Kiribati: Selected Issues

This Selected Issues paper analyzes the effect of social transfers on household spending and draws policy implications in Kiribati. This paper examines Kiribati’s social protection system, focusing on its effectiveness, equity, and fiscal sustainability. Social protection programs have played a significant role in promoting inclusive growth and reducing poverty rapidly. However, growing fiscal pressures and the need to finance climate-resilient infrastructure highlight the importance of improving the efficiency and targeting of social benefits. Some large-scale programs, particularly unemployment benefits and the copra subsidy, remain weakly targeted, resulting in benefit leakage to higher income households and potential market distortions. The study argues that social policy objectives such as poverty reduction, improved health, and better educational outcomes could be achieved more efficiently through targeted reforms. Recommended measures include increasing excise taxes on tobacco, alcohol, and kava to discourage harmful consumption while generating revenue for human development. The paper also supports continued reform of the copra subsidy, rationalization of overlapping programs, and modernization of benefit delivery systems to improve transparency, reduce administrative costs, strengthen targeting, and enhance overall social protection outcomes.