DOCUMENT INFORMATION Reserve Bank of Vanuatu Annual Report 2025 PROPERTY OF THE RESERVE BANK OF VANUATU PMB 9062, Pierre Brunet Street, Port Vila, Vanuatu +678 23333 rbvinfo@rbv.gov.vu rbv.gov.vu
1Reserve Bank of Vanuatu - Annual Report 2025 CONTENTS OUR VISION, VALUES AND PRIORITIES ...........................................................................................2 STRATEGIC PLAN 2025-2030............................................................................................................3 LETTER TO THE MINISTER OF FINANCE AND ECONOMIC MANAGEMENT .....................................4 BOARD OF DIRECTORS .....................................................................................................................5 EXECUTIVE MANAGEMENT TEAM ....................................................................................................6 ORGANISATIONAL STRUCTURE .......................................................................................................8 GOVERNOR’S FOREWORD ...............................................................................................................9 CORPORATE GOVERNANCE .........................................................................................................11 Board of Directors ..................................................................................................................................11 Meetings ....................................................................................................................................................11 Corporate Governance and Accountability .........................................................................................13 Legal Reforms ...........................................................................................................................................14 Internal Audit Function .............................................................................................................................15 ECONOMIC OVERVIEW ...................................................................................................................16 International Economic Developments ...................................................................................................16 2025 Economic Developments in Vanuatu ...........................................................................................16 STRATEGY THEME 1: ENABLING CORE RESPONSIBILITIES .............................................................18 1.1 Macroeconomic Stability .................................................................................................................18 1.2 Sound Currency Management .........................................................................................................22 1.3 Financial Stability ............................................................................................................................23 1.4 National Payments Infrastructure ...................................................................................................32 1.5 Data Governance..............................................................................................................................37 STRATEGY THEME 2: ENABLING A CONDUCIVE AND RESILIENT ENVIRONMENT........................38 2.1 People Development ........................................................................................................................38 2.2 Risk Management and Compliance ...............................................................................................39 2.3 Technological Advancement.............................................................................................................40 2.4 Corporate Services ...........................................................................................................................41 2.5 Financial Management .....................................................................................................................45 STRATEGY THEME 3: EMBRACING INNOVATION AND INCLUSIVITY ............................................47 3.1 Financial System Development ........................................................................................................47 3.2 Corporate Communications ..............................................................................................................49 2025 KEY MILESTONES ...................................................................................................................50 2025 FINANCIAL STATEMENTS .......................................................................................................51 ABBREVIATIONS .............................................................................................................................95
2Reserve Bank of Vanuatu - Annual Report 2025 CREDIBLE CENTRAL BANK OUR VISION OUR STATUTORY OBJECTIVES OUR VALUES OUR STRATEGIC PRIORITIES OUR CORE FUNCTIONAL AREAS STABILITYSUSTAINABILITY INTEGRATION INNOVATION INCLUSIVENESS RBV ACCOUNTABILITY RESPECT COMMITTED TO HIGH STANDARDS EXCEL IN WHAT WE DO FOR OTHERS SAFETY SAFE WORK ENVIRONMENT INTEGRITY PROFESSIONAL IN OUR CONDUCT 1 2 3 ACHIEVE AND MAINTAIN DOMESTIC PRICE STABILITY CONTRIBUTE TO THE STABILITY OF VANUATU’S FINANCIAL SYSTEM SUPPORT THE GOVERNMENT’S BROADER ECONOMIC POLICIES AND DEVELOPMENT OBJECTIVES DELIVER SOUND MONETARY & PRUDENTIAL POLICIES PROMOTE A SAFE, MODERN & INCLUSIVE FINANCIAL SYSTEM BUILD TRUST & GOOD GOVERNANCE STRENGTHEN INSTITUTIONAL CAPACITY & SUPPORT SUSTAINABLE DEVELOPMENT MAINTAINING MACROECONOMIC STABILITY SAFEGUARDING THE FINANCIAL SYSTEM STRENGTHENING NATIONAL AND INTERNATIONAL PARTNERSHIPS PROVIDING BANKING, CURRENCY AND PAYMENT SERVICES THE RESERVE BANK'S 11 STRATEGIC MISSIONS ARE GROUPED INTO THESE FOUR STRATEGIC PRIORITIES THE RESERVE BANK'S 16 STATUTORY FUNCTIONS ARE GROUPED INTO THESE FOUR CORE FUNCTIONAL AREAS OUR VISION, VALUES AND PRIORITIES
3Reserve Bank of Vanuatu - Annual Report 2025 STRATEGIC PLAN 2025-2030 The Reserve Bank of Vanuatu’s (RBV) Strategic Plan 2025–2030 outlines its strategic roadmap over the next five years. It aims to strengthen RBV’s role as Vanuatu’s central bank and financial sector regulator. Under the plan, the RBV seeks to improve its operating processes and achieve efficiency gains through capacity building, improved stakeholder collaboration, and embracing innovation and technology. The plan is comprised of three strategic themes: Enhancing Core Responsibilities in monetary policy and financial oversight; Enabling a Conducive and Resilient Environment through people development, technology and risk management; and Embracing Innovation and Inclusivity through digital finance, financial inclusion and corporate communications. These themes cover 13 strategic priorities that guide the RBV’s work over the planning period. 1.1 Macroeconomic Stability 1.2 Sound Currency Management 1.3 Financial Sector Stability 1.4 Financial and Money Markets Development 1.5 National Payments Infrastructure 1.6 Data Governance ENHANCING CORE RESPONSIBILITIES THEME 1 2.1 People Development 2.2 Risk Management and Compliance 2.3 Technological Advancement 2.4 Corporate Services 2.5 Financial Management ENABLING A CONDUCIVE AND RESILIENT ENVIRONMENT THEME 2 3.1 Financial System Development 3.2 Corporate Communications EMBRACING INNOVATION AND INCLUSIVITY THEME 3
4Reserve Bank of Vanuatu - Annual Report 2025 LETTER TO THE MINISTER OF FINANCE AND ECONOMIC MANAGEMENT 4 September 2026 Hon. Johnny Koanapo RASOU Deputy Prime Minister and Minister for Finance and Economic Management PMB 9031 PORT VILA Dear Hon. Minister, Re: 2025 RBV Annual Report and Audited Financial Statements Pursuant to Section 67 of the Reserve Bank of Vanuatu Act No. 37 of 2025, I have the honour to submit the Reserve Bank of Vanuatu’s Annual Report together with the Bank’s Audited Financial Statements for the financial year ended 31 December 2025. Yours faithfully, AUGUST LETLET Governor RESERVE BANK OF VANUATU PMB 9062 – EMILE MERCET STREET– PORT VILA – VANUATU TEL: (678) 23333 – FAX: (678) 24231 EMAIL: rbvinfo@rbv.gov.vu / enquiries@rbv.gov.vu WEBSITE: www.rbv.gov.vu
5Reserve Bank of Vanuatu - Annual Report 2025 BOARD OF DIRECTORS ANDREW KAUSIAMA CHAIRMAN Chairman of the RBV Board since 2020 and former Governor (1998– 2003), Andrew Kausiama has extensive experience in public service, economic policy and governance. He has held senior advisory roles in government and served on multiple national boards. He holds degrees in Economics from the USP and a Master of Commerce (Economics) from the University of Wollongong. AUGUST LETLET GOVERNOR August Letlet has been Governor of the RBV since November 2023 and has extensive experience in public finance and economic management. He previously served as Director-General of the Ministry of Finance and Economic Management (MFEM) and held senior treasury and policy roles, alongside leadership across several national boards. Mr. Letlet holds a Master’s and Postgraduate Diploma in Applied Economics from the Australian National University (ANU) and a Bachelor of Economics and Public Management from the University of the South Pacific (USP). DR. GREGOIRE NIMBTIK DIRECTOR Dr. Nimbtik is a governance expert with a PhD in Political Governance and extensive leadership experience in public sector reform and regional diplomacy. He has held senior roles including Director-General of the Prime Minister’s Office (PMO) and Deputy Director-General in the office of the Melanesian Spearhead Group (MSG), contributing to financial governance and institutional strengthening. NIKUNJ RASIKLAL SONI DIRECTOR Nik Soni is a senior public financial management adviser with over 25 years of experience in governance reform. He currently leads the EU EDF11 programme in Vanuatu and has advised governments globally. He is recognised for strengthening public financial systems, accountability and transparency in Vanuatu. SERAH OBED DIRECTOR Serah Obed was appointed to the RBV Board of Directors in 2020. She served as Deputy Commissioner of the Vanuatu Financial Services Commission (VFSC) for 19 years until 2019, with extensive experience in anti-money laundering, financial regulation, taxation and audit. She was a Senior and Principal Auditor at the Auditor-General’s Office. She holds a Bachelor of Business Studies (Accounting) from the University of New England and a Master of Business Administration from Revans University.
