Economy of Nauru

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.