Kiribati: Selected Issues

International Monetary Fund

No 2024/104, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper focuses on a case study on copra subsidy in Kiribati. The copra subsidy, disbursed as a minimum support price, is a major part of the social safety net in Kiribati. The subsidy has multiple purposes—including as a means to transfer resources to the outer islands and to stem migration to the capital. The horizontal diversification model shows that a higher subsidy on copra diverts production and labor towards copra but lowers overall income. The vertical diversification model demonstrates how a subsidy on a primary product increases its supply but reduces production of the final good. Considering the benefits, the government could boost the subsidy’s efficiency, replace the scheme with a poverty-targeted social assistance program, or impose a cap on payments. Development partners, including the IMF and the World Bank, stand ready to provide support in both areas as needed.

Keywords: COPRA subsidy; Copra support price; price support scheme; impact of subsidy; household income expenditure survey report; cut support price; Price incentives; Agricultural commodities; Income; Exports; Pacific Islands; Global (search for similar items in EconPapers)
Pages: 17
Date: 2024-05-10
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