WELLINGTON (Reuters) – Six Pacific nations are at high risk of debt distress, partly as governments respond to the COVID-19 crisis, the World Bank said in a report. And spending is reported on Thursday.
The report, titled “Raising Pacific Islanders,” said Kiribati, the Republic of the Marshall Islands, the Federated States of Micronesia, Samoa, Tonga and Tuvalu needed fiscal consolidation because these The country lacks domestic debt markets and access to international capital markets.
Among other countries in the region, Vanuatu is rated as medium risk, while Palau and Nauru’s debt is sustainable, the report noted.
“While levels of public debt as a share of GDP remain moderate across much of the region, PIC9’s economic geography and precarious income base mean that the risk of debt distress remains high,” it said .
Debt has surged in the region since 2019 as tourism-dependent economies hit by COVID border closures, trade hit by logistical challenges and weather events damage. Fiji must also take urgent action to reduce its debt burden, the World Bank said last month.
World Bank Papua New Guinea and Pacific Islands country director Stephen Ndegwa said reducing debt, increasing income and improving the quality of government spending were key areas that Pacific countries needed to address.
Continued access to grants in line with pre-pandemic trends is also critical to finding sustainable capital investment projects, report says
World Bank report recommends that, in addition to Improving taxation, in addition to spending more efficiently, must be a priority for Pacific governments to ensure individuals and businesses make a fair contribution to climate change in the region. Economy.
It also said Pacific nations should allocate more money to social assistance and protection measures.
“These investments will help reduce poverty and inequality while also supporting communities during difficult times, including following climate-related disasters or major pandemic and recent natural disasters in Tonga and Vanuatu,” it said.