Tuvalu

Abstract

The DSA concludes that Tuvalu remains at a high risk of debt distress, in line with the 2016 DSA conclusion. External debt has breached several thresholds as of 2017, including for the present value of debt-to-GDP. Risks to debt sustainability remain high due to elevated current spending, a projected decline in fishing revenue and grants, and risks of natural disasters. A persistent fiscal deficit is projected to deplete fiscal buffers and cause the present value of debt-to-GDP to breach its indicative threshold in the long run. This underscores the importance of containing the fiscal deficit and maintaining buffers.