Economy of Tuvalu
Tuvalu is a Polynesian island nation located in the Pacific Ocean, midway between Hawaii and Australia. The economy of Tuvalu is constrained by its remoteness and lack of economies of scale. Government revenues largely come from the lease of its highly fortuitous .tv Top Level Domain (TLD); sales of stamps and coins; fishing licences (primarily paid under the South Pacific Tuna Treaty); direct grants from international donors (government donors as well as from the Asian Development Bank); and income from the Tuvalu Trust Fund (established in 1987 by the United Kingdom, Australia, New Zealand).
The Tuvalu Trust Fund was established for the intended purpose of helping to supplement national deficits, underpin economic development, and help the nation achieve greater financial autonomy.
World Bank Statistics outline that in 2010 Tuvalu produced a bottom-tier ranking Gross Domestic Product of $31,350,804 and Gross National Income of $4,760. A large proportion of national income is obtained through the employment of 15% of adult male Tuvaluans, overseas in the maritime industry. The value of these remittances was valued at A $4 million (est. 2006) and on average accounts for 10% of GDP.
The IMF Article IV consultation with Tuvalu, which was completed in August 2014, concluded that: "Large revenues from fishing licenses, together with substantial foreign aid, facilitated a sizable budget surplus in the past two years but also an expansionary budget in 2014. The large increase in budget spending is set to cause some inflationary pressure. More importantly, the likely difficulties in unwinding the budget expansion and potential liabilities arising from weaknesses in state-owned banks and public enterprises make fiscal sustainability a major concern over the medium to long run." Natural Resources
Agriculture in Tuvalu is focused on coconut trees and growing pulaka in large pits of composted soil below the water table. Subsistence farming of coconut palms to produce copra and fishing remain the primary economic activities, particularly off the capital island of Funafuti.
Tuvalu is considered a safe country of unspoiled natural beauty and friendly people. However, due to its remoteness, the cost of travelling to the island and limited air traffic to the country, limited numbers of tourists visit each year. The majority of visitors to Tuvalu are government officials, aid workers, NGO officials or consultants. Fishing resources
The Tuvaluan economy therefore relies heavily on its fishing income, with 42% of the Tuvaluan population involved in fishing activity at various levels. UN Data calculated a gross value of fisheries at US$43,773,582 (2007 est), which accounted for the output of coastal commercial fishing, coastal subsistence fishing, locally based offshore fishing, foreign-based offshore fishing, freshwater fishing and aquaculture. Public Sector enterprises
The public sector enterprises are the National Bank of Tuvalu, Development Bank of Tuvalu, Tuvalu Electricity Corporation, Tuvalu Telecommunications Corporation, Tuvalu Philatelic Bureau, Tuvalu Maritime Training Institute and Vaiaku Lagi Hotel.
Banking services are provided by the National Bank of Tuvalu. Private sector enterprises
The Tuvalu National Private Sector Organisation, the Tuvalu National Chamber of Commerce and Tuvalu Business Centre are active in supporting private sector enterprises. In order to set up a business in Tuvalu, an investor needs a start up capital of AUD$20,000, a Tuvaluan partner and pay a business registration fee of AUD$100. As of 2010 there are only seven foreign owned businesses operating in Tuvalu, which were mostly set up by Asian small business operators in the retail and restaurant sector.
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