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Asia and Pacific > Marshall Islands, Republic of the

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Cover Technical Assistance Reports
Republic of the Marshall Islands: Technical Assistance Report-Operationalizing A New Monetary Authority
International Monetary Fund. Monetary and Capital Markets Department
At the request of the authorities of the Republic of the Marshall Islands (RMI), IMF technical assistance was provided to advise on the key steps to be taken to operationalize the recently established Marshall Islands Monetary Authority. The mission recommends establishing core central banking functions, including an integrated payments and clearing system, and core banking operations, while embedding an organizational structure supported by robust governance, risk management, and internal control frameworks. A phased approach to organizational development is emphasized to align capacity with the scale and complexity of the RMI financial sector. The mission recommends prioritization of recruitment and capacity building to establish the MIMA’s core functions and support roles during its start-up phase.
Keywords:
Marshall Islands Monetary Authority; governance; central banking; organizational structure; payments; internal controls; accounting and financial management; risk management and compliance.; payment system oversight; Imf publication; risk management; Board Oversight; staff of the International Monetary Fund; Auditing; Payment systems; Internal audit; External audit; Global
Cover IMF Staff Country Reports
Republic of Fiji: 2026 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Republic of Fiji
International Monetary Fund. Asia and Pacific Dept
The 2026 Article IV Consultation highlights that in Fiji the economy faces rising inflationary pressures driven by higher fuel prices, while public debt is expected to remain elevated despite gradual fiscal consolidation. Increased energy costs are likely to strain foreign reserves, with downside risks stemming from further oil price shocks, higher borrowing costs, constrained public investment, structural bottlenecks, supply-side limitations, and natural disasters. The key policy challenge is to balance cost-of-living pressures with the need to restore fiscal sustainability and support long-term growth. Recommended measures include allowing fuel prices to adjust while protecting vulnerable households through targeted social assistance. Achieving a fiscal surplus of two percent by FY2029–30 would help reduce public debt below 70 percent by FY2032–33. Public expenditure should be reoriented toward productive capital investment to strengthen growth. In addition, liquidity conditions should be normalized to improve monetary policy transmission, while structural reforms should focus on strengthening implementation capacity, encouraging private investment, improving public investment management, and enhancing climate resilience.
Keywords:
governance reform; loan repayment; exchange rate arrangement; Imf executive board; exchange rate; fund's Institutional View; Capital spending; Inflation; Global; Pacific Islands; Asia and Pacific
Cover IMF Working Papers
Climate Finance and Adaptation Needs In Pacific Island Countries
Fabien Gonguet
,
Xuehui Han
,
Choonsung Lim
,
To-Nhu Dao
, and
Saraf Nawar
Pacific Island Countries (PICs) face acute and rising climate adaptation needs due to high exposure to sea‑level rise, natural disasters, and structural vulnerabilities associated with small size and geographic remoteness. This paper develops a unified framework to produce the first region‑wide, internally consistent estimates of climate adaptation financing needs for PICs. A metadata analysis harmonizes country‑level assessments into comparable annual measures, while a complementary machine‑learning approach generates synthetic estimates for data‑deficient countries using economic, geographic, and climate‑vulnerability indicators, subject to differences in sectoral definitions and coverage embedded in the underlying source studies. The results show that adaptation needs are large, highly uneven across countries, and exceptionally high relative to GDP, particularly for atoll nations where physical risks dominate. The paper also examines climate adaptation finance flows to PICs over the past decade, distinguishing between commitments and estimated disbursements, and finds that current financing levels fall well short of projected needs. Disbursement ratios vary substantially across financing channels, reflecting differences in institutional capacity and project implementation. Taken together, the findings highlight substantial adaptation financing gaps in PICs and underscore the importance of strengthening institutional capacity and improving the effectiveness and accessibility of climate finance mechanisms.