6Reserve Bank of Vanuatu - Annual Report 2025 EXECUTIVE MANAGEMENT TEAM AUGUST LETLET GOVERNOR August Letlet has served as Governor of the RBV since November 2023 and brings extensive experience in public finance and economic management. Prior to his appointment, he served as Director-General of the MFEM and held several senior positions in treasury and economic policy, alongside leadership roles on a number of national boards and committees. Mr. Letlet holds a Master’s Degree and Postgraduate Diploma in Applied Economics from the ANU and a Bachelor of Economics and Public Management from the USP. DR. MICHAEL HILILAN ACTING DEPUTY GOVERNOR - POLICY Dr. Michael Hililan was appointed as Acting Deputy Governor – Policy in November 2025. He holds a PhD in Economics from the University of Wollongong, a Master of Science (Economics) from the University of Bradford and a Bachelor of Arts (Economics and Management) from the USP. He served as Advisor to the Governor of the RBV, Director of the Department of Financial Markets and Director of the Department of Economics, Research and Statistics at the RBV. He also served as Advisor at the Executive Director’s Office of the International Monetary Fund (IMF) in Washington, D.C. GLORIA SIRI ACTING DEPUTY GOVERNOR - OPERATIONS Gloria Siri was appointed Acting Deputy Governor - Operations in November 2025. Since joining the RBV in January 2006, she has held several senior leadership positions across financial regulation, economics and risk management, including Director of the Department of Economics, Research and Statistics, and Chief Risk Officer. She holds a Master’s Degree in Central Bank Accounting and Financial Management and has made significant contributions to strengthening the Reserve Bank’s supervisory, risk management and business continuity frameworks. CYNTHIA NGWELEDURU HEAD OF DEPARTMENT - ECONOMICS, RESEARCH AND STATISTICS Cynthia Ngweleduru serves as Head of the Department of Economics, Research and Statistics. She oversees monetary policy formulation, economic analysis and forecasting, research, data collection, statistical compilation and publication. She holds a Bachelor’s degree from the USP and a Postgraduate Diploma and Master’s degree in International and Development Economics from the ANU.
7Reserve Bank of Vanuatu - Annual Report 2025 MARINETTE ABBIL HEAD OF DEPARTMENT - FINANCIAL REGULATIONS Marinette Abbil is the Head of the Department of Financial Regulations. She holds a Bachelor of Management and Public Administration from the USP, a Graduate Diploma in Business Administration from Southern Cross University, and a Master of Business Administration from the USP. DEREK ALEXANDER JUNIOR ACTING HEAD OF DEPARTMENT – ACCOUNTS, CURRENCY AND CUSTOMER SERVICES Derek Alexander Junior is the Acting Head of the Department of Accounts, Currency and Customer Services at the RBV. Since joining in 2013, he has progressed from Banking Officer to Manager of the Banking, Payment and Settlement Unit and now serves in a senior leadership role. He holds a degree in Commerce (Banking and Accounting) from the USP and is pursuing a Master of Professional Accounting. He successfully led the implementation of Vanuatu’s National Payment System in 2023, and remains committed to enhancing financial sector development, leadership and professional capacity building. FREDERIC JACOB ACTING HEAD OF DEPARTMENT - FINANCIAL MARKETS Frederic Jacob serves as the Acting Head of the Department of Financial Markets, where he oversees the management of foreign exchange reserves, exchange rate operations and the implementation of monetary stability within domestic financial markets. He holds a Postgraduate Diploma in Commerce Economics and a Bachelor of Commerce (Economics, Management and Public Administration) from the USP. PHILIP ARUBILAKE ADVISOR – DEPARTMENT OF ECONOMICS, RESEARCH AND STATISTICS Philip Arubilake serves as an Advisor to the Department of Economics, Research and Statistics. He holds a Bachelor of Arts (Economics and Management) from the USP, a Postgraduate Diploma in Economic Principles from the University of London, and a Master of Science in Finance (Economic Policy) from the University of London. He previously served as Director of the Department of Economics, Research and Statistics, and Director of the Department of Financial Markets in the RBV. He also served as Advisor to the Executive Director at the IMF in Washington D.C.
8Reserve Bank of Vanuatu - Annual Report 2025 ORGANISATIONAL STRUCTURE GOVERNANCE COMMITTEE MANAGEMENT COMMITTEE INVESTMENT COMMITTEE MONETARY POLICY COMMITTEE BOARD OF DIRECTORS GOVERNOREXECUTIVE ASSISTANT AUDIT COMMITTEE MANAGER INTERNAL AUDIT DEPUTY GOVERNOR POLICY DEPUTY GOVERNOR OPERATION DEPARTMENT OF FINANCIAL MARKETS DEPARTMENT OF ECONOMICS, RESEARCH & STATISTICS DEPARTMENT OF FINANCIAL DEVELOPMENT & CONSUMER AFFAIRS DEPARTMENT OF FINANCIAL REGULATION DEPARTMENT OF ACCOUNTS, CURRENCY & CUSTOMER SERVICES DEPARTMENT OF CORPORATE SERVICES & RISK MANAGEMENT POLICY COORDINATION COMMITTEE LEGAL OFFICE HUMAN RESOURCE MANAGEMENT OFFICE INFORMATION COMMUNICATION & TECHNOLOGY OFFICE CORPORATE COMMUNICATION & INTERNATIONAL RELATIONS OFFICE STRATEGIC PLANNING OFFICE
9Reserve Bank of Vanuatu - Annual Report 2025 GOVERNOR’S FOREWORD overseeing of the payment system, and acting as lender of last resort, macro prudential authority, as well as resolution authority. The RBV’s function in promoting financial inclusion and overseeing the payment system is also given more clarity. The Act establishes a central bank that is autonomous in pursuing its objectives and in the performance of its functions under the Act. One of the key changes, particularly in monetary policy autonomy, is for the RBV within the next ten years, to participate in fiscal financing only in the secondary market, making the development of a secondary market, an emerging key priority for the RBV. An amendment to the Financial Institutions Act (CAP 254) in 2025 has also now empowered the RBV to establish comprehensive credit reporting from the current regime of ‘‘negative-only’’ credit reporting, with membership expanded to banks and non-banks. As it embraces comprehensive credit reporting, this legal and policy reform will lead to improved risk allocation and pricing, and therefore contribute to reducing borrowing costs and strengthen financial inclusion in Vanuatu. Given the changes in the Reserve Bank Act and rapid technological advancements, the RBV undertook a major organisational restructuring in 2025 to properly align its roles with changes in its operating environment. The Board approved the RBV’s new organisational structure in November The year 2025 marked another profound chapter in legal, policy and organisational reforms at the Reserve Bank of Vanuatu (RBV). This year’s Annual Report highlights several key reform priorities, particularly around legislative and organisational changes that were carried out in 2025. The passing of the new Reserve Bank of Vanuatu Act (No. 37 of 2025) in October 2025 was a key legal reform achievement. The Act provides a modern central banking law in Vanuatu and lays a solid legal foundation for corporate governance, institutional autonomy, policy clarity and accountability. The Act establishes price stability as the primary objective of the RBV. It formally establishes the Monetary Policy Committee, which had previously operated without proper legal provisions, with the role of advising the Board of Directors on monetary policy formulation. The Act also establishes the RBV’s secondary objective of contributing to stability of the domestic financial system. The RBV is now transitioning to carry out the reforms prescribed under the new law, including through the appointment of key positions and the development of new policy frameworks. Functions of the RBV have been clarified by the new law, including the formulation and implementation of exchange rate policy, the holding and managing of all official foreign reserves, the regulation and
