Domesticresourcemobilizationforeconomicrecoveryandresilience Domesticresourcemobilization,theprocessthroughwhichgovernmentsraiseresourcesrequiredforpublicinfrastructureandservicesdelivery,pavesthewayforPacificeconomiestostabilizetheirfiscalpositions,restoredevelopmentprogressderailedbythepandemic,andsupportsustainableand inclusivegrowthamidcontinuedriskfromclimatechangeanddisasters. 6.6%ofGDP: PotentialVATrevenueinNauru Updatedregulationsand web-basedsolutionshelpkeeptheCookIslandstaxcollectionsabovetheregionalaverage Mobilizingdomestictaxrevenuesandstreamliningexistingexpenditures willreduceTonga’srelianceondevelopmentassistance Fiji:Taxadjustmentswouldgenerateadditionalrevenueof2.0%ofGDPperyearinthefirst2years FederatedStatesofMicronesia:PFMandtaxreformsraisetaxrevenuetoT6.0%ofGDPfromT3.4%inFY2017–FY2021 4.6%ofGDP: PotentialpersonalandcorporateincometaxreceiptsforVanuatu Policyreformstoimplementastrengthenedlegalframeworkwillhelpenhancenon-taxrevenuecollectionsinPapuaNewGuinea 50%:ReductioninunpaidtaxaftertheintroductionoflargetaxpayerunitinSolomonIslands PacificEconomicMonitor December2023 www.adb.org/pacmonitor FY=fiscalyear,GDP=grossdomesticproduct,PFM=publicfinancialmanagement,VAT=value-addedtax.Note:ThefiscalyearoftheGovernmentoftheFederatedStatesofMicronesiaendson30September. 2Highlights Contents Internationalandregionaldevelopments3 GDPGrowth AsianDevelopmentBankProjections Countryeconomicissues7 Policybriefs: TheRoleofDomesticResource31 MobilizationandFinancingNeeds VanuatuNauru PapuaNewGuinea 1.0 1.6 1.6 2.0 3.1 PacificsubregionPacificislands 15 inthePacific TaxAdministrationReformthrough34 DigitalTransformation ImportanceofTourism:CaseofPacific39 IslandEconomies Economicindicators44 MarshallIslands KiribatiTonga SolomonIslands Tuvalu 2.6 2.2 2.5 2.3 2.8 2.8 2.6 3.0 2.5 3.0 10 5 0 (5) (10) (15) 201920212223p24p CreativeCommonsAttribution3.0IGOlicense(CCBY3.0IGO) ©2023AsianDevelopmentBank.Somerightsreserved.Publishedin2023.PrintedinthePhilippines. PalauFSM Samoa FijiCookIslands 0.5 2.5 3.8 4.1 4.2 3.7 6.5 8.0 8.3 9.1 14.5 ISBN978-92-9270-510-7(print);978-92-9270-511-4 (electronic);978-92-9270-512-1(ebook) 0.04.08.012.016.0 ISSN2521-6066(print),2521-6074(electronic)PublicationStockNo.SPR230580-2 DOI:http://dx.doi.org/10.22617/SPR230580-2 AsianDevelopmentBank Inflation Fiji ChangeinrealGDP(%) 3.0 2023p 2024p PacificEconomicMonitor,December2023. 3.0Pacificsubregion MandaluyongCity,Philippines. ThiseditionoftheMonitorwaspreparedbyMaybelline Andon-Bing,RobertBoumphrey,PrinceCruz,NoelDelCastillo,DarrellFreund,Lily-AnneHomasi,MariaMelei,Kaukab Naqvi,KatherinePassmore,andIsoaWainiqoloofthePacificDepartment;andEmmanuelAlano,YuhoMyoda,RemrickPatagan,andCaraTiniooftheEconomicResearch andDevelopmentImpactDepartment.PublishingproductionassistancewasprovidedbyCecilCaparas. TheviewsexpressedinthispublicationarethoseoftheauthorsanddonotnecessarilyreflecttheviewsandpoliciesoftheAsianDevelopmentBank(ADB)oritsBoardofGovernorsorthegovernmentstheyrepresent. FSM MarshallIslandsPapuaNewGuinea NauruSolomonIslands KiribatiTuvaluPalau Vanuatu 0.4 3.6 3.7 3.7 4.2 3.7 3.0 3.3 5.0 5.0 5.5 5.5 6.0 6.2 5.0 5.0 6Pacificislands4 2 0 (2)201920212223p24p 8.0 9.0 ADBdoesnotguaranteetheaccuracyofthedataincludedinthispublicationandacceptsnoresponsibilityforany consequenceoftheiruse.Thementionofspecificcompaniesorproductsofmanufacturersdoesnotimplythattheyare endorsedorrecommendedbyADBinpreferencetoothersofa TongaSamoa CookIslands 2.3 4.5 5.3 10.3 12.0 13.0 similarnaturethatarenotmentioned. 0.03.06.09.012.015.0 Bymakinganydesignationoforreferencetoaparticularterritoryorgeographicarea,orbyusingtheterm“country”inthis Changeinconsumerpriceindex(%,annualaverage) 2023p 2024p publication,ADBdoesnotintendtomakeanyjudgmentsastothelegalorotherstatusofanyterritoryorarea. ThispublicationisavailableundertheCreativeCommonsAttribution3.0IGOlicense(CCBY3.0IGO)https://creativecommons.org/licenses/by/3.0/igo/.Byusingthecontentofthispublication,youagreetobeboundbythetermsofthislicense.Forattribution,translations,adaptations,andpermissions,pleasereadtheprovisionsandtermsofuseathttps://www.adb.org/terms-use#openaccess. Printedonrecycledpaper ThisCClicensedoesnotapplytonon-ADBcopyrightmaterialsinthispublication.Ifthematerialisattributedtoanothersource,pleasecontactthecopyrightownerorpublisherofthatsourceforpermissiontoreproduceit.ADBcannotbeheldliableforanyclaimsthatariseasaresultofyouruseofthematerial. ()=negative,FSM=FederatedStatesofMicronesia,GDP=grossdomesticproduct,p=projection.Notes: 1.ProjectionsareasofDecember2023andrefertofiscalyears.Fiscalyearsendon30JunefortheCookIslands,Nauru,Niue,Samoa,andTonga;31JulyforFiji(forgovernmentfinancedataonly);30SeptemberfortheMarshallIslands,theFederatedStatesofMicronesia,andPalau;and31Decemberelsewhere. 2.SubregionalaveragesofGDPgrowthandinflationarecomputedusingweightsbypurchasingpowerparity(PPP)GDPincurrentinternationaldollars. 3.AveragesforthePacificislandsexcludePapuaNewGuinea.Source:As