Efforts to support private sector development should be stepped up to boost Vanuatu’s economy, with growth expected to moderate to 3.2% in 2018 and 3.0% in 2019, says a new Asian Development Bank’s (ADB) report.
The new Asian Development Outlook (ADO) 2018, ADB’s flagship annual economic publication, notes that gross domestic product (GDP) growth in Vanuatu was steady in 2017, driven by construction and the continued recovery of agriculture and tourism from the impacts of Cyclone Pam in 2015. Tourism, in particular, was given a lift by the 2017 Pacific Mini Games in Port Vila and the return of codeshare flights operated by Qantas and Air Vanuatu.
“Vanuatu’s ambitious infrastructure pipeline is supporting its current and future growth prospects, but the accompanying rise in public debt poses big challenges for fiscal management,” said Ananya Basu, Principal Economist from ADB’s Pacific Department.
The report notes that continued support for private sector growth in the country is needed while the government expands its revenue base. As it looks to increase taxes on businesses, the government needs to ensure that other costs of doing business are minimized.
The report says initiatives such as updating the financial management information system, training staff to operate it, and enhancing human resource capacity in tax administration would help support the government’s revenue reform initiative.