The economy of Nauru is tiny, based on a population in 2014 of only 11,000 people. The economy is primarily based on phosphate mining, offshore banking, and processing of coconut products.Mining of phosphate ceased after the exhaustion of the primary phosphate reserves, but in 2006–07 mining of a deeper layer of "secondary phosphate" began.
Nauru is dependent on foreign aid, chiefly from Australia, Taiwan and New Zealand . In the years after independence in 1968, Nauru possessed the highest GDP per capita in the world due to its rich phosphate deposits.
In the same year the Nauru government budget shows that income from licensing foreign fishing vessels was over US$3,000,000. Nauru needs to import almost all basic and capital goods, including food, water, fuel, and manufactured goods, with Australia and New Zealand as its major import sources.
Economic uncertainty caused by financial mismanagement and corruption, combined with shortages of basic goods, resulted in some domestic unrest. In 2004 Nauru was faced with chaos amid political strife and the collapse of the island's telecommunications system. Moreover, the deterioration of housing and hospitals has continued.
The economy of Nauru is tiny, based on a population in 2019 of only 11,550 people. The economy has historically been based on phosphate mining. With primary phosphate reserves exhausted by the end of the 2010s, Nauru has sought to diversify its sources of income. In 2020, Nauru's main sources of income were the sale of fishing rights in Nauru's territorial waters, and revenue from the Regional Processing Centre.
Australia has also sent financial experts to Nauru to help the tiny nation overcome its economic problems. However, serious questions remain about the long-term viability of Nauru's economy, with uncertainties about the rehabilitation of mined land and the replacement of income from phosphates. In 2008, talks began between Australia ...
However, because of heavy spending from the trust funds, including some wasteful foreign investment activities, the government is now facing virtual bankruptcy. To cut costs the government called for a freeze on wages, a reduction of over-staffed public service departments, privatization of numerous government agencies, and closure of some of Nauru's overseas consulates. Economic uncertainty caused by financial mismanagement and corruption, combined with shortages of basic goods, resulted in some domestic unrest. In 2004 Nauru was faced with chaos amid political strife and the collapse of the island's telecommunications system. Moreover, the deterioration of housing and hospitals has continued.
Historically Nauru was regarded as a tax haven due to the operation of its international financial centre, which offered amongst other things offshore banking services. In 2001, Nauru was blacklisted internationally over concerns it had become a haven for money laundering. Amendments made in 2004 abolished Nauru's Offshore Banking sector and, as recognised in Nauru's latest anti money laundering and countering the financing of terrorism (AML/CFT) review, Nauru's offshore sector is now limited to a small offshore company register.
Nauru receives about US$20 million foreign aid a year from Australia. The nations economy has grown significantly since 2012, with help from the reopening of the Nauru Regional Processing Centre, funded by Australia.
Economic uncertainty caused by financial mismanagement and corruption, combined with shortages of basic goods, resulted in some domestic unrest. In 2004 Nauru was faced with chaos amid political strife and the collapse of the island's telecommunications system.
In 2020-21, an estimated $210.5 million in revenues and $210.4 million in expenditures is expected.