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...
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
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/
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