2016 Index of Economic Freedom

Kiribati

overall score46.2
world rank165
Rule of Law

Property Rights30.0

Freedom From Corruption29.2

Limited Government

Government Spending0.0

Fiscal Freedom73.3

Regulatory Efficiency

Business Freedom51.6

Labor Freedom83.9

Monetary Freedom81.0

Open Markets

Trade Freedom58.2

Investment Freedom25.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 0.1 million
  • GDP (PPP):
    • $0.2 billion
    • 3.8% growth
    • 1.7% 5-year compound annual growth
    • $1,713 per capita
  • Unemployment:
  • Inflation (CPI):
    • 2.1%
  • FDI Inflow:
    • $1.2 million
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Kiribati is one of the least developed Pacific Island nations. The public sector continues to dominate economic activity, accounting for two-thirds of employment and over 80 percent of GDP. Budgetary pressure has undermined economic growth, and the economy is heavily dependent on foreign assistance, remittances, and an increasingly important tourism sector.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 46.2 (down 0.2 point)
  • Economic Freedom Status: Repressed
  • Global Ranking: 165th
  • Regional Ranking: 38th in the Asia–Pacific Region
  • Notable Successes: Monetary Freedom
  • Concerns: Rule of Law, Open Markets, and Regulatory Efficiency
  • Overall Score Change Since 2012: –0.7

Economic dynamism is also hindered by poor public administration. An inefficient regulatory framework has pushed much of the workforce into the informal economy. High tariffs continue to limit trade and investment flows, reducing benefits from integration into the global economy.

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Background

The Pacific archipelago of Kiribati gained its independence from Britain in 1979 and is a democracy. With presidential elections scheduled for early 2016, third-term President Anote Tong is barred from reelection. Economic activity in Kiribati once centered on the mining of phosphates, but deposits were exhausted in 1979. However, a $500 million Revenue Equalization Reserve Fund created with mining revenues continues to provide significant revenue. Reliance on foreign assistance, remittances from overseas, fishing licenses, exports of fish and coconuts, and tourism is also heavy. Crippling algae in the corals surrounding Kiribati seriously threaten the fishing industry, and preservation of the coral ecosystem, the South Pacific’s largest marine reserve, remains a priority.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 29.2 Create a Graph using this measurement

Official corruption and abuse are serious problems, and international donors continue to push for improved governance and transparency. The judicial system is modeled on English common law and provides adequate due process rights, but the rule of law remains uneven across the country. Traditional customs permit corporal punishment. Contracts are weakly enforced, and courts are relatively inexperienced in commercial litigation.

Limited GovernmentView Methodology

The top individual income and corporate tax rates are 35 percent. Taxation remains erratic and poorly administered. The total tax burden is estimated to equal 14.9 percent of total domestic income. Government spending amounts to 96.6 percent of GDP. Large reserves held in a sovereign wealth fund have helped to cushion the effects of the global downturn. Public debt amounts to less than 10 percent of GDP.

Regulatory EfficiencyView Methodology

The costs of launching a business and completing licensing requirements remain high, discouraging new investment. A small share of the labor force participates in the formal economy, and the public sector is the major source of employment. Monetary instability is mitigated by use of the Australian dollar as the official currency, but the government funds price-distorting subsidies for some agricultural products such as coconut oil.

Open MarketsView Methodology

Kiribati’s average tariff rate was 15.9 percent as of 2006. The government relies heavily on tariffs for revenue. New foreign investment may be screened, and foreign ownership of land is restricted. With a large part of the population remaining outside the formal banking system, constrained access to financing severely impedes entrepreneurial activity and development of the private sector.

Country's Score Over Time

Bar Graph of Kiribati Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
1Hong Kong88.6-1.0
2Singapore87.8-1.6
3New Zealand81.6-0.5
4Australia80.3-1.1
5Taiwan74.7-0.4
6Japan73.1-0.2
7South Korea71.70.2
8Malaysia 71.50.7
9Macau70.1-0.2
10Brunei Darussalam67.3-1.6
11Thailand 63.91.5
12Kazakhstan63.60.3
13Samoa63.51.6
14Philippines63.10.9
15Vanuatu60.8-0.3
16Azerbaijan60.2-0.8
17Sri Lanka59.91.3
18Tonga59.60.3
19Kyrgyz Republic 59.6-1.7
20Bhutan59.52.1
21Indonesia59.41.3
22Mongolia59.40.2
23Fiji58.8-0.2
24Cambodia57.90.4
25India56.21.6
26Pakistan 55.90.3
27Vietnam542.3
28Maldives53.90.5
29Bangladesh 53.3-0.6
30Papua New Guinea53.20.1
31China52-0.7
32Micronesia51.82.2
33Tajikistan51.3-1.4
34Nepal50.9-0.4
35Laos49.8-1.6
36Burma48.71.8
37Solomon Islands470.0
38Kiribati46.2-0.2
39Uzbekistan46-1.0
40Timor-Leste45.80.3
41Turkmenistan41.90.5
42North Korea2.31.0
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