Kiribati economy: The sinking feeling

Kiribati is made up of a group of 33 Islands in the Pacific Ocean that are under threat of being drowned by the Ocean, on account of climate changes. The present International conference on Climate change at Copenhagen has failed to address the concerns of such small Island nations such as Kiribati that has to do with their very survival.

Phosphate deposits that until the late ‘70s were the key contributors of the economy have since depleted, and now fishing and agriculture, mainly copra production, are the major economic activities. Kiribati did one wise thing by establishing a Trust Fund with proceeds from phosphate mining-the Revenue Equalization Reserve Fund (RERF). This fund is used to cover the annual fiscal deficit.

Kiribati has an exclusive economic zone in the pacific covering a vast area of 3.5 million square kilometers, endowed with a variety of fish, especially tuna. Kiribati derives good income by licensing foreign fishing vessels to operate in its EEZ. As a matter of fact, over 80% of the Kiribati population is dependent on the fishing industry for its sustenance.

As for other economic activities, there does not appear to be much scope, primarily on account of the small size of the economy, as well as the Island nation’s remoteness from major markets, apart from lack of a variety of raw materials. All these factors have combined to stunt the growth of the economy, so much so, that it is classified as a least developed country by the United Nations.

Australia is the major market for Kiribati, as well as a source of aid, and there is a Kiribati-Australia Partnership for Development in place. The Kiribati Government has also taken initiatives in addressing these problems and has identified the following areas for special attention in the Kiribati Development Plan 2008-2011: Human Resources Development, Economic growth and Poverty Reduction, Health, Environment, Governance and Infrastructure.

Kiribati is in need of help from the International Community in addressing the most critical problems faced by it, namely the threat of environmental degradation, global warming, etc, that threaten its very existence.