10Reserve Bank of Vanuatu - Annual Report 2025 2025, which saw an increase in the number of functional Departments from four to six, and five additional offices. Two Deputy Governor positions were established, with one having responsibilities in policy and the other with operational functions. The Reserve Bank Strategic Plan 2025-2030, a bottom-up approach to planning, and which sets out the RBV’s medium-term policy strategies, was approved by the Board in 2025. The RBV launched its second National Financial Inclusion Strategy (NFIS) 2025-2030 in 2025. The NFIS 2025-2030 has the strategic goal of achieving 60 per cent financial inclusion among the adult population with a focus on the underserved segments of the Vanuatu population, such as women and micro-small-medium-sized businesses. In pursuing this strategic goal, the RBV issued the National Regulatory Sandbox Guideline, the Financial Consumer Protection Guideline and the Operating Guideline for Mobile Money Service Providers in 2025. Global and domestic developments and challenges continued to impact the operations of the RBV in 2025. Global economic activity continued to show resiliency, with global inflation showing further moderation. As a result, domestic activity held up in 2025 and headline inflation, which the RBV targets, registered a small annual increase of 0.7 per cent in 2025. Over the course of 2025, the RBV’s official foreign reserves rose to VT 81.58 billion (USD 680.4 million), enabling the RBV to maintain monetary policy unchanged through 2025. The RBV also continued to strengthen its regulatory and supervisory functions to ensure stability in the domestic financial system, in accordance with its objective under the Act. The RBV continued to work with the banking sector in ensuring continued operational resilience in 2025 following severe damages caused by the December 2024 earthquake. Domestic banking sector operations remained strong in 2025, with a capital adequacy ratio well above the minimum regulatory thresholds, improved profitability and high levels of liquidity. The financial performance of the RBV remained strong in 2025, with the RBV recording a net profit of VT 2.34 billion for the year ended 31 December 2025, broadly unchanged from VT 2.35 billion in 2024. Total revenue increased by 14.9 per cent to VT 4.34 billion from VT 3.77 billion in 2024, while total expenses increased by 39.7 per cent to VT1.995 billion, from VT1.43 billion. I take this opportunity to thank the Hon. Prime Minister, the Hon. Deputy Prime Minister and Minister of Finance and Economic Management, and the National Government for their continued support to the RBV. I acknowledge and thank the Board of Directors for their insight and contribution to policy changes and development of the RBV. I also thank the International Monetary Fund and our other stakeholders for advice and technical support rendered to the Bank. Finally, I thank the staff of the RBV for their support and contributions to the work carried out by the Bank in 2025. Mr. August LETLET Governor
11Reserve Bank of Vanuatu - Annual Report 2025 CORPORATE GOVERNANCE Table 1: RBV Board of Directors Meetings 2025 MEETING NO. DATE VENUE 1 11 March 2025 Ramada Resort 2 17and 18 March 2025 Ramada Resort 3 16 and 17 June 2025 Warwick Le Lagon Resort 4 21 July 2025 Vila Rose Apartment 5 21 August 2025 Ramada Resort 6 28 October 2025 Ramada Resort 7 17 December 2025 Warwick Le Lagon Resort 2025 RBV BOARD RESOLUTIONS BOARD MEETING 1 (11 MARCH 2025) The Board considered governance matters relating to Board vacancies, organisational changes within the RBV and legislative developments. The RBV was encouraged to progress legislative amendments to strengthen the Bank’s governance framework. The Board also received an update on the implementation of the Staff Policy 2025, including the recruitment process. BOARD MEETING 2 (17–18 MARCH 2025) The Board approved the RBV’s programme of major events for 2025: • Economic Symposium hosted in Santo in July, 2025. • The co-hosting of the Asia-Pacific Applied Economic Association (APAEA) Conference in Port Vila in May 2025, a regional forum bringing together researchers, policymakers and practitioners to exchange knowledge and share research on applied economics and public policy. • The hosting of the Wansolwora Central Bank The Reserve Bank of Vanuatu (RBV) is established under the Reserve Bank of Vanuatu Act (No. 37 of 2025) as a body corporate owned by the Government of Vanuatu. Its roles as central bank and regulator are specified in the Reserve Bank Act, the Financial Institutions Act (CAP 254), the International Banking Act (CAP 280), the National Payment Systems Act (No. 8 of 2021), and the Insurance Act (No. 54 of 2005). Section 7 of the Reserve Bank Act establishes the RBV as an autonomous institution in pursuing its objectives. BOARD OF DIRECTORS Under the new Reserve Bank Act, the appointment of the Board of Directors is made by the Minister of Finance and Economic Management (MFEM) upon the recommendation of the Evaluation Committee, established under the Act. The Board is responsible for determining the policy and overseeing the affairs of the Bank. The Board comprises five members: The Governor, who serves as an ex-officio member, and four non-executive members, one of whom serves as Chairperson. Although the position of Deputy Chairperson does not exist, the Board continued to discharge its responsibilities effectively throughout 2025, operating within the parameters of the law and in accordance with the Board Charter, which serves as the Bank’s principal governance policy document. BOARD OF DIRECTORS COMPOSITION IN 2025 Chairman • Mr. Andrew KAUSIAMA Directors • Dr. Gregoire NIMBTIK • Mrs. Serah OBED (term ended in July 2025) • Mr. Nikunj SONI Ex Officio Member and Governor • Mr. August LETLET MEETINGS The Board of Directors convened on seven occasions in 2025, as in Table 1, below:
12Reserve Bank of Vanuatu - Annual Report 2025 Event in July 2025, an exchange programme involving staff from the RBV, the Central Bank of the Solomon Islands and the Bank of Papua New Guinea, aimed at strengthening regional cooperation through peer learning, knowledge sharing, cultural exchange and staff engagement. • Sponsorship of the Vanuatu Broadcasting and Television Corporation (VBTC) Canoe Race in 2025. The Board considered human resource matters, including the transition to a fortnightly payroll cycle and the composition of the Reserve Bank Structure Committee. Financial performance and exchange rate developments were reviewed, including discussions on the Bank’s financial position and engagement with the International Monetary Fund (IMF) regarding the valuation assessment of the Vatu. Following the December 2024 earthquake, the Board reviewed the Business Continuity Plan (BCP) Report and acknowledged the effective implementation of the Bank’s continuity arrangements. The associated BCP budget was also noted. The Board approved the appointment of Ernst & Young as the Bank’s Internal Auditor. As part of strengthening the monetary policy framework, the Board endorsed the development of a comprehensive monetary policy implementation framework encompassing policy objectives, instruments and key macroeconomic indicators. As part of strengthening the monetary policy framework, the Board endorsed the development of a comprehensive monetary policy implementation framework, encompassing policy objectives, instruments and key macroeconomic indicators. Following its assessment of domestic and global economic conditions, the Board approved the recommendation to maintain the prevailing monetary policy stance BOARD MEETING 3 (16–17 JUNE 2025) The Board considered the presentation of bids received from various construction companies for construction of the RBV’s Northern Region Operations, and duly approved the engagement of KD Enterprise to carry out construction of the new building. In addition, the Board approved the Long-Term Service Agreement (LTSA) with Note Printing Australia (NPA) for the printing of the Vatu polymer currency notes. The Board also approved the amendment to the Board Charter 2019. The Board noted the Reserve Bank’s Financial Statements for the financial year 2024. The Board discussed matters relating to the Special Retained Earnings Transfer Account. The Board approved the 2024 dividend payment to the Government of Vanuatu and considered matters relating to the partnership between the National University of Vanuatu (NUV) and the Vanuatu Agriculture Research and Technical Centre (VARTC). The Board discussed matters concerning legal cases involving the Vanuatu Financial Intelligence Unit (VFIU) and the RBV. The Board noted the upcoming visit of the International Monetary Fund (IMF) Legal Department to Vanuatu in July 2025. The Board approved the recommendation of the Monetary Policy Committee to maintain the current monetary policy stance in light of ongoing economic recovery and external stability considerations. BOARD MEETING 4 (21 JULY 2025) The Board met with the IMF Legal Department in Vanuatu to discuss the review and modernisation of the RBV’s legislative framework. The meeting provided an opportunity for the Board to consider international best practices and the technical assistance being provided to strengthen the Bank’s legal and governance framework. BOARD MEETING 5 (21 AUGUST 2025) The Board approved revisions to the composition and weightings of the Vatu currency basket and authorised the implementation of the revised basket. The Board reviewed the Bank’s investment portfolio and approved the 2025 Budget Review, including the associated risk budget. Approval was also granted for the commencement of Phase 1 and Phase 2 of the National Payment System (NPS) rollout in Tanna and the associated budget allocation. The Board considered the 2025 Financial Sector Stability Review and updates on the banking sector by the Department of Financial Regulation. The Board also approved the 2026 corporate uniform and associated budget.
