December 16, 2010 8:57 PM EST
In the aftermath of the global financial crisis, many governments around the world are forced to support their private economy in the face of weak global demand. The combination of higher spending and lower revenues results in the deterioration the government's fiscal health.
The Asian Development Bank (ADB) has such concerns for several Pacific Island countries.
Kiribati, Papua New Guinea, Tonga, and Tuvalu are maintaining their government expenditures even as tax revenues have declined because of their weakened economies.
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The Cook Islands and Fiji Islands have expansionary fiscal policies because they are still subsidizing key industries, building their infrastructure, and trying to soften the impact of the global recession.
The Samoan government has to cope with tsunami damages on top of the typical challenges that face Pacific Island countries.
According to 2009 data from the ADB, Cook Islands and Fiji Islands had their highest budget deficit as a percentage of GDP at 11.7 percent and 6.3 percent, respectively.
The Cook Islands and Kiribati had the highest trade deficits at 92.7 percent (2009 estimate) and 57.6 percent (2008) of GDP, respectively.
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