2017 Index of Economic Freedom

Kiribati

overall score50.9
world rank153
Rule of Law

Property Rights48.0

Government Integrity37.6

Judicial Effectiveness33.0

Government Size

Government Spending0.0

Tax Burden73.6

Fiscal Health99.5

Regulatory Efficiency

Business Freedom51.5

Labor Freedom71.9

Monetary Freedom82.0

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
    • 4.2% growth
    • 3.6% 5-year compound annual growth
    • $1,787 per capita
  • Unemployment:
  • Inflation (CPI):
    • 1.4%
  • FDI Inflow:
    • $1.7 million
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Kiribati’s economy is dominated by a public sector that accounts for two-thirds of formal employment and about half of GDP. Only a small proportion of the total labor force is employed on salaries, however; the rest work in subsistence farming or fishing. The economy relies heavily on foreign assistance and remittances.

Economic growth continues to be undermined by inefficient state-owned enterprises and regulations that hinder private-sector development. The government has tried to decentralize economic activity from the main islands, but progress has been very limited. The financial sector remains underdeveloped, leaving much of the population without formal access to banking services.

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Background

The Pacific archipelago of Kiribati gained its independence from Britain in 1979, and its government functions democratically. Elections in February 2016 ushered in new leadership, with Taneti Maamau of the Tobwaan Kiribati Party becoming president after 12 years of rule by Anote Tong of the Boutokaan te Koaua. 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.

Rule of LawView Methodology

Property Rights 48.0 Create a Graph using this measurement

Government Integrity 37.6 Create a Graph using this measurement

Judicial Effectiveness 33.0 Create a Graph using this measurement

Property rights are weak. 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. Enforcement of contracts is weak, and courts are relatively inexperienced in commercial litigation. Official corruption and abuse are serious problems, and international donors continue to demand improved governance and transparency.

Government SizeView Methodology

The top individual income and corporate tax rates are 35 percent. Taxation remains erratic and poorly administered. The overall tax burden equals 13.8 percent of total domestic income. Government spending has amounted to 94.9 percent of total output (GDP) over the past three years, and budget surpluses have averaged 9.4 percent of GDP. Public debt is equivalent to 16.4 percent of GDP.

Regulatory EfficiencyView Methodology

Kiribati’s regulatory environment is quite rudimentary. Existing commercial regulations are not enforced consistently. The government is the major source of formal employment, providing jobs in public service and state-owned enterprises. It also funds price-distorting subsidies for some agricultural products such as coconut oil. Inflows of development aid and assistance account for as much as 25 percent of GDP.

Open MarketsView Methodology

Trade is extremely important to Kiribati’s economy; the value of exports and imports taken together equals 104 percent of GDP. The average applied tariff rate is 15.9 percent. Foreign investors may not own land, and investment in other sectors of the economy is screened by the government. High credit costs impede development of the private sector. A large proportion of the population remains outside the formal banking system.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Hong Kong89.81.2
2Singapore88.60.8
3New Zealand83.72.1
4Australia810.7
5Taiwan76.51.8
6South Korea74.32.6
7Malaysia 73.82.3
8Macau70.70.6
9Brunei Darussalam69.82.5
10Japan69.6-3.5
11Kazakhstan695.4
12Vanuatu67.46.6
13Thailand 66.22.3
14Philippines65.62.5
15Azerbaijan63.63.4
16Fiji63.44.6
17Tonga633.4
18Indonesia61.92.5
19Kyrgyz Republic 61.11.5
20Cambodia59.51.6
21Bhutan58.4-1.1
22Samoa58.4-5.1
23Tajikistan58.26.9
24China57.45.4
25Sri Lanka57.4-2.5
26Nepal55.14.2
27Solomon Islands558.0
28Bangladesh 551.7
29Mongolia54.8-4.6
30Micronesia54.12.3
31Laos544.2
32Pakistan 52.8-3.1
33India52.6-3.6
34Burma52.53.8
35Vietnam52.4-1.6
36Uzbekistan52.36.3
37Papua New Guinea50.9-2.3
38Kiribati50.94.7
39Maldives50.3-3.6
40Afghanistan48.9N/A
41Turkmenistan47.45.5
42Timor-Leste46.30.5
43North Korea4.92.6
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