Kiribati

The purpose of this Country Strategy Paper (CSP) is to provide a framework for EC co-operation with Kiribati under the Cotonou Agreement. The framework is based on global objectives of EC-ACP co-operation, Kiribati’s own development policy, an analysis of the political and economic situation in the country, and an assessment of the past co-operation programmes of the EC and other donors. It concludes with the proposed EC response strategy of the 10th EDF and an Indicative Programme.

Kiribati (formerly the Gilbert Islands) was granted self-rule by the UK in 1971 and complete independence in 1979. Since then, the country has maintained a stable and democratic government. Kiribati has a population of 105,4321 living on low-lying atolls and islands scattered over a large part of the central Pacific. Kiribati is most vulnerable to the effects of climate change, climate variability, and sea-level rise. The country is highly vulnerable to extreme events, especially coastal flooding from storm surges and droughts. These threaten the viability and performance of public and private assets, and depress the returns on investment.

Economic growth has been much slower than population growth since 2002, and is projected to remain so for the foreseeable future. The public sector is the economy’s chief employer. Government recurrent and development expenditures are a main determinant of aggregate demand. The private sector is underdeveloped and private investment is extremely limited. Fishing license revenues, income from a trust fund, and seafarers’ remittances make gross national product (GNP) about 70% higher than gross domestic product (GDP). Because of the narrow production base, the financial situation of Kiribati is vulnerable to external shocks.

There is wide disparity between the economic conditions in the capital, Tarawa, and Kiribati’s outer islands, where many follow a subsistence-based lifestyle. The need for cash jobs, education, and better social services is causing an urban drift that can potentially lead to an overcrowding of South Tarawa, where almost half the population is now concentrated. With over 40% of the population under 15-years of age, a 50% increase in the country’s labour force is expected within the next decade. Measures to stem the influx of people into the capital and job creation in the outer islands are high priorities. The provision of affordable basic services in the outer islands is considered a prerequisite for achieving this goal.

Under the 10th EDF, the A envelope (programmable funds) will be € 12.7 million and the B envelope (for certain unforeseen needs) will be € 1.1 million. It is proposed to allocate 85 percent of the A envelope or € 10.8 million for the development of the water and energy sector. Non State Actors will be encouraged to participate in the implementation of the programme. The remaining 15 percent (€ 1.9 million) will be assigned for establishment of a Technical Co-operation Facility from which necessary local Technical Assistance, studies and essential EDF-related activities will be funded.