Vanuatu's economy: gardens at home and money from abroad

What households grow for themselves

Most people in Vanuatu live from their own land. Britannica describes subsistence agriculture, tied to old networks of exchange within and between islands, as the traditional base of the economy, and roughly three-quarters of the population lives in rural areas. The constitution keeps that land in the hands of its custom owners, so farming households work custom land under customary rules of ownership and use.

The censuses measure how far this reaches. The national agriculture census of 2007 found that 80% of the population lived in rural areas where farming was the main source of livelihood, and that 99% of those households took part in agriculture, fishing or forestry. Of the 1,803 million vatu of household income it counted, 683 million was produce grown for the household's own use and 561 million produce grown for sale. It recorded 97,888 crop gardens, 62% of them on flat land and 7% on steep slopes. The preliminary report of the 2022 agriculture census, published by the Vanuatu Bureau of Statistics, found 87.3% of households engaged in agriculture, with kava making up 66% of the value of crops and coconut 22.5%.

Gardens grow taro, yams, bananas, cassava and sweet potatoes, with fruit and vegetables in most months. Pigs and chickens are kept for food and for ceremony, pigs above all; Wikipedia's figures from the same period give an average household five pigs and sixteen chickens. In 2007 the government declared a Year of the Traditional Economy, encouraging trade in shell money and pig tusks in place of cash, extended the experiment into 2008, and linked a Tangbunia Bank for customary wealth to the initiative.

The sea is the other larder. In 2007, by Wikipedia's figures, 15,758 households fished, 99% of them mainly for their own consumption, and they went out on average three times a week. Wikipedia's country article records that fishing near villages has thinned the near-shore stocks. Offshore, some ni-Vanuatu fish commercially alongside foreign fleets; Wikipedia's economy article judges that the activity brings in little foreign exchange, while Britannica counts the sale of fishing rights as an important source of foreign revenue.

How the plantation trade changed hands

European plantations spread through the group after 1867. Britannica records cotton first, then maize, coffee, cocoa and coconuts dried into copra, and cattle ranching later. French planters overtook the British by the 1880s and brought in Vietnamese labour in the 1920s, hoping high copra prices would give them control of the islands' economy, but the Depression of the 1930s ended that. By 1948 ni-Vanuatu growers produced most of the copra themselves, falling back on their gardens when prices dropped, and cooperatives in the 1970s finally gave them control of the trade.

Other industries came and went. Manganese was mined on Efate until the 1970s. Forestry grew again after independence; because most logs felled in the 1980s left as unsawn timber, the government banned the export of roundwood in the early 1990s and limited the annual harvest, after which earnings from timber sawn on small portable mills rose. The sale of commercial fishing rights in the economic zone brings in foreign revenue, while ni-Vanuatu fish on a small scale for their own tables. Later surveys, Britannica records, identified remaining manganese deposits on Efate and probably exploitable gold, copper and petroleum elsewhere; Wikipedia's country article states that no petroleum deposits are known.

Which goods leave the islands

The export list is short and agricultural. The International Monetary Fund names kava, coconut oil, copra, cocoa and beef as the main products and New Caledonia, Australia and New Zealand as the main markets. Britannica lists kava, beef, copra, timber and cocoa, with Japan as a further market, and gives Australia, Singapore, New Zealand and Fiji as the main sources of imports of machinery, food and fuel. Beef comes from cattle first brought from Australia by the British planter James Paddon.

The two towns split the trade between them. Wikipedia's economy article records that 64.3% of domestic exports left through Luganville on Espiritu Santo against 35.7% through Port Vila, while 86.9% of imports came in through the capital.

The figures are the IMF's from its Article IV report of September 2025; 2024 is an estimate and 2025 and 2026 are forecasts.

How money arrives from abroad

Read across, the table shows how the economy balances. Goods imports ran at between four and seven times goods exports from 2021 to 2024, and the difference is met by flows that have little to do with what the islands produce. Remittances alone were worth 20.6% of GDP in 2021, when the borders were closed to tourists and travel receipts had almost vanished, and the IMF estimated them at 15.2% in 2024. The IMF urges the government to use overseas labour mobility programmes to build skills and businesses at home.

Grants from foreign governments made up 16.3% of GDP in 2021 and 10.4% in 2024, in the IMF's estimates. Even so, the current account has run a deficit of between 6.6% and 17.6% of GDP every year from 2021 to 2024.

