Tuvalu is a fragile micro-state facing tremendous challenges from its
remoteness, lack of scale economies, weak institutional capacity, and above all, climate
change, which threatens the country’s very existence. Thanks to buoyant fishing licensing
fees and grants, Tuvalu has accumulated fiscal buffers in recent years, but it is now
incurring significant costs rebuilding after the devastating Cyclone Pam in March 2015.
Looking ahead, Tuvalu faces substantial long-run costs in improving its infrastructure to
mitigate the effects of climate change.
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