Key Drivers of Fragility
Kiribati’s economic growth potential isconstrained by very limited land area, geographicdispersion across 5,000 kilometers o ocean, andremoteness rom major markets resulting in hightransport costs and limited transport services.
Almost hal o national income is derived romabroad, predominantly through fshing licenseees, remittances, oreign aid, and revenuerom the country’s trust und, the RevenueEqualization Reserve Fund.
Kiribati is highly vulnerable to economic shocksassociated with rising oil and ood prices, losso fsheries revenues, and the appreciation o the Australian dollar (A$), which is the legal tenderin Kiribati.
Private sector activity is low and economicopportunities are limited, leading to highunemployment rates, especially among the youth.
Te public sector is dominant, with state-owned enterprises (SOEs) operating in mostsectors o Kiribati’s economy. SOEs, supportedby government subsidies and guaranteed loans,have largely ailed to provide essential goodsand services, such as reliable electricity and
L A G O O N
P A C I F I C O C E A N
Buariki Tebangaroi NuatabuTearinibai Taratai Eretibou
N O R T HT A R A W AS O U T H T A R A W A
T A R A W A A T O L L
173 00'Eo173 00'Eo1 30'No1 30'No
Box 1 Surviving in a Subsistence Economy
Bairiki Village in South Tarawa is characterized by high levels of unemployment, with most households involvedin informal sector activities. Only a handful of households in the community are formally employed in the publicsector. The most common source of income is derived from fishing, with the men responsible for going out to fishwhile women sell the catch at roadside stalls. Households reported earning an average of A$200 every fortnightfrom fishing activities; however, incomes vary widely depending on the size of the catch.Households have little disposable income once paying for basic necessities and church contributions. Like otherPacific island communities, households in South Tarawa place priority upon contributing to the church. However,due to cultural sensitivity, it was not possible to collect data on the average size of household contributions.On the other hand, households reported that they can all afford to feed their families, and that they rarely faceshortages of cash to purchase food. While household plots are too cramped for households to have their owngardens, almost all households keep pigs. These are either consumed during celebrations or sold for cash whenneeded.
transport services. SOEs incur substantiallosses, oset by government transers, resultingin underinvestment in development andmaintenance o key inrastructures.
High rates o urbanization and limited economicopportunity have translated into high rates o poverty in South arawa, with almost a quarter o urban residents living below the poverty line.