Why citizenship and offshore finance count for so much

Vanuatu kept its colonial status as a tax haven after independence. There is no income tax, withholding tax, capital gains tax or inheritance tax and no exchange control; government revenue comes mainly from import duties and a value-added tax of 15%. Wikipedia's economy article puts the number of registered offshore institutions at about 2,000, and Britannica names offshore financial services, with tourism, as a main earner of foreign income since independence. Vanuatu was removed from the OECD list of uncooperative tax havens in 2003, and until 2008 it released no account information to other governments. It keeps an international shipping register in New York and is recognised as a flag of convenience.

The newer source of revenue is citizenship. Under successive programmes the state sells passports, mostly to buyers from mainland China, for about $150,000 each, and Wikipedia records claims that the sales may account for more than 30% of government revenue. The scheme has had a cost abroad: the United Kingdom withdrew visa-free access for Vanuatu passport holders on 19 July 2023 over concerns about it. The IMF wrote in September 2025 that revenue from the Economic Citizenship Program remained significant but faced a structural decline, and it asked for the programme's governance and transparency to be strengthened.

Supervision of the offshore banks has its own disputes. The Reserve Bank revoked the international banking licence of Pacific Private Bank and, according to a notice on its website, a court then stayed the revocation.

What disasters and Air Vanuatu have cost

Cyclone Pam in March 2015 caused damage and losses estimated at VT 48.6 billion, US$449.4 million, equal to 64.1% of GDP, according to the post-disaster needs assessment. Housing took 32% of the damage and tourism 20%, while agriculture and tourism carried 33% and 26% of the losses in output. The International Labour Organization estimated that the cyclone affected the livelihoods of about 195,000 people in four provinces and cost 504,050 working days.

The pattern repeated in the 2020s. Three cyclones struck in 2023. The national carrier, Air Vanuatu, went into liquidation in May 2024, and in December 2024 an earthquake damaged Port Vila; by mid-2025 domestic air services had only partly resumed. By the IMF's figures real output shrank by 1.6% in 2021, grew by 5.2% in 2022 and 2.1% in 2023, and slowed to 0.9% in 2024. The Fund forecast 1.7% for 2025 and 2.8% for 2026 and described the risks as tilted to the downside, naming the future of Air Vanuatu, the citizenship programme and the slow execution of public investment.

How the vatu and the public finances are managed

The currency is the vatu, which has no subdivisions, issued by the Reserve Bank of Vanuatu. On 2 October 2026 the bank's published rate was 118.27 vatu to the US dollar, 81.95 to the Australian dollar and 133.02 to the euro. Consumer prices rose by an average of 11.2% in 2023 and by 1.2% in 2024, according to the IMF, which judged inflation to be back within the Reserve Bank's target band in 2025.

Public debt, including debt the government guarantees, stood at 46.2% of GDP at the end of 2024 by the IMF's estimate and was forecast at 52.2% for 2026, with the domestic part rising fastest. The Fund noted that the government had leaned heavily on financing from the central bank, called for that to be phased out, and warned that planned increases in public pay and allowances would create persistent deficits. It also recorded high non-performing loans in the banks.

How tourism depends on leased custom land

Tourism grew before independence. Cruise arrivals reached 40,000 a year by 1977, after a deep-sea wharf was built and alongside a building boom in Port Vila. Of the 57,000 visitors counted in 2000, 37,000 came from Australia, 8,000 from New Zealand and 6,000 from New Caledonia; by 2008 arrivals had reached 196,134, a rise of 17% on 2007. Divers come for the reefs and for wrecks such as the SS President Coolidge off Espiritu Santo. Travel receipts fell to 0.2% of GDP in 2021 and recovered to 12.0% in 2023, by the IMF's figures.

Every resort stands on land that, under the constitution, belongs to its custom owners and cannot be sold. Foreign developers lease it instead, for 75 years in the arrangement Britannica describes, and Britannica records that many such leases were negotiated to the owners' disadvantage. Some required the custom owners, at the end of the term, to pay the full cost of any development before they could take their land back, which raised concern in the early twenty-first century that leased land would in effect be lost to its owners for good.

How reform and regulation reached the offshore sector

In 1997 the government began a three-year Comprehensive Reform Program with the Asian Development Bank. In its first year it introduced the value-added tax, consolidated and reformed the government-owned banks and started a 10% reduction of the public service. Wikipedia's economy article records that the programme stalled under the government formed in 1999 and was taken up again under the one that followed in 2001.

Pressure on the offshore centre came from outside. In December 1999 four major international banks banned US dollar transactions with Vanuatu, Nauru and Palau. Pressure from abroad, mainly from Australia, pushed the government towards international norms of transparency, and it promised to tighten regulation of the offshore centre. The Tax Justice Network gave Vanuatu a secrecy score of 88 out of 100 in its Financial Secrecy Index of 2011, with a marginal share of the market.