Republic of Palau: Selected Issues

International Monetary Fund

No 2014/111, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper describes Palau’s fiscal challenges and policy options to achieve long-term fiscal sustainability. Palau relies heavily on compact grants, and without continued fiscal consolidation over the medium term, the fiscal position will become unsustainable after these grants expire in FY2024. The fiscal sustainability analysis uses an intertemporal budget constraint model to show that reducing the current deficit excluding grants by about 8 percentage points of GDP during FY2014–19 would ensure Palau’s long-term fiscal sustainability. The paper also discusses the role of tourism in Palau and identifies policy priorities to further promote this sector and sustain growth.

Keywords: ISCR; CR; Palau; tax; tourism industry; increase tourism revenue; tourism growth; tourism volatility; Palau's tourism infrastructure; import tax exemption; Tourism; Fiscal sustainability; Fiscal consolidation; Pacific Islands; Global (search for similar items in EconPapers)
Pages: 27
Date: 2014-05-06
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