IMF Ends Assessment of FSM's Economic Health
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IMF (International Monetary Fund): An international organization that promotes the stabilization of the world's currencies and maintains a monetary pool from which member nations can draw in order to correct a deficit in their balance of payments: a specialized agency of the United Nations.
The IMF concluded its evaluation of the FSM's economic standing. Their evaluations are conducted annually and reports indicate the FSM's economy is on a "steady growth path".
Of note in their evaluation:
1. "The FSM's economy is highly dependent on external aid and private activity contributes little to growth."
2. The economy is growing slowly. But an increase in oil and food costs have been a hindrance.
3. Economic growth can be credited to a rise in fisheries and "construction activities".
4. Although FSM's economy is seeing an increase, the assessment does not specify individual growth or decline by states.
5. The private sector is not growing fast enough to take over the annual reduction of compact funds.
Looking ahead, FSM's status is not adequate enough to be self sustaining after compact 2. The economy as a whole is growing modestly with growths of 2-2.5 percent in 2010 to 2011 and 1.4 percent in 2012. But a progressively worsening environment coupled with the shrinking compact funds will spell economic decline in the near future. A huge outmigration of citizens specifically the "working age" population also factors in to the list of indicators that a troubled economy is not far ahead.
Officials were urged to form a "2023 Planning Committee" to prepare the nation for possible economic difficulties. There is a "need to begin addressing the fiscal gap to create fiscal buffers and ensure sustainable public finances and to accelerate reforms to boost potential growth." In other words, to prepare the nation's economy through proper economic reforms and the advancement of viable sources of income.
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