13Reserve Bank of Vanuatu - Annual Report 2025 BOARD MEETING 6 (28 OCTOBER 2025) The Board considered the proposed Reserve Bank of Vanuatu Bill as part of the ongoing modernisation of the Bank’s legislative framework, taking into account recommendations arising from the 2016 IMF Safeguards Assessment. Following its review, the Board approved the proposed Bill for submission to Parliament. The Board also received updates on developments within the banking sector and matters relating to the VFIU. BOARD MEETING 7 (17 DECEMBER 2025) The Board reviewed developments in domestic financial markets, together with the financial position of the RBV. The Board received updates on developments in the banking sector and approved the RBV’s 2026 Budget and organisational structure. CORPORATE GOVERNANCE AND ACCOUNTABILITY The RBV aims to ensure sound corporate governance and accountability in its operations. The new Reserve Bank of Vanuatu Act establishes a framework for ensuring sound corporate governance and accountability, which the RBV must meet. The RBV performs its functions derived from several legislations, which are: • The Reserve Bank Act (No. 37 of 2025), which is the legislation establishing the RBV as a central bank; • The Financial Institutions Act [CAP 254] of 1999, giving prudential supervisory powers to the RBV over the domestic banking sector in Vanuatu; • The International Banking Act [CAP 280] of 2002, giving prudential supervisory powers to the RBV over the international banking sector in Vanuatu; • The Insurance Act No. 54 of 2005, giving licensing, regulatory and supervisory powers to the RBV over the domestic insurance sector; and, • The National Payment System Act No. 8 of 2021, giving powers to the RBV to establish, regulate and oversee the national payment system in Vanuatu. The Reserve Bank Act established that the RBV must be autonomous in pursuing its objectives, in price stability and in the performance of its functions. NEW PROCEDURES FOR APPOINTING KEY POSITIONS The Act provides procedures for the appointment of key positions at the RBV through the establishment of an Evaluation Committee. The committee, which operates independently, is responsible for recommending suitable candidates for the positions of Board of Directors to the MFEM and an external member of the RBV’s Monetary Policy Committee. The Evaluation Committee consists of the following members: a legal practitioner appointed by the Vanuatu Law Council; an individual appointed by the Vanuatu Public Service Commission; and an academic appointed by the NUV. CONFLICTS OF INTEREST The Act sets the minimum standards concerning conflict of interest for the Board of Directors and staff of the RBV in identifying, disclosing, assessing and managing conflicts of interest so as to protect the integrity of the RBV. It established any contravention of conflict of interest as an offence under the Act. GOVERNANCE COMMITTEE The Board Governance Committee was established under the Act with the responsibility of looking into any conflict-of-interest allegations within the RBV. BOARD OF DIRECTOR APPOINTMENTS The members of the Board of Directors, which meets at least four times per year, are appointed by the MFEM. Unlike before, the appointment is based upon the recommendation of an independent Evaluation Committee. APPOINTMENT OF THE GOVERNOR Under the Act, the Prime Minister appoints the Governor after consultation with the MFEM and on the recommendation of the Board of Directors. Where the Governor is temporarily absent, incapacitated, or otherwise unable to perform his or her functions under the Act, the Governor will appoint a Deputy Governor to act as the Acting Governor. APPOINTMENT OF DEPUTY GOVERNORS The Governor, on the approval of the Board of Directors, appointed two Deputy Governors in
14Reserve Bank of Vanuatu - Annual Report 2025 2025 as prescribed under the Reserve Bank Act and the organisational structure of the RBV. AUDIT COMMITTEE The Reserve Bank Act establishes a Board Audit Committee, which meets at least once every three months, from three non-executive members of the Board, with at least one having substantial expertise in accounting, auditing or financial reporting. The Audit Committee functions to oversee the financial reporting and disclosure process; to oversee the performance of the internal audit function; and to oversee the risk management adopted by the RBV. Its duties include: monitoring the implementation of recommendations made by the Manager Internal Audit and external auditors; and overseeing compliance laws and policies, ethics and whistle-blower hotlines. OTHER COMMITTEES ESTABLISHED BY THE ACT The Act establishes a Management Committee, which assists the Governor with the day-to-day management of the RBV and the implementation of policies adopted by the Board. It also established the Monetary Policy Committee for advising the Board on the formulation of the monetary policy, and the Investment Committee for advising the Board on the formulation of investment policy and in the investment strategy of the RBV. BOARD OF DIRECTORS The Reserve Bank Act sets out the responsibilities of the Board and its members. The Board has overall responsibility for the RBV’s strategic direction, functions and operations, and is ultimately accountable for the delivery of the RBV’s outcomes. It is responsible for: • Making internal rules for the conduct of the business; • Making orders and issuing directives for the purpose of giving effect to the provisions of the Reserve Bank Act; • Formulating monetary and foreign exchange policies and overseeing their implementation; • Formulating other policies of the RBV regarding the execution of its functions and overseeing their implementation; • Approving the annual budget of the RBV; • Approving the annual report and financial statements of the RBV; • Adopting and overseeing the RBV’s policies on internal and external audit, compliance, internal controls and risk management; • Adopting and overseeing the system of financial reporting, accounting policies, information technology and security of the RBV; • Appointing and dismissing the Manager Internal Auditor on recommendation of the Audit Committee; • Determining policies on the appointment, dismissal, remuneration, pension, code of conduct and other terms and conditions relating to the service of the employees of the RBV; and • Establishing committees of the Board to assist in its oversight functions. LEGAL REFORMS The RBV advanced several major legal initiatives in 2025: It advanced two major legislative reforms and formulated the Council of Ministers (COM) policy papers, prepared the legislation drafting instructions, and made representations in the Development Committee of Officials (DCO) meetings. Major legal reforms undertaken in 2025 included Parliament’s adoption of the new Reserve Bank Act No. 37 of 2025 and the amendment to Section 21 of the Financial Institutions Act [CAP 254]. The RBV negotiated the Long-Term Polymer Supply Agreement with Note Printing Australia (NPA), including preparation of management and Board papers, securing approvals and facilitating the formal signing in Melbourne in September 2025. In addition, the RBV managed the VT 200 currency design settlement, engaging with the Vanuatu Intellectual Property Office (VIPO), preparing the Deed of Settlement, and finalising the goodwill payment to avoid litigation and reputational risk to the RBV. BENEFITS TO RBV The initiatives undertaken during 2025 delivered several institutional benefits: • Legal and regulatory resilience – stronger legislative foundations and supervisory frameworks. • Operational efficiency – secured long-term currency supply and improved systemic risk monitoring. • Public trust and confidence – reinforced through transparent settlement of the VT 200 matter and achieved a secure currency management.
15Reserve Bank of Vanuatu - Annual Report 2025 • Future safeguards – the new Reserve Bank Act now vests intellectual property rights relating to currency design with the RBV, and reduced future legal, reputational and compliance risks. INTERNAL AUDIT FUNCTION Internal audit plays a critical role within the RBV as the third line of defence, providing independent assurance that corporate governance, internal controls and risk management frameworks are effectively implemented by management. Following the Bank’s restructuring in 2019, an Internal Audit Unit was established and an Internal Auditor appointed. To ensure independence from management, the Internal Auditor reports administratively to the Governor and functionally to the Audit Committee. The RBV outsourced its internal audit function to Ernst & Young in 2025 for a five-year period to ensure independent internal audit services by an international and reputable firm, as recommended by the 2016 IMF Safeguard Assessment. The arrangement also aligns with provisions of the new Reserve Bank of Vanuatu Act No. 37 of 2025. The RBV’s Internal Auditors primarily focus on its governance processes, internal control systems and risk management framework. Their work complements the external audit function and supports the overall integrity and accountability of the RBV’s operations. Figure 1: Economic Symposium in Santo
16Reserve Bank of Vanuatu - Annual Report 2025 ECONOMIC OVERVIEW The Reserve Bank of Australia (RBA) increased policy rates late in the year, and trade conditions reflected external risks linked to global demand and trade tensions. In New Zealand, growth remained modest amid weak domestic demand; inflation eased within the target band and unemployment remained relatively elevated. Monetary policy was eased through several rate cuts and trade conditions were supported by resilient services exports. China maintained comparatively stronger growth supported by policy stimulus, infrastructure investment and export activity; inflation remained subdued and labour market conditions were broadly stable. Monetary policy remained accommodative and a sizeable trade surplus was sustained. Overall, developments across key partner countries continued to shape external demand, tourism flows, remittances and import price pressures relevant to Vanuatu’s economy. 2025 ECONOMIC DEVELOPMENTS IN VANUATU In 2025, growth remained resilient, underpinned by stronger performance of the agriculture, forestry and fisheries sectors and a gradual recovery in services, alongside continued, though moderating, expansion in the industry sector. Growth in the agriculture, forestry and fisheries sectors was estimated at 5 per cent, supported by higher production and favourable prices for key export commodities, including copra, cocoa and kava, which offset weaker outcomes in beef, coffee and forestry. The industry sector is estimated to have expanded by 8.6 per cent, reflecting sustained construction activity, infrastructure development and post-earthquake reconstruction, albeit at a slower pace than in 2024. Meanwhile, the services sector was estimated to have improved by 3.2 per cent, driven by the gradual recovery in tourism and its spillover effects across tourism- related services. Inflationary pressures eased markedly in 2025. Headline annual inflation slowed to 0.8 per cent in the December 2025 quarter, down from 2.3 per cent in the September 2025 quarter. Labour demand eased in 2025, with total job vacancies falling 4.5 per cent from 2024, largely due to more modest openings in services and the agriculture, fishing and forestry sectors. The industry sector, however, recorded higher vacancies, reflecting strong demand for INTERNATIONAL ECONOMIC DEVELOPMENTS Global economic activity remained resilient in 2025, with growth estimated at around 3.3 per cent, broadly unchanged from 2024, according to the IMF World Economic Outlook Update (January 2026). The stable performance reflected resilient domestic demand, continued expansion in emerging markets, and sustained investment in technology and productivity-enhancing sectors, which helped offset the drag from tighter financial conditions, geopolitical tensions and ongoing trade policy uncertainty. Global inflation moderated further during 2025 relative to 2024, supported by easing commodity and energy prices, improved supply conditions and the lagged effects of earlier monetary tightening, although core inflation remained elevated in some advanced economies due to persistent services price pressures. Global trade volumes remained positive and broadly stable compared with 2024, supported by ongoing goods and services demand and supply chain adjustments, though growth momentum softened amid tariff uncertainties and shifts in global production networks. Overall, the international environment in 2025 was characterised by moderate but stable economic growth, continued disinflation, and resilient, albeit gradually moderating, global trade activity. These developments shaped external demand, import prices, and financial flows relevant to Vanuatu’s small, open economy. Growth trends across Vanuatu’s main trading partners remained mixed during 2025. The United States recorded moderating growth supported by resilient consumption, while inflation eased but remained above target; unemployment increased modestly. The Federal Reserve maintained a broadly neutral policy stance following earlier rate reductions and the trade deficit widened amid strong imports. The Euro Area experienced subdued growth due to weak industrial activity and cautious consumer spending; inflation remained close to target, and unemployment stayed relatively low. Policy rates were broadly unchanged and export performance remained soft. Australia’s economy expanded modestly, supported by services demand and labour market resilience; inflation pressures persisted above target, and unemployment remained low.
