Tuvalu Economy

Tuvalu Economy

Public finances, state budget – income, expenditure, balance for the last 5 years

The public sector represents 70% of GDP. The main incomes are fishing license fees (almost half of the income), income from national domain fees

“tv” (13.7% of income), then income from issuing stamps and coins and development grants. This made it possible to draw up relatively expansive budgets in previous years. Tuvalu’s economy uses the Australian dollar (AUD) as its currency.

Tuvalu Budget (AUD million)
2013 2014 2015 2016 2017
Income + development aid 44,5 53,6 64,9 66,6 68,7
Issues 32,5 41,5 60,6 60 70,9
Balance 10,9 12,1 4,5 6 -2,2

According to cheeroutdoor.com, Tuvalu manages the Tuvalu Trust Fund (TTF), which is expected to be increased to AUD 200 million by 2020. (In 2016, the value of the fund was AUD 15 million, an increase of AUD 1 million year-on-year). This fund is used for fiscal stabilization in years when revenues fall below a sustainable level. In 2016, the Tuvalu Survival Fund was established for the costs associated with the effects of climate change. In 2016, AUD 5 million was put into the fund. For the year 2017, the state budget counted on the transfer of AUD 2 million to this fund.

The main sectors focused on in the 2017 budget are: infrastructure, education, health, climate change and fiscal sustainability.

Unlike previous years, Tuvalu did not publish its national budget. Thus, the only source is the ADB statistics, which state Tuvalu’s income for 2017 at 136.2% of GDP (approx. 5 million USD), expenditures at 118.6% of GDP (approx. 47.4 million USD) and a balance of in the amount of 17.6% of GDP (approx. 7 million USD).

Balance of payments (current, capital, financial account), foreign exchange reserves (last 5 years), public debt to GDP, foreign debt, debt service

Current account balance (million USD)
2013 2014 2015 2016 2017
-8 -9 -10 -12 -15

Source: Ministry of Foreign Affairs of Australia

Capital and Financial Account Balance (AUD million)
2012 2013 2014 2015 2016p
-3,4 8,7 -4,9 2,1 -1,8
Reserves (AUD million) (not foreign exchange)
2012 2013 2014 2015 2016
27,5 37,9 41 46,4 42,7
Foreign debt (million USD)
2013 2014 2015 2016 2017
22 18 17 17 16

Zdroj: IMF Country Report No. 16/323, Asian Development Outlook 2018, ADB Key Indicators for Asia and the Pacific 2017, MZV Austrálie

Banking system (major banks and insurance companies)

There is no Central Bank in the country (AUD is the official currency) and (with limited options) there is only one commercial bank (National Bank of Tuvalu).

Tax system

Income tax, including corporate tax, is set at 30% on annual incomes above AUD 1900. There are also sales taxes on certain goods and services. Sales of stamps, copra and fishing licenses are thus taxed. The government maintains price restrictions on gasoline and basic foodstuffs.

Representation of the EU in the country

The local authority for Kiribati is the EU Delegation in Fiji
Address: Delegation of the European Union for the Pacific
Level 6, Tappoo City Complex,
Corner of Scott & Usher St, Suva
Email: [email protected]
Postal address: Delegation of the European Union for the Pacific
Private Mail Bag,
GPO Suva
Tel: (+679) 3313633
Fax: (+679) 3300370
Web: https://eeas.europa.eu/delegations/fiji_en

The country’s trade relations with the EU

Trade relations between the EU and Tuvalu are negligible and their volume exceeds the minimum resolution of the European Statistical Office EUROSTAT. The 2016 report continues to be the most up-to-date information.

Provision of development funds and EU instruments

Under the 10th period of the European Development Fund (EDF), Tuvalu has been allocated €million for projects focused on water, sanitation and waste. These projects delivered 1,233 rainwater catchment tanks, covering 86% of households in the outer islands. As part of the projects, up to 90 composting toilets are to be built on Funafuti. In the area of ​​waste, Tuvalu has acquired basic equipment for waste management, such as tractors, flatbed trucks and household bins for medical waste and waste oil. As part of this project, the EU helped the government establish the SWAT (Solid Waste Management Agency).

The EU also supported the construction of photovoltaic energy facilities to ensure a 24-hour electricity supply on the islands of Nukufetau, Nukulaelae and Nui. The project was budgeted at EUR 2 million.

Other sectors were focused on capacity building in climate change adaptation, undersea minerals, sustainable fisheries, tourism, trade policy, agriculture, public finance and hazardous waste management.

For the 11th EDF period (2014-2020), million EUR is allocated for Tuvalu, with a main focus on waste management (6 million EUR). The main sub-sectors supported are waste management (including collection), improvement of the legal framework for waste management, capacity development and increased emphasis on recycling. EUR 300,000 was allocated to strengthening civil society and the rest to support services to the main project.

Tuvalu Economy