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Economy of Nauru
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Economy of Nauru

Revenues of Nauru have traditionally come from exports of phosphate rock. Primary phosphate reserves were exhausted, and mining ceased, but in 2006-07, mining of a deeper layer of "secondary phosphate" began. It is hoped that this economic activity might lift Nauru from the bottom rung of global GDP per capita. The only other major source of government revenue is sale of fishing rights in Nauru's territorial waters.

Though for a time phosphates gave Nauruans one of the highest per capita incomes in the world, few other resources exist with most necessities being imported, including some fresh water from Australia.

The rehabilitation of mined land and the replacement of income from phosphates are serious long-term problems. In anticipation of the exhaustion of Nauru's phosphate deposits, substantial amounts of phosphate income were invested in trust funds to help cushion the transition and provide for Nauru's economic future. The government borrowed heavily from the trusts to finance fiscal deficits. To cut costs, the government froze wages, reduced over-staffed public service departments, and closed some overseas consulates. In recent years Nauru encouraged the registration of offshore banks and corporations. Tens of billions of dollars were channeled through their accounts, until international pressure saw Nauru crack down on money laundering. Few comprehensive statistics on the Nauru economy exist, with estimates of Nauru's GDP varying widely.

Aid flows, chiefly from Australia, Taiwan and New Zealand, keep the Nauruan economy afloat.


Economic performance

In the years after independence in 1968, Nauru possessed the highest GDP per capita in the world due to its rich phosphate deposits. In anticipation of the exhaustion of its phosphate deposits, substantial amounts of the income from phosphates were invested in trust funds aimed to help cushion the transition and provide for Nauru s economic future. However, because of heavy spending from the trust funds, including some wasteful foreign investment activities, the government is now facing virtual bankruptcy. To cut costs the government has called for a freeze on wages, a reduction of over-staffed public service departments, privatization of numerous government agencies, and closure of some overseas consulates. Economic uncertainty caused by financial mismanagement and corruption, combined with shortages of basic goods, has resulted in some domestic unrest. In 2004 Nauru was faced with chaos amid political strife and the collapse of the island s telecommunications system. Moreover, the deterioration of housing and hospitals has continued.

Few comprehensive statistics on the Nauru economy exist, with estimates of Nauru's GDP varying widely. According to the U.S. State Department, Nauru s GDP volume was US$1 million in 2004. Nauru receives about US$20 million foreign aid a year from Australia.[1]

Balance of payments

Phosphate is Nauru s only product for export, although the government also receives relatively significant foreign exchange income from licencing its rich skipjack tuna fishing grounds to foreign fishing vessels, which land an annual average of 50,000 tonnes of Nauru zone-caught tuna overseas.[2] In 2004 income from phosphate export was US$640,000, with Australia, New Zealand and Japan serving as the country's major export markets. In the same year the Nauru government budget shows that income from licencing foreign fishing vessels was over US$3,000,000.

Nauru needs to import almost all basic and capital goods, including food, water, fuel, and manufactured goods, with Australia and New Zealand as its major import sources. In 2004 Nauru s imports totaled about US$19.8 million.[1]

Regional situation

Currently, Nauru is heavily dependent on Australia as its major source of financial support. In 2001 Nauru signed an agreement with Australia to accommodate asylum seekers (mostly from Iraq and Afghanistan) on the island, in return for millions of dollars in aid. This agreement, referred to as the "Pacific Solution", came to an end in 2007, prompting Nauruan concerns about the future of the island's revenue.[3] Australia has also sent financial experts to Nauru to help the tiny nation overcome its economic problems. However, serious questions remain about the long-term viability of Nauru s economy, with uncertainties about the rehabilitation of mined land and the replacement of income from phosphates.[1]

In 2008, talks began between Australia and Nauru regarding the future of the former's economic development aid to the latter. Nauruan Foreign and Finance Minister Dr. Kieren Keke stated that his country did not want aid handouts. One possible solution currently being explored would be for Australia to assist Nauru in setting up a "boat repair industry" for regional fishing vessels.[4]


There is no tax on income in Nauru. Taxes include the Airport Departure tax and the bed tax at the Mene Hotel. The 2007-08 Budget saw the increase of existing excises on cigarettes and duty on imports. A tax on sugary foods was also introduced, chiefly to help combat Nauru's diabetes epidemic.[5]

Economic statistics

  • GDP: purchasing power parity - US$60 million (2001 est.)
  • GDP per capita: purchasing power parity - US$5,000 (2001 est.)
  • Inflation rate (consumer prices): -3.6% (1993)
  • Budget: revenues: US$23.4 million; expenditures: US$64.8 million (1995/96)
  • External debt: US$33.3 million
  • Economic aid - receives around US$2.25 million from Australia (1996/97 est.)
  • Currency: Australian dollar

The fiscal year runs from July 1 to June 30.


  • Labour force are mainly employed in mining phosphates, public administration by RONPhos, education and transport
  • Unemployment rate is close to 90%.[6] In February 2008, foreign affairs minister Dr. Kieren Keke stated: "We have got a major unemployment crisis in front of us."[7]
  • Main industries are phosphate mining, offshore banking, coconut products
  • Electricity production (fossil fuels) and consumption are around 30 GWh (2000)
  • Agriculture is not a major employer, coconuts are the main produce


  • Exports - valued at US$25.3 million (1991), mainly phosphates, main partners are New Zealand, Australia, South Korea, US (2000)
  • Imports - valued at US$21.1 million (1991), mainly food, fuel, manufactures, building materials, machinery, main partners are Australia, USA, UK, Indonesia, India

See also

  • Phosphate mining in Nauru
  • Nauru Phosphate Corporation
  • Nauru Phosphate Royalties Trust
  • Tourism in Nauru


External links

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