MINISTRY OF FINANCE AND ECONOMIC DEVELOPMENT ANNUAL REPORT 2015 PO Box 67 Bairiki, Tarawa, Kiribati Telephone 686 21806. Website: www.mfed.gov.ki Table of Contents Acronyms ....................................................................................................................................... 3 Minister’s Introduction ................................................................................................................ 4 Secretary’s Overview .................................................................................................................... 5 Vision and Mission ........................................................................................................................ 6 Vision .............................................................................................................................................. 6 Mission ............................................................................................................................................ 6 About the Ministry of Finance and Economic Development .................................................... 6 Role and main functions.................................................................................................................. 6 Our priorities .................................................................................................................................. 7 Our legislation ................................................................................................................................ 7 Organisational structure ................................................................................................................. 7 Governance ................................................................................................................................... 10 Our stakeholders ........................................................................................................................... 10 Our critical issues ......................................................................................................................... 11 Accountant General’s Report .................................................................................................... 12 Consolidated Fund Recurrent Revenue and Expenditure ............................................................. 12 Income for MFED ......................................................................................................................... 14 Expenditure for MFED ................................................................................................................. 15 Comparison of actual MFED financial results with 2015 Budget ............................................... 16 Kiribati National Statistical Office ............................................................................................ 18 Internal Audit .............................................................................................................................. 20 Accounting and Financial Services............................................................................................ 20 Corporate Services ...................................................................................................................... 21 Information Technology ................................................................................................................ 21 National Economic Planning Office .......................................................................................... 22 Kiribati Customs Services .......................................................................................................... 28 Taxation ....................................................................................................................................... 29 Kiribati Fiduciary Services Unit (KFSU) ................................................................................. 29 List of Tables Figure 1: Monthly Website Hits, MFED 2015 20 ................... Error! Bookmark not defined. Figure 2: Revenue Equalisation Reserve Fund, Kiribati, 1984 to 2014 21Error! Bookmark not defined. Figure 3: Annual Debt Payments, Kiribati, 2014 to 2043 22. Error! Bookmark not defined. Table 1: MFED Establishment, 2014 and 2015 .............................................................................. 8 Table 2: Government Recurrent Revenue by Source, 2015 ......................................................... 13 Table 3: Government Recurrent Expenditure by Source in 2015 ................................................. 14 Table 5: Expenditure by Divisions of MFED, 2015 ..................................................................... 16 Table 6: Expenditure for MFED Divisions against Budget, 2015 ................................................ 17 Table 7: Revenue for MFED Divisions against Budget, 2015 ..................................................... 17 Table 8: Expenditure by Type against Budget, MFED, 2015 ....................................................... 18 Table 9: In-Service Training of Staff, MFED, 2015 ..................................................................... 21 1 2 List of Figures Figure 1: Monthly Website Hits, MFED 2015 ............................................................................. 22 Figure 2: Revenue Equalisation Reserve Fund, Kiribati, 1986 to 2015 ....................................... 24 Figure 3: Value of Total Debt, Kiribati, 2015 to 2043 ................................................................. 25 Figure 4: Annual Debt Payments, Kiribati, 2014 to 2043 ............................................................ 25 3 Acronyms EEZ Exclusive Economic Zone EU European Union GoK Government of Kiribati IMF International Monetary Fund IT Information Technology KCS Kiribati Customs Service KDP Kiribati Development Plan KFSU Kiribati Fiduciary Services Unit KNSO Kiribati National Statistics Office KPF Kiribati Provident Fund MCIC Ministry of Commerce, Industry and Cooperatives MCTTD Ministry of Communications, Transport and Tourism Development MELAD Ministry of Environment, Land and Agricultural Development MFED Ministry of Finance and Economic Development MPWU Ministry of Public Works and Utilities NEPO National Economic Planning Office NSO National Statistics Office Paris21 Partnership in Statistics for Development in the 21st Century PFTAC Pacific Financial Technical Assistance Centre RERF Revenue Equalisation Reserve Fund RAA Revenue Administration Act SOE State Owned Enterprise SPC Secretariat of the Pacific Community SPFM Strengthening Public Financial Management TIN Taxpayer Identification Number VAT Value Added Tax All currency in this report is expressed in Australian dollars. 4 Minister’s Introduction This is the 2015 Annual Report of the Ministry of Finance and Economic Development. 2015 was a year of consolidation of the major reforms that were carried out in 2014, particularly those in taxation reform with the introduction of the VAT and Excise Tax and the abolition of Customs Duties as well as the continued reforms of State Owned Enterprises. Revenue records were broken both in terms of taxation revenue and the revenue from fishing license fees which allowed the Government of Kiribati to post its third annual surplus in a row. The strategies undertaken by the Ministry are based on the Ministry of Finance and Economic Development Strategic Plan 2012–15. In 2015, the Government has maintained a fiscal policy of prudent expenditure, low inflation, real economic growth and improvements in the lives of all I-Kiribati. As well, a record surplus was posted in 2015. This Annual Report supports the Ministry’s desire to provide the public information on our activities in 2015 to enhance accountability and transparency within Government. I would like to extend my appreciation to all staff who have contributed to the work of the Ministry in the past year and to all Divisions for their input to this report. Hon Teuea Toatu Minister of Finance and Economic Development 2016 5 Secretary’s Overview It is my pleasure to present the Annual Report of the Ministry of Finance and Economic Development for the calendar year 2015. I would like to extend my appreciation to those donors who have made contributions to the economic reforms undertaken in 2015, in particular the World Bank, the IMF, Australia, New Zealand, the ADB and the EU. The Pacific Financial Technical Assistance Centre (PFTAC) has provided its usual high level of assistance with financial management, advice on taxation and the enhancement of economic statistics throughout 2015. I would also like to thank other donors who have assisted the Ministry particularly with other projects (the EU) and with statistics (SPC, IMF). One again, the Pacific Regional Infrastructure Facility has assisted with the monitoring of the performance of the largest infrastructure projects and provided valuable support with wider aspects of project monitoring. The Pacific Islands Forum Secretariat has assisted with short-term secondments of three staff to the Ministry of Finance in Samoa to enhance development of the 2016 budget. This report sets out the achievements of the Ministry in 2015 including: The bedding down of the VAT and Excise Taxes which commenced in April 2014. The continuation of budget support from donors including the World Bank and New Zealand which recognised the continuance of economic reforms undertaken by the Government. New measures undertaken