17Reserve Bank of Vanuatu - Annual Report 2025 reconstruction work. Meanwhile, estimates of the stock of Vanuatu seasonal workers abroad rose 10.5 per cent, and the Vanuatu National Provident Fund (VNPF) membership increased 12 per cent in the third quarter of 2025. The monetary and financial sectors remained stable in 2025, with broad money (M2) expanding, private sector credit rising, interest rates on lending declining and banking sector indicators - including Capital Adequacy Ratio (CAR), and the levels of Non-Performing Loans (NPLs) and profitability - showing continued soundness. The Vanuatu Government recorded a recurrent fiscal surplus of VT 8.91 billion (5.6 per cent of GDP) in 2025, supported by strong revenue performance - particularly Value Added Tax (VAT), fees from the Citizenship by Investment program and controlled expenditure management. The external sector improved in 2025, reflected in an increase of 7.5 per cent in gross official foreign reserves to VT 81.58 billion (USD 680.4 million) at end-December, mainly driven by government- related development inflows and service-related receipts. Merchandise export earnings showed an increase of 13.5 per cent over the year, supported by higher receipts from cocoa, copra, coconut oil, kava, fish and other commodities, which more than offset lower earnings from sawn timber, coffee and beef exports. In contrast, the value of merchandise imports declined by 2.4 per cent compared to 2024, contributing to a narrowing of the trade in goods deficit during the year. Figure 2: Asia Pacific Applied Economics Association International Conference 2025
18Reserve Bank of Vanuatu - Annual Report 2025 STRATEGY THEME 1: ENABLING CORE RESPONSIBILITIES Policy Statements and press releases, and are implemented through instruments such as open market operations, statutory reserve requirements and prudential measures. The RBV assesses the achievement of its price stability objective through two key indicators: maintaining low and stable inflation, and ensuring adequate foreign reserves to support external stability. These indicators serve as the primary benchmarks for evaluating the effectiveness of monetary policy. 2025 MEETINGS AND KEY DECISIONS The PCC and MPC held their respective scheduled quarterly meetings in 2025 as part of their statutory roles in policy formulation. The PCC convened three times in March, June and September 2025. It undertook assessments of prevailing domestic and external economic and financial developments across key sectors, evaluated their implications for the RBV’s monetary policy objectives, and provided recommendations on appropriate monetary policy measures to the MPC. During the year, the Committee’s deliberations focused on developments in domestic economic activity and business conditions, inflation trends, banking sector risks, including elevated non-performing loans and the expiry of the commercial banks’ loan moratorium, liquidity conditions within the banking system, and the implications of the Government’s expansionary fiscal policy and domestic borrowing for macroeconomic stability. Based on these assessments, the Committee consistently recommended maintaining the existing monetary policy stance while continuing to closely monitor domestic and international economic and financial developments. The MPC met three times in March, June and September 2025. The Committee reviewed developments in domestic money markets, liquidity conditions, inflation, credit growth, financial stability and the external sector. Throughout the year, the Committee’s deliberations focused on the outlook for inflation, the adequacy of official foreign reserves, domestic liquidity conditions, the effectiveness of open market operations in managing excess liquidity, the resilience of the banking sector, and the implications of fiscal developments, including domestic borrowing, for monetary and financial stability. Based on these assessments, the Committee concluded that the prevailing monetary policy settings remained appropriate and recommended maintaining the existing monetary policy stance throughout 2025. 1.1 MACROECONOMIC STABILITY SOUND MONETARY POLICY RESERVE BANK OF VANUATU (RBV) POLICY MANDATE The RBV conducts monetary policy with the primary objective of achieving and maintaining domestic price stability. Its other objective is to contribute to financial system stability and sustainable economic development, in accordance with Section 2 of the Reserve Bank of Vanuatu Act No. 37 of 2025. Under the Act, the RBV is mandated to formulate and implement monetary policy. The Act formally establishes the Monetary Policy Committee (MPC) as a committee responsible for advising the Board of Directors on the formulation of monetary policy. The MPC is chaired by the Governor, with the Deputy Governor serving as Deputy Chairperson, and includes four additional members appointed by the Governor. To support this framework, the RBV established the Policy Coordinating Committee (PCC) as a committee in its organisational structure that serves as a technical advisory body responsible for undertaking comprehensive economic and financial assessments and providing recommendations on appropriate monetary policy measures to the MPC. It is chaired by the Head of the Department of Economics, Research and Statistics (DERS) and comprises the Deputy Governor (Policy), the Head of the Department of Financial Markets (DFM), and technical staff from DERS and DFM. The RBV operates a three-tiered monetary policy decision-making framework to ensure rigorous analysis, structured review and transparency. At the technical level, the PCC evaluates developments across the real, monetary and financial, fiscal and external sectors, as well as international economic conditions, and assesses their implications for monetary policy. At the policy advisory level, the MPC deliberates on key macroeconomic and financial indicators, including inflationary pressures, liquidity conditions, credit growth, financial system stability and external sector developments, and provides formal policy advice to the Board. At the decision-making level, the Board of Directors holds final authority for monetary policy decisions, ensuring alignment with the statutory objectives set out in the Act. Policy decisions are communicated through Monetary
19Reserve Bank of Vanuatu - Annual Report 2025 RBV SANTO BRANCH GROUND-BREAKING AND THE 3RD RBV ECONOMIC SYMPOSIUM The RBV marked a historic milestone with the ground-breaking ceremony for its Santo Branch Phase 1 project on 30th June 2025 at Santo Canal. The event was attended by the Prime Minister, Deputy Prime Minister, Sanma Provincial leaders and RBV officials, and featured custom ceremonies, official remarks, construction contract signing and a project blessing. This development reflects RBV’s commitment to expanding its presence and strengthening financial services in the northern region. Following this, RBV hosted its 3rd Economic Symposium from 2nd – 3rd July 2025 at Unity Park in Luganville, Santo, under the theme “An Enabling Environment for Digital and Green Finance for Inclusive Growth and Resilience.” The symposium brought together government leaders, regulators, financial institutions and development partners. The RBV launched key policy initiatives during the symposium, including the National Financial Inclusion Strategy 2025- 2030, Mobile Money Operating Guidelines, the National Regulatory Sandbox Guideline, Financial Consumer Protection Guidelines and the RBV Strategic Plan 2025-2030, alongside the presentation of the Vanuatu Financial Services Demand Side Survey 2024. Panel sessions addressed critical topics, such as enabling digital and green finance, balancing innovation with regulatory oversight, MSME financing, and bridging the digital divide through consumer protection and financial literacy. Figure 3: Honourable Jotham Napat - The Prime Minister giving his official remarks at the ground- breaking ceremony. The RBV Board of Directors maintained its monetary policy stance throughout 2025. The RBV’s policy instruments remained unchanged throughout the year: the policy rate at 2.75 per cent, the Capital Adequacy Ratio (CAR), 12.0 per cent, the Statutory Reserve Deposit (SRD), 5.50 per cent and the Liquid Asset Ratio (LAR) at 5.0 per cent. Moreover, the amount of RBV notes issued in the Open Market Operations (OMO) remained at VT 1.9 billion per month. Prevailing economic conditions and developments were key factors in driving the Board’s views on monetary policy decisions in 2025, including moderating global growth, easing inflationary pressures, resilient domestic economic activity, stable financial sector conditions, strengthened fiscal and external positions. In particular, inflation had remained well within the RBV’s price stability objective throughout 2025. 2025 PERFORMANCE OUTCOMES • Prevailing economic conditions imply that macroeconomic stability was maintained in 2025, in line with the RBV’s statutory mandate and as a key outcome of the RBV’s Strategic Plan 2025–2030, which included continued low inflation and an adequate level of foreign reserves, as indicators of the effectiveness of the RBV’s monetary policy. • Headline inflation declined steadily over the course of the year, averaging 0.7 per cent in 2025, down from 1.2 per cent in 2024, and remained comfortably within the RBV’s target range of 0–4 per cent. At the same time, official foreign reserves levels rose to VT81.58 billion (USD 680.4 million) in December 2025, providing a stronger external buffer and reinforcing Vanuatu’s external sector stability. RBV UNDERTAKING OF DIALOGUE AND POLICY CONSULTATION WITH KEY STAKEHOLDERS IN 2025 The RBV’s policy dialogue and consultations with key stakeholders remained important aspects of policy formulation, supporting informed policy formulation and strengthening coordination with relevant institutions.
