Buzz Update IMF staff complete a visit to the Virtual Staff Republic of the Marshall Islands TOU

Buzz Update IMF staff complete a visit to the Virtual Staff Republic of the Marshall Islands

 TOU

IMF staff complete a visit to the Virtual Staff Republic of the Marshall Islands

IMF staff complete a visit to the Virtual Staff Republic of the Marshall Islands

April 13, 2022

End-of-mission press releases include statements from IMF staff teams who report preliminary results after visiting a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF Executive Board. Based on the preliminary results of this mission, the staff will prepare a report to be submitted to the IMF’s Executive Board for discussion and decision, subject to management approval.

                    <ul class="pr-points">
                                <li>Strong control measures by the Marshall Islands prevented the spread of domestic COVID-19.  Accelerating the vaccination rate is crucial to safely reopening borders.
  • The economy is recovering slowly and growth is expected to strengthen as Kovid-19 related restrictions are relaxed. But the outlook is clouded by the spillovers of the war in Ukraine and the relative uncertainty.
  • Policies should focus on dealing with initiatives that adopt still-emerging technology to maintain financial stability, as well as provide targeted support to the most vulnerable and gradually strengthen the financial position to maintain financial stability. And cohesive growth.
  • Washington DC:

    Ms. The International Monetary Fund (IMF) team led by Yong Sarah Zhou held virtual staff-level talks with officials in the Marshall Islands between March 28 – April 7, 2022. These discussions covered recent developments, economic outlook and policies. Priority priorities. At the end of the tour, Ms. Zhou released the following statement:

    “After a moderate contraction of 1.6 per cent, real GDP growth is expected to recover in FY2021, thanks to high fishing activity and strong donor support. Growth in FY2022, however, is expected to be slower than previously thought as extended travel restrictions and higher global commodity prices are having an impact on economic activity. Negative terms of trade shock along with reduction of grants put pressure on current account and financial reserves. Inflation in FY2022 is projected to rise to more than 6 percent, with higher food and fuel prices.

    “Uncertainty about the economic outlook is high and the risks are negative. Kovid’s local coverage of breakout and / or global outbreaks of new infectious and deadly COVID variants, major natural disasters related to climate change, rising and volatile food and energy prices, and the recent withdrawal of USD correspondent There are major negative risks such as banking relationship (CBR) due to AML / CFT risks.

    “Authorities have taken strong measures to respond to the COVID-19 epidemic — 80 percent of the Kovid support package (about 20 percent of GDP) was implemented by the end of March. While continuing efforts to expedite vaccination, the authorities should consult with donors on prioritizing and redistributing the remaining Kovid funds depending on the financial situation. Authorities should carefully assess and prioritize the cost pressures arising from the spillovers of war in Ukraine and ensure that measures to better protect the most vulnerable are well-aimed.

    [KMD1]

    Authorities should immediately develop a systematic but reliable financial adjustment plan to minimize the potential expiration of compact grants and minimize financial losses and protect long-term income. Achieving financial adjustment requires a combination of cost control, domestic resource mobilization and public financial management. Advancing tax policy reform should be a priority. It is important to ensure adequate implementation efficiency in the revenue administration, including consolidating the progress already made and upgrading the tax agency’s IT system to reduce the taxpayer compliance burden and reduce administrative costs. Reforming offshore shipping and corporate registry taxes will support public finance and improve transparency.

    [KMD2]

    “The Marshall Islands must exercise caution in pursuing initiatives such as the Digital Currency SOV Second Legal Tender, the Digital Economic Zone (DEZRA) and the newly enacted Act on Decentralized Autonomous Organizations. If not, the RMI’s final USD CBR could be in jeopardy, resulting in a significant drag on the economy.

    “Climate change and natural disasters pose an existential threat to the country. Accelerating the preparation of a national adaptation plan to address the challenges of climate change and to integrate climate-friendly investment and disaster spending into economic planning is crucial. It is important to speed up reforms to keep SOEs more stable and commercially viable in order to reduce financial pressures and improve financial viability.


    Creating new growth resources requires structural reforms and efforts to promote private sector development. Authorities have made good efforts in developing domestic tuna-value chains. The government should improve and pursue additional policy initiatives: (i) land registration and land lease hold activities; (ii) infrastructure including digital connection; (iii) education and opportunities for training and skills development; And (iv) social services. All of those measures will help reduce immigration to the US and achieve greater local growth.

    “We would like to congratulate the RMI officials as well as the private sector representatives for the fruitful discussions. We look forward to continuing the conversation during the Article IV consultation in the first half of 2023.

                    <div class="imf-com">
                        <h5>IMF Communications Division</h5>
    
    Media relations

    Press Officer: Pemba Sherpa

    Phone: +1 202 623-7100Email: [email protected]

    IMF Representative

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