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Books and Analytical Papers > IMF Staff Country Reports

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  • Type: Journal Issue x
  • Micronesia, Federated States of x
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Cover IMF Staff Country Reports
Federated States of Micronesia: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Federated States of Micronesia
International Monetary Fund. Asia and Pacific Dept
The 2023 Article IV Consultation discusses that the Federated States of Micronesia (FSM) experienced a short-lived recovery in 2021 from Covid, but economic activity has since stagnated because of additional shocks. Economic growth rebounded to 3 percent in FY2021, led by the fisheries sector and government support. However, economic growth is estimated to have averaged zero in FY2022–2023. FSM’s near-term economic prospects will get a boost from higher public investment. Growth in FY2024 is projected at 1.1 percent before accelerating further to 1.7 percent underpinned by continued recovery in tourism, as well as higher public spending partly funded by the higher grants under the new Compact of Free Association (COFA) agreement with the United States. The FSM economy remains highly vulnerable to shocks, such as an increase in global commodity prices, extreme climate events, and potential delays of the COFA agreement. Moreover, the acceleration of outward migration would severely jeopardize already constrained labor supply, affecting implementation of large public projects. The underdeveloped private sector remains vulnerable, and deteriorating infrastructure hinders growth and social goals, especially on health. The adverse impact of climate change is increasingly being felt raising food security concerns.
Keywords:
FSM authorities; FSM issue; United States government; General government operation; FSM's economy; Public investment spending; Climate change; Debt sustainability analysis; Global; Pacific Islands
Cover IMF Staff Country Reports
Federated States of Micronesia: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper focuses on a model based approach to study public investment, economic growth, and resilience in the Federated States of Micronesia (FSM). Enhancing public investment management (selection, planning, and implementation) could significantly improve the efficiency of public investment and support economic growth. This is particularly important as FSM starts a new boost to public investment financed by foreign grants. Using a dynamic Debt, Investment, Growth, and Natural Disasters model, we illustrate the effects of various policy options on achieving higher and more resilient growth and improving private sector participation. The reforms can also have fiscal benefits through the higher growth dividend. Additionally, the impact of different types of public investment on building resilience to climate shocks emphasizes the benefits of larger investment in climate-resilient infrastructure to minimize gross domestic product loss and allow the economy to bounce back faster after a large natural disaster.
Keywords:
B. climate change vulnerability; B. climate change vulnerabilities in FSM; climate vulnerability; efficiency scenario; infrastructure investment; Public investment spending; Climate change; Natural disasters; Private investment; Global; Pacific Islands
Cover IMF Staff Country Reports
Federated States of Micronesia: Technical Assistance Report-Government Finance Statistics Mission (October 25-November 2, 2021)
International Monetary Fund. Statistics Dept.
A virtual technical assistance (TA) mission supported by the IMF’s Asia and Pacific Department (APD) was conducted by the IMF Statistics Department (STA) and the Pacific Financial Technical Assistance Centre (PFTAC) during October 25 – November 2, 2021. The mission assisted the Department of Resources and Development (DoRD), National Statistics Office (NSO) improving the compilation and dissemination of Government Finance statistics (GFS) and Public Sector Debt Statistics (PSDS) according to the Government Finance Statistics Manual 2014 (GFSM2014) and the Public-Sector Debt Statistics Guide 2011 (PSDSG 2011). The mission was conducted under the Data for Decisions (D4D) trust fund,1 a multi-donor initiative aimed at strengthening the quality of national statistical outputs to better support economic policy making in low-and lower-middle income countries and the PFTAC GFS capacity development project.
Keywords:
gap analysis; statistics compilation; IMF's Statistics Department; World Bank staff; Federated States of Micronesia telecommunications cable corporation; Government finance statistics; PFM information systems; Public sector; Chart of accounts
Cover IMF Staff Country Reports
Federated States of Micronesia: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Federated States of Micronesia
International Monetary Fund. Asia and Pacific Dept
The COVID-19 pandemic and related containment measures have put severe strains on the economy. The economic policy response has been strong and generally appropriate, helping counter the negative effects of the pandemic. Nevertheless, as the international borders remain shut, the economic contraction is likely to deepen in FY2021. A slow recovery is expected for FY2022 driven by a gradual border reopening. The FSM is facing significant medium-term uncertainty, owing to the possible expiration of grants and other assistance provided under the Compact Agreement with the United States. The FSM is also highly vulnerable to climate change-induced natural disasters.
Keywords:
FSM authority; FSM authorities; policy support; FSM economy; island state; FSM remain; COVID-19; Pacific Islands; Global
Cover IMF Staff Country Reports
Federated States of Micronesia: Technical Assistance Report-Financial Soundness Indicators Mission
International Monetary Fund. Statistics Dept.
