Tuvalu's gross domestic product of around A$20 million a year is the smallest of any independent state. Government is the biggest employer by far with 1,100 Tuvaluans or over 10 percent of the population working for the government. Imports cost about A$19 million while exports are limited to small quantities of fish and copra. Despite this, Tuvalu has no foreign debts and is financially sound due to fiscal prudence, aid, remittances, and a series of unique monetary arrangements.
The Tuvalu Trust Fund was created in 1987 with grants of A$27.1 million from the governments of Australia, New Zealand, the United Kingdom, and Tuvalu itself. By June 2007 the fund had earned A$65.7 million and was providing Tuvalu with a regular income.
Tuvalu also receives development aid from Taiwan, Japan, and the European Union, plus another A$2 million from Australia for education and overseas scholarships, but not much of this money reaches the outer islands. Taiwan sharply increased its aid to Tuvalu in late 1998, after Tonga switched recognition to Beijing. Consequently, Taiwan established the first ever permanent diplomatic mission on Funafuti.
In 2006 the Tuvalu delegate to a meeting of the International Whaling Commission voted in favor of a resumption of commercial whaling worldwide. This was done to curry favor with Japan which hunts whales in Antarctica, a sad example of a small country selling their vote in an unworthy cause.
Asian and European tuna-fishing boats pay US$9,000 apiece in licensing fees to exploit Tuvalu's exclusive economic zone but revenue from this source has been declining. The sale of postage stamps to collectors provides further government revenue, and remittances from Tuvaluans overseas, such as the 400 young men working as crew on mainly German ships, brings in millions of dollars a year. There's also a Tuvalu Ship Registry which allows foreign ships to sail under the Tuvalu flag for an annual fee.
Tourism has long been hampered by stiff airfares, which effectively eliminate all but the most determined travelers. Of the few thousand overseas visitors to Tuvalu per year, only about 10 percent declare their purpose as tourism, and not more than a handful of those got beyond Funafuti. Half the arrivals are on people on business and most of the rest are visiting friends and relatives.
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