20Reserve Bank of Vanuatu - Annual Report 2025 RBV ATTENDS THE 2025 ALLIANCE FOR FINANCIAL INCLUSION (AFI) GLOBAL POLICY FORUM The RBV attended the AFI Global Policy Forum (GPF) in Namibia in September 2025, led by Governor Letlet and a delegate representing the Financial Inclusion working groups. The RBV delegation also attended the side event - the Pacific Islands Regional Initiative (PIRI) leaders meeting. The GPF brought together more than 700 global leaders, policymakers and financial sector experts, representing 71 AFI member institutions across 61 countries. The key highlight of the 13th PIRI Leaders Roundtable was the presentation of the Bank Supervision Application (BSA) by the Banco de Mozambique, showcasing tools to strengthen regulatory oversight and risk monitoring. The RBV agreed to be part of the pilot of the BSA. The 13th PIRI Leaders Roundtable discussed the region’s unique vulnerabilities, including small market size, geographic isolation and climate- related risks, and acknowledged the role of PIRI in fostering peer learning, technical cooperation and capacity building. Members reaffirmed PIRI’s focus on advancing inclusive policies for underserved groups such as women, youth and rural populations while leveraging technology to improve access and resilience. RBV PARTICIPATES IN THE BANK OF PAPUA NEW GUINEA (BPNG) GREEN FINANCE SUMMIT The RBV participated in the Green Finance Summit, hosted by the BPNG in Port Moresby on 24th – 26th March 2025, attended by the RBV Governor. The summit focused on advancing sustainable finance practices and exploring how financial systems can support climate resilience and environmentally responsible growth. The Green Finance Summit provided valuable exposure to regional strategies and global policy approaches, and strengthened the RBV’s capacity to integrate green finance principles into domestic policy. RBV PARTICIPATES IN AFI WORKING GROUP MEETINGS Staff of the RBV attended the AFI’s 31st Financial Inclusion Data (FID), 12th Inclusion Green Finance (IGF) and 24th SME Finance (SMEF) Working Group meetings in Seychelles in April 2025. The meetings brought together regulators, central banks and financial institutions from across the globe to share experiences, discuss emerging challenges, and shape strategies for advancing financial inclusion and resilience. RBV’s participation provided insights into data- driven approaches for measuring inclusion, innovative financing solutions for small and medium enterprises, and strategies for integrating climate and environmental considerations into financial systems. By engaging in these discussions, RBV working group representatives were able to benchmark Vanuatu’s progress against international best practices and identify practical tools to support local policy initiatives. RBV PARTICIPATES IN WORLD CONSUMER RIGHTS DAY The RBV participated in the 2025 World Consumer Rights Day, celebrated in Vanuatu on 14 – 15 May 2025 at Unity Park, Luganville, Santo, with RBV serving as part of the organising committee. The event brought together key institutions and stakeholders to promote consumer awareness and highlight the importance of fair and transparent practices in the marketplace. The RBV’s participation reinforced its commitment to promoting fair and transparent financial practices, while contributing to national efforts to empower consumers and strengthen confidence in the financial system. RBV’S UNDERTAKING OF REGULAR LIQUIDITY CASH FLOW CONSULTATIONS As part of its policy consultation, the RBV continued to undertake regular liquidity cash flow monitoring with key stakeholders in support of effective monetary policy liquidity management and implementation in 2025. RBV’S PROGRESS IN MODERNISING RESEARCH AND DEVELOPMENT Evidence-based policy capacity building remains Figure 4: Launching of the National Financial Inclusion Strategy. (L-R): Md. Asad-Ur-Rahman Nile, Country Coordinator UNCDF; Honourable Johnny Koanapo RASOU, Deputy Prime Minister and Minister of Finance and Economic Management; Mr. August Letlet, Governor RBV.
21Reserve Bank of Vanuatu - Annual Report 2025 one of the RBV’s key priorities. The RBV made significant progress to modernise research and analytical capacity in 2025. The RBV established a Monetary Policy and Research Unit within the Department of Economic Research and Statistics (DERS) and filled two positions within the unit as part of strengthening macroeconomic analysis and policy research. The RBV also invested in analytical tools and econometric software in 2025 as part of its strategic plan to enhance and support economic modelling and forecasting. To strengthen regional collaboration and research engagement, the RBV signed a Memorandum of Understanding with the Asia-Pacific Applied Economics Association (APAEA) and hosted the inaugural APAEA Conference in May 2025. RBV staff also participated in several regional knowledge-sharing initiatives, including the APAEA Annual Conferences hosted by central banks in the region and in the Maldives. Four RBV staff participated in the Australia Awards Fellowship, hosted by Griffith University. The fellowship program, titled “Towards a Pacific Digital Economy: Finance, Technology and Policy,” was conducted over three weeks from late January to February 2025, with the post-course assessment completed in November 2025. RBV’S WORK IN INTEGRATING CLIMATE CHANGE INTO ITS POLICY FRAMEWORK The integration of climate change considerations into the RBV’s policy framework remains a medium- to long-term objective of the RBV and is being advanced through continued collaboration with bilateral and multilateral development partners. During 2025, the RBV progressed several initiatives aimed at strengthening inclusive green finance, climate resilience and sustainable financial sector development as part of its broader policy and financial inclusion agenda. RBV’S DEVELOPMENT OF ITS FIRST INCLUSIVE GREEN FINANCE ROADMAP The RBV completed a significant part of developing its first Inclusive Green Finance (IGF) Road Map 2026-2030 in 2025, expected to be adopted in the first half of 2026. It partnered with the Global Green Growth Institute (GGGI) through the Greening the Pacific Financial Systems programme funded by the Agence Francaise de Development (AFD) to develop the Roadmap. The RBV held the Roadmap Inception meeting on 21 October 2025 at the Vanuatu Cultural Centre, followed by stakeholder consultations. The key focus areas of the RBV IGF Road Map focus on strengthening governance arrangements, identifying financing mechanisms, and promoting gender sensitive and socially inclusive approaches. 2025 PERFORMANCE OUTCOMES • The RBV’s monetary policy framework and coordination mechanisms supported macroeconomic stability, price stability, external sector resilience, and economic confidence amid global and domestic uncertainties in 2025. • The PCC, MPC and Board decision- making processes strengthened policy coordination, analytical rigor, transparency and accountability in monetary policy formulation. • Engagement with government agencies, financial institutions, development partners and regional organisations strengthened policy coordination and reinforced the RBV’s role in national economic development and regional cooperation. • Strengthened research functions, analytical tools and regional knowledge-sharing initiatives enhanced economic forecasting, evidence-based policy analysis and institutional research capacity. • Leadership in inclusive and sustainable finance was advanced through strategic policy frameworks, international engagement and collaboration with development partners, including progress on the Inclusive Green Finance Roadmap and integration of climate considerations into policy development. • Participation in regional and international forums and professional development initiatives strengthened staff capacity, institutional networks and the exchange of policy experience and best practices. RBV’S INCLUSIVE GREEN FINANCE (IGF) IMPACT STORY The RBV partnered with AFI in June 2025 to produce a video about its journey on IGF. The story captured perspectives from RBV’s Financial Inclusion Unit, World Vision Vanuatu (WVV),
22Reserve Bank of Vanuatu - Annual Report 2025 the Vanuatu Red Cross Society (VRCS) and beneficiaries, highlighting how IGF is beginning to take root in the country. The story focuses on how sustainability, resilience and inclusivity are being integrated into the RBV’s new National Financial Inclusion Strategy (NFIS) 2025 – 2030. Other financial inclusion partners such as World Vision shared stories of disaster recovery and how access to savings and capital can empower households to adapt to climate change. The VRCS highlighted its use of digital cash transfers for immediate disaster relief, and how the speed and flexibility of this support helps rebuild livelihoods. Together, these stories documented Vanuatu’s first steps in IGF and reinforced RBV’s commitment to building a financial system in Vanuatu that is inclusive, sustainable and climate resilient. The video link can be accessed at www.youtube. com/watch?v=Qs-vnm2P0CE 1.2 SOUND CURRENCY MANAGEMENT Under Section 42 of the Reserve Bank Act, the RBV has the mandate as the sole issuer of the Vatu currency. It has the role of printing and issuing of the Vatu currency, and for ensuring safe custody of unissued currency stocks, its quality and distribution so as to ensure a trusted and durable currency that is readily available in Vanuatu. SUPPLY OF QUALITY VATU NOTES AND COINS In 2025, the RBV focused on ensuring a reliable, timely and efficient provision of high-quality banknotes and coins to support economic activity and public confidence in the currency. In October 2025, the RBV formalised a long-term banknote supply agreement with Note Printing Australia (NPA), strengthening the continuity and reliability of banknote production. A coin supply arrangement with the Royal Australian Mint remains in place. These arrangements underpin the timely availability of quality Vatu banknotes and coins in Vanuatu. Currency operations continued to prioritise the quality of cash in circulation through close collaboration with commercial banks to maintain appropriate fitness standards. During the year, VT6.52 billion in new currency was issued, while VT 2.02 billion in unfit notes and coins were withdrawn from circulation. The RBV continued to exchange demonetised Vatu coins and the VT 100 paper note at full face value. The public is encouraged to present remaining demonetised currency at the RBV or any commercial banks in exchange for legal tender cash. The RBV also continued its numismatic activities as part of its currency function. These initiatives support public engagement and promote national heritage. Table 2: Currency in Circulation by Denomination DENOMINATION (VT) SHARE OF CURRENCY IN CIRCULATION (%) 10,000 18.4 5,000 46.3 2,000 12.1 1,000 12.1 500 2.6 200 1.5 100 3.8 Other / rounding 3.2 Total 100 ENHANCED SECURITY FEATURES The switch by the RBV to the polymer banknotes series, which incorporates advanced security features, meets international standards and has enhanced currency durability and resistance to counterfeiting. Counterfeiting risk remained low, and confidence in the Vatu has been sustained, throughout 2025. Currency in circulation by denomination showed a continued concentration in higher value banknotes with VT 10,000 and VT 5,000 notes accounting for 18.4 per cent and 46.3 per cent, respectively. Mid-range and lower denominations represent a comparatively smaller proportion of total circulation. This distribution highlights prevailing usage patterns in the economy and reinforces the need to ensure that the structure of the Vatu currency remains appropriate to transactional needs. In this regard, the RBV has identified the need to undertake research on Vatu denominations to ensure continued alignment with transactional needs and effective currency in circulation. COUNTERFEITS Pursuant to the Reserve Bank Act, the reproduction or possession of counterfeit or unauthorised banknotes constitutes a criminal offence and is subject to prosecution. Since the introduction of the new Vatu family of polymer notes series in 2010, an isolated case of counterfeit currency involving printed banknotes on paper was detected in 2025. The RBV issued a press release and disseminated educational materials to raise public awareness on identifying
