Kiribati - Economy

Overview: Phosphate mining on Banaba by the British Phosphate Commission accounted for 80% of exports and 50% of government revenue until the mines were exhausted in 1979, the year of independence. The loss of the phosphate industry caused a huge drop in GDP, which, in real terms, is still considerably below pre-1980 levels; no other product or sector has yet been able to make up the lost revenue. The best prospects for diversification of the economy lie in marine resources. The country’s exclusive economic zone of some 3.55 million sq km is among the largest in the world in relation to its land area. After fishing licences, the next largest source of income is remittances from around 1,500 seamen employed on foreign – mainly German – ships.

A vital source of revenue is the Revenue Equalisation Reserve Fund, built up from past phosphate taxation surpluses. It was worth some US$400 million by 2008.

There were some years when the economy was buoyant in the 1990s, growing 5% in 1998 and 9.5% in 1999, with modest levels of inflation, but in the 2000s growth was generally slower, when sustainable development became a key objective. It has become increasingly apparent that this low-lying country faces numerous development challenges, not least that 32 of 33 islands rise no higher than 2m above sea level. The economy dipped into recession in 2005 (0.2%), surged in 2006 (5.8%) and grew more slowly in 2007 (2.5%), with very low inflation.

Trade: Main exports are copra, seaweed (from Fanning Island in the Line group) and fish products. Imports include food and consumer goods, fuels, chemicals, vehicles and machinery. Chief export partners are Japan and South Korea; leading import partners are Australia, Fiji Islands and New Zealand.