Keywords:
Climate Adaptation; Pacific Island Countries; Financing Needs; Climate Finance Flows; Meta-data Analysis; Machine Learning; face acute; disbursement ratio; metadata analysis; finance flow; IMF working papers; Climate finance; Climate change; Climate policy; Natural disasters; Pacific Islands; Global; Asia and Pacific; Sub-Saharan Africa
Cover Selected Issues Papers
Building Resilience to Natural Disasters and Climate Change in the Marshall Islands: Republic of the Marshall Islands
Xin Li
,
Azar Sultanov
, and
Taku Zakoji
The Republic of Marshall Islands (RMI) faces severe challenges due to its vulnerability to climate change and natural disasters, resulting in economic repercussions such as erosion, flooding, droughts, and damage to essential infrastructure. Leveraging a dynamic general equilibrium model—Debt, Investment, Growth, and Natural Disasters (DIGNAD) Model, this paper shows that resilient infrastructure investments and effective public investment management can significantly reduce GDP contraction following rapid onset and slow-moving natural disaster shocks. Tax reform, featured by a permanent increase in the VAT rate, helps facilitate infrastructure restoration against persistent sea-level rise and boost private investment and long-term growth despite dampened consumption. To address substantial financing needs for climate-resilient infrastructure, maximizing climate funding is essential, which includes improving domestic revenue collection and mobilizing external resources from the renewed Compact and development partners. RMI must also strengthen its institutional capacity to access climate finance effectively. Given the limited financial envelope, prioritizing adaptation actions while maintaining fiscal sustainability is vital for the country's future resilience.
Keywords:
Natural Disasters; Sea-level Rise; Resilience; Adaptation; External Financing; Revenue Mobilization; Small States; IMF country; infrastructure investment; IMF staff; climate funding; building Resilience; Infrastructure; Climate change; Public investment spending; Climate finance; Global
Cover IMF Staff Country Reports
Republic of Marshall Islands: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Authorities of the Republic of Marshall Islands
International Monetary Fund. Asia and Pacific Dept
The 2025 Article IV Consultation highlights that as a small, fragile, and remote island state, the Republic of the Marshall Islands faces several vulnerabilities and challenges, including high exposure to climate-related shocks and persistent labor emigration. Near-term growth is projected to accelerate amid expansionary fiscal policy. Growth is expected to moderate over the medium term, constrained by structural challenges and inflation to remain above its historical average. The government is pursuing an ambitious reform agenda. The recent renewal of the Compact of Free Association (Compact) with the United States offers a window of opportunity to enhance fiscal prudence and press ahead with such reforms. In order to ensure fiscal sustainability and enhance developmental impact, the immediate replacement of the Universal Basic Income with a more targeted social scheme is recommended. Concurrently, subsidies to State-Owned Enterprises should be phased out, utilizing the Compact’s Extraordinary Needs Distribution for outer atolls as an alternative support mechanism. Continued momentum in tax reform is crucial to reduce revenue volatility and create necessary fiscal space.
Keywords:
Rmi authorities; compilation technique; technology governance; Medium-Term Budget and Investment Framework; e-money instrument; Imf executive board; Debt sustainability; Debt sustainability analysis; Global; Pacific Islands
Cover IMF Staff Country Reports
Republic of Marshall Islands: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper focuses on building resilience to natural disasters and climate change in the Marshall Islands. The Republic of Marshall Islands (RMI) faces severe economic threats from climate change and natural disasters, resulting in coastal erosion, flooding, and infrastructure damage. Utilizing the Debt, Investment, Growth, and Natural Disasters Model, this paper demonstrates that resilient infrastructure investments and effective public investment management are crucial for minimizing gross domestic product contraction following disaster shocks. A key recommendation is implementing a permanent increase in the value added tax rate as part of tax reform. This measure helps finance infrastructure restoration against persistent sea-level rise while simultaneously boosting private investment and long-term growth. To meet the substantial financing needs for climate-resilient infrastructure, RMI must maximize climate funding by improving domestic revenue collection and mobilizing external resources from the renewed Compact and development partners. Given the limited fiscal space, prioritizing adaptation actions while maintaining fiscal sustainability is essential for the nation's future resilience.