23Reserve Bank of Vanuatu - Annual Report 2025 genuine banknotes. The RBV continued to promote vigilance among the public to safeguard the integrity of the currency. RBV’S CURRENCY AWARENESS The RBV continued its initiatives in currency awareness in 2025 to support public confidence in the Vatu currency. Activities included community outreach, participation in national events and distribution of educational materials. These initiatives were aimed at improving the recognition of genuine banknotes and coins, promoting proper handling practices and supporting effective use of currency across all segments of the population. 2025 PERFORMANCE OUTCOMES • A stable and reliable supply of Vatu banknotes and coins was maintained throughout 2025, supporting uninterrupted economic activity and strengthened through long-term supply arrangements and coordination with commercial banks. • Currency fitness management and the withdrawal of unfit notes and coins maintained the quality, integrity and public confidence in cash circulation. • Polymer banknotes with advanced security features, together with counterfeit awareness initiatives, strengthened currency security and contributed to low counterfeit incidence. • Currency awareness and outreach initiatives improved public understanding of genuine banknotes, cash handling and currency exchange processes, supporting confidence in the use of cash. • Ongoing assessments of currency circulation and denomination usage supported alignment of the Vatu currency structure with evolving economic and transactional needs, enhancing the efficiency of currency management operations. 1.3 FINANCIAL STABILITY The Reserve Bank Act strengthens the RBV’s role in ensuring a safe and sound financial sector by mandating the RBV to contribute to financial sector stability in Vanuatu. The RBV performs a number of roles as supervisory and regulatory authority - in the licensing, regulation and supervision of licensed financial institutions. The Act also specifies a number of functions that were not explicit in the past, including its role as macroprudential and resolution authority. FINANCIAL SYSTEM REGULATION AND SUPERVISION Regulation and supervision continued as one of the RBV’s main functions as per section 5 of the Reserve Bank Act. The 2024 earthquake had a major impact on the operations of the industries in which the licensed institutions operate. The deployment of Business Continuity Plans (BCP) played a critical role in ensuring resilience and allowing banks, insurance companies and the Vanuatu National Provident Fund (VNPF) to respond swiftly with essential services, despite physical relocations of their functions to other areas of Port Vila. The RBV focused on an enhanced off-site monitoring and prudential consultation during the first six months of 2025 in light of difficulties in conducting on-site visits as it sought to ensure financial sector stability and keep abreast of the developments in the recovery stages. Towards the latter part of the year, the RBV, jointly with the Vanuatu Financial Intelligence Unit (VFIU), progressively began anti- money laundering and counter-terrorism financing (AML/CTF) on-site visits. This joint work also included gradual compilation of evidence- based documents as the basis for the effectiveness of the current framework in preparation for the Mutual Evaluation in November 2026. The RBV also engaged the Financial Sector Stability Review (FSSR), an arm of the IMF, to strengthen financial institutions and financial infrastructure in 2025. FSSR identified gaps in the RBV’s regulatory framework through a scoping exercise conducted in late 2024. The FSSR report was released in June 2025. Preliminary discussions on implementation of the FSSR work plans to strengthen these gaps and assist with capacity development were undertaken in 2025. The RBV also continued to work closely with the IMF through the Pacific Financial Technical Assistance Centre (PFTAC), with the roll out of 12 new RBV prudential standards in 2025. The RBV also commenced discussion on the Comprehensive Credit Reporting (CCR) and commenced work on establishing sub-committees under the main Steering Committee. This will enhance greater stakeholder consultation with
24Reserve Bank of Vanuatu - Annual Report 2025 regards to the establishment of a comprehensive credit reporting system. At the same time, work on the CCR regulation was also close to being finalised by the end of 2025. BANKING INDUSTRY IN VANUATU The RBV’s prudential regulation and supervision of the banking sector aim to maintain a safe, sound and resilient banking system in Vanuatu by ensuring that banks remain adequately capitalised, liquid and operationally robust. This strategic outcome supports the domestic financial system that is resilient to shocks while continuing to provide essential services to households and businesses. The RBV regulated a total of five domestic banks and 10 international banks in 2025. International banks are required to maintain a physical presence in Vanuatu, however their licenses are restricted to dealing only with non- resident customers and transacting through correspondent banks located offshore. The ongoing challenges in establishing and maintaining correspondent banking relationships have meant that a number of licensed international banks have been unable to maintain and commence full banking operations. During 2025, several new applications for international banking licenses were received, however these were declined due to failure to provide sufficient information in line with the relevant legislations, prudential and AML/CTF requirements. The domestic banking sector remained in a generally strong position by the end of 2025. The banking industry capital adequacy ratio stood at 23.8 per cent in December 2025, comfortably above the minimum regulatory requirement of 12.0 per cent, and confirms that banks continued to hold substantial buffers against potential losses. Profitability also improved over the year, with net income after tax and provisions increasing by 52.7 per cent to VT4.8 billion. The stronger earnings supported internal capital generation and further reinforced banks’ capacity to absorb future shocks. Credit risk pressures softened as asset quality showed signs of improvement in 2025. Non- performing loans (NPL) declined by 22.0 per cent to VT 10.0 billion, and the ratio of NPLs to total loans fell to 10.4 per cent, reflecting banks’ continued efforts to recover loans and tighten loan book management. Both specific and general provisions eased in line with the anticipated decline in credit impairments, although credit risk remains a key focus for supervisors. Banks also maintained ample liquidity, with the liquid asset ratio above 45.0 per cent, which is significantly above the minimum regulatory threshold of 5.0 per cent. This strong liquidity position indicated that banks are well placed to meet short-term obligations and support the smooth functioning of payment and settlement activities. Operational resilience and recovery also remained a focus during the year. Two banks were able to return to their main downtown offices in 2025 following the December 2024 earthquake, while another permanently relocated its operations to new premises after its former building was demolished. A fourth institution continued to operate from its disaster recovery site while progressively repairing and refurbishing its main office. Despite significant challenges, banks maintained sound prudential indicators, with capital, liquidity, profitability and asset quality measures remaining at comfortable levels and improving over 2025. During 2025, work also progressed on the comprehensive review of the prudential standards framework for banks. The review will modernise RBV’s prudential framework, clarify regulatory expectations and support a more effective risk- based supervision. In the first phase, five qualitative prudential standards were issued to the industry for consultation, covering governance and risk management, business continuity management, financial reporting and audit matters, outsourcing of banking services and operational risk management. Quantitative standards, including those relating to capital adequacy, credit risk management, large exposures, related party exposures, interest rate risk in the banking book, foreign exchange risk management and liquidity risk management, will be issued at a later stage as part of the RBV’s ongoing reform programme. During 2025, the RBV also continued follow up work on the Financial Sector Stability Review (FSSR) completed by the IMF in late 2024, which provided recommendations to strengthen supervision and resilience of the financial system. The RBV’s regulation team worked with the IMF to discuss and refine the FSSR technical assistance roadmap and the implementation of the agreed priority actions that is scheduled to begin in 2026.
25Reserve Bank of Vanuatu - Annual Report 2025 Chart 3: Asset Quality – Domestic BanksChart 1: Earnings – Domestic Banks (Levels: Billions of Vatu) Chart 2: Capital Adequacy & Tier 1 Ratio (Levels: Billions of Vatu) Chart 4: Liquid Asset Ratio – Domestic Banks (Percentage of Total Assets) OTHER FINANCIAL INSTITUTIONS SECTOR IN VANUATU The Other Financial Institutions Sector includes the Vanuatu National Provident Fund (VNPF), Credit Corporation Vanuatu Limited (CCVL), the Credit Unions, Vanuatu Rural Development Bank (VRDB) and Mobile Money and Payment Service Providers. VNPF The VNPF remains a significant institutional investor and the sole mandatory superannuation fund in the financial system, while operating under the VNPF Act [CAP 189]. In 2025, the RBV maintained close oversight of VNPF given its systemic importance and the potential implications for financial stability. The RBV’s supervisory attention remained focused on VNPF’s investment risk, liquidity risk, governance and risk management. In March 2025, the RBV conducted a Prudential Consultation meeting with the VNPF, which provided insights into the Fund’s current and planned operations. Key risks and areas of concern were identified during the consultation, and corresponding remedial action plans outlining implementation steps were proposed. In consultancy with the RBV, the VNPF Investment Policy Guidelines of October 2006 were reviewed and revised into the updated VNPF Investment Guidelines (IG), which were formally endorsed by the VNPF Board of Directors in September 2025. The revised IG enhances the Fund’s investment framework and supports alignment with relevant best practices and its statutory obligations to members. As at year-end 2025, VNPF’s total assets reached approximately VT 31.9 billion, reflecting 10.4 per cent growth compared to the previous year. Contribution inflows indicated an annual growth of 16.7 per cent, supported by formal sector employment recovery and compliance efforts. The Fund’s asset portfolio continued to be dominated by domestic investments, including government securities, real estate and loans to members, with limited exposure to offshore assets.
