EFFECTIVE EXCHANGE RATES, 1985-95

(1980=100)