Keywords:
staff team; infrastructure investment; steady state value; climate change in the Marshall Islands; IMF country; Natural disasters; Infrastructure; Public investment spending; Climate change; Climate finance; Global
Cover IMF Working Papers
Growth Strategies and Diversification in the Pacific Islands Countries
Gabriela Cugat
We examine growth strategies for the Pacific Island Countries (PICs) focusing on the role of tourism and diversification. First, we quantify the contribution of tourism to growth using panel regressions and we compute how much additional tourism would be needed for PICs to sustain comparators’ growth rates. Given the sizable scaling ups in tourism required, we consider the benefits of an alternative growth strategy based on diversification. We identify diversification episodes in the PICs and quantify their benefits using the synthetic control method. Such episodes have had mixed results for PICs. Finally, we outline a framework for designing growth strategies in the PICs, based on diagnosing the binding constraints to their economic expansion and working around these limitations.
Keywords:
Tourism; diversification; growth; Pacific Islands countries; diversification episode; growth strategy; Annex II; IMF exports diversification toolkit; tourism-led strategy; Export diversification; Exports; Natural disasters; Pacific Islands; Caribbean
Cover IMF How To Notes
How to Manage Government-Sector Remuneration and Staffing in Small States
Nick Carroll
,
Celine Thevenot
, and
Sébastien Walker
The management of government spending on employee compensation is crucial for small developing states (SDS), where such spending constitutes a large portion of government expenses. These states often face unique challenges, such as disproportionately high government employment levels and the issue of "brain drain"—the latter complicates staffing for skilled positions. This note summarizes the unique challenges these states face, underscoring the importance of tailored strategies for small states in managing government compensation and employment effectively.
Keywords:
government-sector remuneration; staffing; small states; fiscal sustainability; brain drain; compensation spending; public service delivery; employment management; government compensation; staffing in small states; IMF Library; Public employment; Wages; Caribbean
Cover IMF Working Papers
Impact Dynamics of Natural Disasters and the Case of Pacific Island Countries
Choonsung Lim
and
Yue Zhou
This paper investigates the short- and medium-term economic impacts of natural disasters, focusing on Pacific Island Countries (PICs) and using global high-frequency nightlight data in addition to macroeconomic data. In this paper, we identify significant short-term effects on growth following natural disasters, which are exacerbated by high public debt and heightened climate vulnerability. Although the negative impacts generally diminish within a year for most countries, PICs face disproportionately larger and rising short-term disruptions (-1.4 percent of annual potential growth) and persistent medium-term consequences. Further analysis of PICs' fiscal, external, and real sectors following severe disasters using annual economic data reveals that weaker fiscal positions, partly driven by reduced output, may lead to an upward trend in public debt, and increased imports may deteriorate current account balances over the medium term. These findings underscore the need for robust counter-cyclical policies and proactive investments in climate resilience to mitigate the adverse effects of climate shocks and promote long-term economic stability
Keywords:
Climate change; natural disasters; growth; development; nightlight; IMF staff calculation; Choonsung lim; impact dynamics; nightlight data; IMF working paper 25/84; Fiscal stance; Pacific Islands; Global
Cover Technical Assistance Reports
Republic of the Marshall Islands: Technical Assistance Report-Consumption and Income Tax Reform
International Monetary Fund. Fiscal Affairs Dept.
This report provides analysis and advice on tax policy and administration reforms to modernize and improve the income and consumption tax system. On consumption taxes, the key recommendation is to replace the current system that is based on import tariffs, a business turnover tax, and local sales taxes, by a more efficient and equitable system with a broad-based value-added tax, selected excises to address externalities, and a profit tax. On income taxes, the report recommends base broadening and simplifying the rate structure.
Keywords:
Personal income tax; Corporate income tax; Value-added tax; Turnover tax; Republic of the Marshall Islands.; schedule reform option; Marshalls energy company; gross revenue; profit tax; capacity development mission; reform management governance; tax administration issue; income tax reform; administration system; Marshall Islands consumption tax; Tax administration core functions; Consumption taxes; Income and capital gains taxes; Global; Asia and Pacific; Pacific Islands