The International Monetary Fund’s (IMF’s) Statistics Department (STA) provided technical assistance (TA) on financial soundness indicators (FSI) to the Federated States of Micronesia Banking Board (FSMBB) during November 2-13, 2020. The TA mission took place in response to a request from the authorities, with the support of the IMF’s Asia & Pacific Department (APD). The mission was conducted remotely via video conferences due to the COVID-19 pandemic and travel restrictions. The mission worked with the staff of the FSMBB on the development of FSIs that are in line with the IMF’s 2019 FSI Guide.1 The main objectives of the mission were to: (i) review the source data, institutional coverage and accounting and regulatory frameworks supporting the compilation of FSIs; (ii) provide guidance for mapping source data for the banking sector to the FSI reporting templates FS2 and FSD as well as areas for improvement in the metadata; (iii) agree with the FSMBB the timeline to begin regular reporting of the FSIs for deposit-takers to STA, conditional on the availability and completeness of the source data; and (iv) agree on the timeliness of data reporting.
Keywords:
IMF's Statistics Department; Federated States of Micronesia banking Board; Federated States of Micronesia development bank; Federated States of Micronesia insurance Board; FSI Guide; Financial soundness indicators; Financial statements; Commercial banks; Nonperforming loans; Credit bureaus; Pacific Islands
Cover IMF Staff Country Reports
Federated States of Micronesia: Climate Change Policy Assessment
International Monetary Fund. Fiscal Affairs Dept.
This Climate Change Policy Assessment (CCPA) takes stock of the Federated States of Micronesia (FSM)’s climate response plans, from the perspective of their macroeconomic and fiscal implications. CCPA explores the possible impact of climate change and natural disasters and the cost of FSM’s planned response. It suggests macroeconomically relevant reforms that could strengthen the national strategy and identifies policy gaps and resource needs. FSM has made progress toward its Nationally Determined Contribution mitigation pledge by beginning to expand renewable power generation and improve its efficiency. The authorities plan to continue this and encourage the take-up of energy efficient building design and appliances. Accelerating adaptation investments is paramount, which requires addressing critical capacity constraints and increasing grant financing. It is recommended that FSM needs to increase its capacity to address natural disaster risks following the expiry of Compact-related assistance in 2023. It is advised to improve climate data collection and use, including on the costs of high and low intensity disasters and disaster response expenditure.
Keywords:
ISCR; CR; financial support; fiscal cliff; FSM authorities; capital project; government of FSM; excise tax; real GDP; Climate change; Natural disasters; Disaster aid; Infrastructure; Climate policy; Pacific Islands; Global
Cover IMF Staff Country Reports
Federated States of Micronesia: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Federated States of Micronesia
International Monetary Fund. Asia and Pacific Dept
This 2019 Article IV Consultation with Federated States of Micronesia (FSM) highlights that the economy has performed well in recent years, with relatively high growth and low inflation. Fiscal and current account balances have recorded large surpluses since 2017, owing to the authorities’ decision to save revenue windfalls. Nonetheless, the FSM faces significant medium-term uncertainty as various economic supports under the Compact Agreement with the United States are set to expire in 2023. Unless they are renewed, the FSM is expected to lose access to Compact grants, giving rise to a fiscal cliff in 2023; banking sector oversight by the Federal Deposit Insurance Corporation; and post-disaster rehabilitation assistance. The country is highly vulnerable to climate change, while private sector activity remains anaemic. It is recommended to improve resilience to climate change by strengthening capacity to implement adaptation projects. Over the medium term, disaster risks should be mitigated by using disaster insurance and disaster-contingent foreign financing.
Keywords:
ISCR; CR; Micronesia; FSM authorities; IMF-World Bank Climate Change Policy Assessment; debt; FSM economy; FSM banking law; energy master plan; fiscal cliff; IMF quota; Extra-budgetary funds; Natural disasters; Pacific Islands; Global
Cover IMF Staff Country Reports
Federated States of Micronesia: Staff Report for the 2015 Article IV Consultation
International Monetary Fund. Asia and Pacific Dept
This 2015 Article IV Consultation highlights that Micronesia’s economy is stagnating, as externally funded infrastructure projects are moving slowly. Difficulties in the business climate, in particular those related to land tenure issues, continue to hold back private sector development. Real GDP growth of about 0.1 percent is estimated for the fiscal year 2014. The Micronesian economy is projected to grow at 0.6 percent in the medium term, while risks on the outlook are tilted to the downside. Growth in 2015 is projected to remain subdued at 0.3 percent, while consumer prices are projected to further decline to negative 1.0 percent thanks to the continued pass through of low oil prices.
Keywords:
ISCR; CR; government; FSM authorities; Micronesia; state government; Micronesian authorities; tax reform legislation; expenditure reform; government finance; Extra-budgetary funds; Agroindustries; Pacific Islands; Global; East Asia; Asia and Pacific
Cover IMF Staff Country Reports
Federated States of Micronesia: 2012 Article IV Consultation
International Monetary Fund. Asia and Pacific Dept
The Federated States of Micronesia (FSM) is highly dependent on external aid. Following a recession in FY2006–08, the FSM economy has grown by 2–2½ percent for FY2010 and FY2011. The economy remains dependent on the large public sector, although the fisheries and agriculture sectors have shown signs of growth. Despite some deterioration in current account balance, external balance also has sustained a stable flow of official transfers. However, economic growth is likely to slow in the near term owing to a decline in public sector demand.
Keywords:
ISCR; CR; FSM authorities; government; Micronesia; government development priority; FSM economy; IMF staff estimate; government balance; FSM government; Public enterprises; Inflation; Pacific Islands; Global; Asia and Pacific