Since 2017 Vanuatu’s Passport Office have issued more than 4,000 passports under the country’s citizenship by investment program (CIP), which comprises of two parallel programs, the Vanuatu Contribution Program (VCP) and the Vanuatu's Development and Support Programme (VDSP).
Meanwhile, the International Monetary Fund (IMF) urges the government not to get used to CIP revenue, which it estimates, will drop.
After meeting with Passport Office officials, co-chairman Seule of the Parliamentary Committee on Economic Policies stated that the sale of passports has increased since the launch of the CIP in 2017.
He urges that regulations be tightened for the program and that direct investment options beyond the simple donation route should be implemented. He states that the Passport Office and the Citizenship Office must include policies that require investment in Vanuatu if foreigners seek a Vanuatu passport.
In 2018 nearly 10% of Vanuatu GDP and one-third of government revenue (around US$88 million) came from its respective CIPs, proportions nearly three times as high as during the previous year.
The IMF concludes in its Article IV consultation report for 2019 that that figure is more accurately considered a ‘windfall’ than a ‘new normal’. The organisation does not anticipate the upward trend in CBI-revenue to carry on, and therefore urges the Vanuatu government not to become accustomed to it.
Estimations from the IMF indicate CIP revenues will revert to the 2016 levels this year this year, which is 2.8% of GDP or around US$24 million, and to stabilise at about 2.2% of economic output afterwards.
However, the institution recognised the government’s sensible use of the unexpectedly high influx of extra-budgetary funds. The report points out that nearly one-third of program-related income had gone towards reducing its overall debt.
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