On March 4th this year, the European Council announced it would be partially suspending its visa-waiver agreement with Vanuatu, which had allowed ni-Vanuatu passport holders to visit Europe’s Schengen zone without a visa. Though stakeholders had hoped to be able to avert disaster through bilateral dialogue, the suspension eventually took effect on May 4th.
In its first half-yearly economic report since the visa-waiver suspension, Vanuatu’s Department of Finance and Treasury (DoFT) divulge figures showing the effect on citizenship by investment-related revenue was sharp and immediate:
The country’s CBI programs raised a combined VUV 2.07 billion (about US$ 16.4 million) in the year’s second quarter, which is a 34% drop compared to the same quarter last year and represents the lowest quarterly figure since 2018.
DoFT reported that, for the first half of 2022, the Vanuatu Development Support Program (VDSP) and Vanuatu Contribution Program (VCP) “together collected VT 4,705.9 million so far this year, which is 48.7 percent of the budget target of VT 9,659.6 million and is 16.8 percent lower than the VT 5,654.2 million that was collected up to June last year.”
Pointing out that while CBI had been a "major revenue initiative for the government for the last five years," DoFT warned that this was "unlikely to be the case for 2022 given some of the major hurdles the programs have so far gone through this year."
DoFT pointed to three specific reasons it expected revenue from CBI to keep falling:
"The discontinued correspondent banking relationship in 2021, the recent suspension of the EU Visa waiver program, and the discontinuity of the Change of Name policy under the Civil Registry Act are currently among the major policy changes that have and may continue to significantly impact revenue collected under this program. The new Real Estate Option (REO) program is unlikely to compensate for any shortfall, given its very low direct revenue potential."
The drop in income also saw the proportion of government revenue coming from CBI fall below 30% (29.89%) in Q2, the first time this has happened since 2018.
CBI revenue - in all likelihood - has further to fall in Vanuatu. Consider that the suspension only took effect on May 4th, two-thirds the way through Q2, and that processing time for citizenship applications typically exceed three months. The true extent of the suspension's effect on government revenue in Vanuatu will only become apparent when reports for Q3 are released.
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