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Small island economies : Consolited Investment Fund balance of Tuvalu
The Tuvalu Trust Fund has languished below its target maintenance value since 2008 and been unable since then to transfer resources to the Consolidated Investment Fund, through which budget deficits a... re financed. The investment fund neared utter depletion in 2012, prompting an A$4 million contribution from Australia (Figure 3.38.6). Nauru has recently ramped up its exploitation of secondary phosphate reserves, digging deeper to reach a production high in FY2012. The proper management of phosphate wealth and of revenues from the reopening of the RPC will largely determine Nauru’s fiscal and economic sustainability over the long run. In addition to effects on local employment and construction, the RPC has the potential to increase visa fee revenues by as much as A$16 million per year when operating at full capacity. However, full scaling up depends on the government and landowners reaching agreement on the terms of the land lease for two of the three RPC sites. Like phosphate revenues, RPC earnings may be transitory, so the government could consider saving RPC-related revenues for future generations and investing in priority infrastructure projects and human capital development. Prioritizing investments and building up savings will allow future generations to benefit from the current use of resources. In addition to equity concerns, such adjustments to fiscal policy would address issues affecting the sustainability of growth. Broadening the economic bases of these small islands through private sector development, the reform of state-owned enterprises, and other improvements to the business environment will help reduce reliance on foreign assistance and promote more inclusive growth over the longer term----------Source: International Monetary Fund. 2012. Tuvalu: 2012 Article IV Consultation. September. - http://www.imf.org/external/country/tuv/
Rank: 3300 of 4890 in Economy
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