Debt in Nauru

Nauru uses the Australian dollar and has no independent central bank. Official financial functions are handled through the Department of Finance and Sustainable Development, while Bendigo and Adelaide Bank operates an agency that provides deposit and savings services; official 2020 information did not show formal commercial or retail lending through that agency. The current availability of private credit should be checked separately because the 2020 finding does not establish the position in 2026. The Public Debt Act 2026 replaced the Government Loans Act 1972. It covers borrowing by the Government, departments, instrumentalities and public enterprises inside or outside Nauru. Covered instruments include loan and credit agreements, Treasury securities, government loan guarantees and other approved debt instruments. The responsible minister, Cabinet, Parliament and the Secretary of the Department of Finance and Sustainable Development each have defined roles. A borrowing proposal generally moves from the responsible minister to Cabinet and then to a parliamentary motion. The Secretary manages debt, lending and on-lending, guarantees, the debt register, monitoring and reports. Parliament approves the annual borrowing plan, lending or on-lending and guarantees. The annual debt strategy covers the current and following two financial years. It addresses borrowing costs and risks, the debt portfolio, new issues, lending, on-lending and guarantees. Departments and public enterprises provide borrowing requests with information about their balance sheet, profit or loss and debt-service effects. A report is due within three months after the financial year ends, and the debt report is due within six months. Public borrowing may finance a budget deficit, projects, Treasury liquidity, refinancing, foreign-exchange reserves, approved government loans or credits, or a natural or environmental emergency. Public debt service includes principal, interest, borrowing expenses and amortisation. The budget forecast must account for these payments, and insufficient budget allocation does not remove the statutory need to pay on time. Public debt also includes risks that may become payable later. These include guarantees, indemnities, legal disputes, liabilities connected with public enterprises and other contingent liabilities. A public enterprise does not automatically become a liability of the Republic under the Public Debt Act or the Public Enterprises Act. In financial year 2024, the IMF reported public debt at 17.4% of GDP; by the end of financial year 2025 it was approximately 15% of GDP. The IMF assessed Nauru at moderate risk of debt distress and projected a further decline under its baseline. The 2021 resolution of Firebird external debt reduced the debt-to-GDP ratio by about 40 percentage points. The reported financial year 2024 structure included A$19.7 million in EXIM Bank loans connected with Taiwan Province of China, Air Nauru aircraft obligations serviced through grants, and approximately A$2.9 million in informal international-organisation membership dues. Domestic debt included the Government's liability as guarantor of the liquidated Bank of Nauru. Other contingent risks included Air Nauru and foreign-company exposure, arrears of state-owned enterprises and cost overruns for a climate-resilient port. A decline in donor support could lead to spending cuts or arrears. State-owned enterprise losses, revenue volatility, natural disasters, import or commodity shocks and a fall in the Australian dollar against the US dollar can increase debt-service pressure. A one-percentage-point interest-rate increase was estimated by the IMF to raise debt-service costs by up to about A$0.15 million. For any private, company or public borrowing decision, check repayment capacity, cash flow, currency, interest, maturity, security, guarantees, fees and default clauses. Keep the contract, principal, interest, fees, due dates, receipts and arrears in writing. If repayment becomes difficult, contact the lender promptly and negotiate any hardship arrangement or repayment plan in writing. The Consumer Protection Act 2024 provides complaint and enforcement mechanisms for relevant consumer conduct, but the reviewed sources do not establish a debt-specific ombudsman or counselling service. After default, a creditor may apply contractual charges and pursue enforcement, litigation or security realisation under the applicable contract and law. Under the Public Debt Act, renegotiation, conversion or consolidation requires lender consent; the Act does not create an automatic debt write-off. Corporate insolvency, bankruptcy and liquidation references exist under the Corporations Act 1972, and the Public Enterprises Act 2019 contains insolvency-related governance provisions. The reviewed sources do not establish a standard personal insolvency or discharge pathway, its eligibility, costs or timing. A Nauru-qualified lawyer or accountant should review a serious personal, company or cross-border debt case.