The IMF in its Article IV consultation report has said Vanuatu Economic Citizenship Program (ECP) revenues have fallen 60 percent below the authorities’ 2024 target, partly due to the reactivation of a cheaper citizenship-by-investment program. The upcoming national risk assessment for AML/CFT ahead of the 2026 FATF/APG Mutual Evaluation has highlighted the ECP as an important risk to Vanuatu’s financial integrity, and the EU announced the permanent removal of visa-free travel for Vanuatu citizens from February 2025.
While Vanuatu was recovering from the natural disasters of 2023 induced by climate change, prolonged disturbance from the pandemic, the voluntary liquidation of Air Vanuatu in May 2024 and steep decline in ECP revenues had created a major shock to the economy with substantial implications for growth and confidence, IMF said.
“The current account deficit is projected to widen to around 7½ percent of GDP in 2024 and 6½ percent of GDP in 2025, reflecting the significant decline in tourism and travel, and dwindling Economic Citizenship Program (ECP) revenue.”
Political instability has left the country reeling. The country had three changes of government in the second half of 2023. Vanuatu has experienced a period of political instability over 18 months, with three prime ministers in that time. The president of Vanuatu, Nikenike Vurobaravu, signed an order to dissolve the Pacific island nation’s parliament last week.
