Debt in Tuvalu

Tuvalu's public debt and private debt follow different rules. Public borrowing requires a written legal basis and parliamentary control. Personal and business debt usually depends on the loan contract, the creditor's recovery rights, available security and any court order. The FY2026/27 budget measure covers external central-government debt. It records an ADB balance of about AUD 1.38 million, after the ICDF debt was fully repaid in FY2025/26. The debt-to-GDP ratio under that measure is about 1.8 percent. No new external debt has been recorded since 2019. The debt is entirely in special drawing rights or foreign-currency exposure, has a fixed interest rate, and has a weighted average interest rate of 0.89 percent. The average time to maturity is 4.5 years, 13.7 percent falls due within one year, and debt service equals about 0.68 percent of revenue. Scheduled amortisation continues from 2025/26 to 2037/38, with at least AUD 0.092 million due in the final year. The IMF's 2025 debt-sustainability analysis uses a broader measure that includes central-government debt, government-guaranteed debt and guaranteed or non-guaranteed debt of state-owned enterprises (SOEs). At the end of 2024, this broad public debt was about AUD 9.5 million, or 11.1 percent of GDP, including about AUD 2.5 million owed to the ADB, AUD 1.1 million to the ICDF and AUD 5.9 million in domestic public debt to NBT. The analysis classifies the risk of external and overall debt distress as high, although it still treats the debt as sustainable under the baseline because borrowing terms are concessional, debt service is low and CIF/TTF buffers are available. The long-term baseline breaches the present-value debt-to-GDP threshold from 2038/39. Persistent fiscal deficits, changing fishing-licence revenue and grants, climate or natural-disaster shocks and foreign-exchange movements are the main risks. The Government Borrowing and Guarantee Act, including its 2025 amendment listed in the current legislation index, requires the minister in Cabinet to borrow domestically or externally only on terms approved by Parliament. Parliament must approve the purpose of a loan. Principal, interest and charges are paid from the Consolidated Fund, or from another legally designated fund where applicable. A government guarantee also requires parliamentary approval and safeguards for repayment. The Credit Guarantee Program is limited to $10,000 per transaction. Loan proceeds must be handled under written law and may enter the Consolidated Fund or a designated fund; the Development Fund may also contain loan proceeds. Parliament can authorize the abandonment or write-off of government claims. NBT conducts general banking activities, including deposits, lending, credit, guarantees and loan underwriting. The reviewed sources do not provide a current general statistic for consumer credit or household arrears. DBT carries out loan recovery, and DBT debt has the same ranking as government tax debt in bankruptcy or insolvency proceedings. The Limitation Act 1939 does not apply to DBT loan recovery. The TNPF Small Loans Investment Scheme is a defined borrowing option for an active contributing member with at least $400 in the retirement account. The scheme excludes applicants who had arrears exceeding three months during the previous 12 months, people under 45 who are unemployed, repayments that cannot be taken directly from pay, and applicants who already have more than 40 percent of net pay committed. The loan amount is linked to the retirement-account balance, with the reviewed schedule recording a minimum of $100 and a maximum of 30 percent of that balance. The retirement account serves as security. The term can run for up to 10 years, repayments cannot exceed 40 percent of net income and must be at least $20 per fortnight or 10 percent under the scheme rule. Interest is 8.75 percent per year on a reducing balance. The application fee is $20 and a dishonoured cheque costs $10. A borrower in active default cannot obtain another TNPF loan until a compromise has been arranged. An active default may continue for 12 months with consent, while an inactive default may be cleared from the retirement account after six months, but only as the last proper recovery method. TNPF also reviews the cause of arrears. Applications are handled in person in Funafuti; approved forms for the outer islands and Fiji can be submitted through agents or the High Commission. An unpaid court judgment can lead to wage attachment. The employer pays the ordered amount into Court. A Magistrates' Court order can set payments of up to $20 per fortnight, while the Senior Magistrate considers wages, resources and needs when setting the rate. An employer must comply within seven days. If employment ends or an employer gives false information about employment, the Court must be notified within 10 days. Court fees may be deducted, and the Court can discharge or vary the order. Non-compliance can result in a fine of up to $200. A Bill of Sale can secure debt against personal chattels, meaning movable personal property. The document requires an inventory, a witness and registration. Default, bankruptcy, distress, fraud or execution can lead to seizure when the statutory conditions are met. Company debt has a separate recovery pathway under the Companies (Winding Up) Act. A creditor may seek winding up after a demand for more than $500 remains unpaid for three weeks and the debt is unsecured or not settled under an arrangement. An unsatisfied execution or proof before the Court can also support the case. A petition may be brought by the company, a creditor, a contributory, the Official Receiver or the Minister. Once winding-up begins, the Court can stay proceedings, and execution against the company after commencement is ineffective. This process applies to companies, not to personal debt. The reviewed official legislation index for 2026 lists no standalone Bankruptcy Act for individuals. It also does not identify a general personal discharge procedure, debt-relief agency, debt-counselling service or credit ombudsman in Tuvalu. A person who cannot repay may instead need to negotiate an informal compromise with the creditor, use a TNPF compromise where eligible, rely on secured recovery arrangements, respond to wage attachment or seek assistance from the Court or People's Lawyer. Access, fees and timing depend on the creditor and the Court, and no general personal debt-relief rule is established in the reviewed sources.