26Reserve Bank of Vanuatu - Annual Report 2025 Furthermore, the current Fund management has made some significant progress in implementing the recommendations proposed in the 2016 Commission of Inquiry (COI) and 2017 Regulatory Task Force (RTF) reports, though these are yet to be fully implemented. CCVL CCVL demonstrated commendable financial resilience and operational stability, aligning with the RBV’s expectations and requirements. The institution returned to its main office in Port Vila in the fourth quarter of 2025, after relocating following the December 2024 earthquake. CCVL recorded a net profit of VT 244.5 million during the current financial year, with capital adequacy and liquidity levels well above the minimum regulatory requirements. Its principal activities remained unchanged throughout the year and maintained prudent lending practices, resulting in a healthy loan portfolio and improved asset quality, and a non-performing loans ratio of 3 per cent, down from 62.3 per cent the prior year. The RBV continued to engage with CCVL in carrying out its mandated supervisory responsibilities. VRDB In 2025, the RBV continued to maintain its regulatory oversight of the VRDB, the nation’s sole development bank. The VRDB plays a pivotal role in financing agriculture and rural development, contributing to increased lending in underserved sectors. The financial year recorded a net profit of VT 29.6 million, with capital adequacy and liquidity levels well above the minimum regulatory requirements. The growth in total assets was primarily driven by an expansion in loans and advances to customers, supported by the introduction of new lending products in the second quarter, notably the Seasonal Workers Loan and the Vehicle Loan. VRDB continued to maintain a healthy loan portfolio and improved asset quality through a combination of loan restructures, refinancing arrangements and targeted payouts, resulting in a significant decline in its non-performing loans by 36.5 per cent compared to the prior year. However, the RBV continued its engagement with VRDB to improve governance and align operations with national development priorities, supporting inclusive economic growth and effective risk management. CREDIT UNIONS The Credit Union industry in Vanuatu, comprising of only three actively-operating unions, remained the smallest financial institutions sub-sector supervised by the RBV, although it performs an important role in financial inclusion objectives. The RBV conducted on-site inspections to two credit unions in the period November-December 2025. The RBV has highlighted key regulatory concerns, including weak internal governance, limited financial and technical capacity, and inadequate risk assessment practices. Furthermore, the absence of reliable and timely financial data continues to hamper effective supervision and risk analysis. The RBV has prioritised its work on improving supervisory reporting and will continue to engage credit unions on strengthening institutional resilience and sound management practices. MOBILE MONEY AND PAYMENT SERVICE PROVIDERS The RBV established a structured framework for the supervision and regulation of mobile money operators and payment service providers in Vanuatu in 2025, with approval of the Mobile Money Services Providers (MMSP) Operating Guidelines in July 2025. The MMSP Guidelines, in support of the National Payment System Act No. 8 of 2021 (the NPS Act), provide for the licensing of entities operating or intending to operate as MMSPs and aim to support the sustainable development of mobile money services while fostering innovation and promoting financial inclusion. The currently active MMSPs include M-Vatu, MyCash, and Kwik Pay. In November 2025, the RBV required these entities to submit applications for MMSP licences, together with the relevant supporting documentation. The licensing process is ongoing and is expected to be finalised by the end of April 2026. In addition, the RBV will be expanding its responsibilities as provided in the NPS Act, with the commencement of supervisory and regulatory oversight of remittance service providers in early 2026. The RBV continued its oversight functions under the NPS Act, aimed at ensuring that MMSPs operate in accordance with applicable regulatory requirements and licensing conditions. While their services contribute to financial inclusion, the supervision of this sector presents ongoing challenges, particularly in the context of limited human and technical resources. The RBV will therefore prioritise enhancements to its regulatory and supervisory frameworks and will maintain engagement with stakeholders to support the sector’s long-term development and stability.
27Reserve Bank of Vanuatu - Annual Report 2025 INSURANCE SECTOR IN VANUATU The insurance industry consists of four domestic insurers: one external; one reinsurer; two international insurers; four Captives; five brokers; three Insurance Managers; and ten Insurance Agents. INDUSTRY PERFORMANCE Despite the frequency of severe weather conditions and natural perils with incurred losses, the domestic industry still maintained a sound financial position for the year under review. The industry continued to protect its underwriting books through a risk transfer mechanism with reinsurance companies. The industry’s financial position improved significantly, with admissible assets growing by 74 per cent to VT 4.5 billion from VT 2.58 billion in 2024. This expansion outpaced the 59 per cent rise in insurance liabilities, which reached VT 2.6 billion compared to VT 1.6 billion in the previous year. The industry’s total surplus surged by 102 per cent, reaching VT 1.8 billion, a significant jump from the VT 913 million reported in 2024. While the required minimum solvency rose 80 per cent to VT 222 million and the surplus solvency position grew by 105 per cent to VT1.6 billion, up from VT 789 million the previous year. The industry experienced a significant contraction in net written premiums, which dropped 36 per cent year-on-year to VT 437 million in December 2025. This downturn was compounded by a sharp 266 per cent escalation in net claims incurred, which reached VT 1.5 billion, up from VT 428 million in the preceding year. Loss ratios for the industry stand at 41 per cent, while the net combined ratio is at 16 per cent. As of year-end 2025, the underwriting result rose by 15 per cent to VT1.7 billion, up from VT1.5 billion in 2024. The offshore ceded premiums have dropped by 38 per cent, falling from VT361 million to VT224 million reported as of end of 2025. ACQUISITION AND AMALGAMATION The sector underwent significant consolidation in 2024, marked by the strategic exit of two financially-rated entities in the market. Both major acquisitions reached formal completion in 2025. The RBV approved both acquisitions in July 2024, with the transition of business by new owners – Alpha Insurance and Capital Insurance Group Ltd – both completed in quarter four of the year 2025. The Alpha Insurance business name changed from QBE Insurance (Vanuatu) Ltd to Alpha Insurance (Vanuatu) Ltd, and Tower Insurance (Vanuatu) Ltd to Capital Insurance (Vanuatu) Ltd, with all existing rights, obligations and regulatory framework remaining unchanged. The RBV was notified of the Capital group acquisition of shares in Tower Insurance in 2024, of which the insurer, a subsidiary of the Capital Insurance Group Ltd (PNG), was named Capital Insurance Vanuatu Ltd. In early 2025, the amalgamation of Capital Insurance Ltd, a branch of Capital Insurance Ltd (Fiji), which was previously licensed as an external insurer by the RBV, and Capital Insurance (Vanuatu) Ltd, which was formally Tower Insurance (Vanuatu) Ltd took place. This was approved by the RBV on 11 March 2025 subject to listed conditions that were fully met by September 2025. INSURANCE CLAIMS The insurance sector experienced an overwhelming volume of insurance claims incurred from the catastrophic impacts of consecutive Category 4 Tropical Cyclones (TC), Judy and Kevin, in early March 2023 and the 7.2 magnitude earthquake that struck in December 2024. TC Judy & Kevin claims The TC Judy & Kevin recovery effort reached a 99.9 per cent payout rate by the end of 2025, leaving just one VT 1.8 million claim to be finalised out of the initial VT 1.69 billion total of claims registered in 2024. 17 December 2024 Earthquake Claims The industry met the RBV’s Key Action Plan 2 targets for faster processing of insurance claims in 2025. The earthquake claims recovery effort reached a 64 per cent payout rate by the end of 2025, leaving a total of 169 claims, worth VT 6.9 billion, still outstanding from the total estimated, initially registered, claim of VT 13 billion. CURRENT MARKET CHALLENGES Following the severe losses from the 2023 twin cyclones and the 2024 earthquake, insurers are re-evaluating their risk appetite to maintain solvency and profitability. This restructuring is driving a sharp rise in renewal premiums. Furthermore, coverage for natural disasters is being restricted, with some providers withdrawing protection for properties in high-exposed areas and along fault lines, while others have pivoted to offer cyclone and earthquake protection only as optional extensions.
28Reserve Bank of Vanuatu - Annual Report 2025 The insurance sector has identified significant underinsurance, widely experienced across the industry following recent earthquake claims. This stems from policyholders undervaluing their assets, resulting in inadequate coverage and premiums that fail to reflect price increases in building materials as well as actual risk exposure. Insurers have subsequently introduced remedial measures to bridge this gap. 2025 INSURANCE SECTOR ACTIVITIES AND ACHIEVEMENTS New Licensees and Cancellation A total of six new insurance licence applications were lodged in 2025. The RBV issued one license and one rejection in 2025, while three applications remain pending for review. As of end-2025, the RBV cancelled one license, with a second cancellation currently pending. 2025 New Market Entry The entry of a second licensed broker in 2025 with physical presence in the market is a positive development for policy holders in Vanuatu. Although with a small customer base, it provides another option for consumers in the market. Newly-Licensed Onshore Captive The RBV oversaw the inception and licensing of the first insurance captive in 2025. This development marks a defining milestone in the maturity of the domestic insurance market in Vanuatu. Onsite/Offsite Review The RBV continued the conduct of industry offsite monitoring in 2025 to ensure they remain solvent and adhere to best business practices and other regulatory requirements. It maintained its onsite monitoring in 2025, by conducting targeted focus visits to two insurance companies, specifically addressing AML/CTF compliance and 2024 earthquake claims management. The RBV continued to fulfil Key Action Plan 2 of its strategic plan in 2025, which focuses on implementing Basel standards, reforms and the International Association of Insurance Supervisors (IAIS) Insurance Core Principles through the conduct of onsite and offsite reviews of licensed entities to ensure effective regulatory oversight and surveillance. International Financial Reporting Standards (IFRS 17) on Insurance Contracts The RBV conducted consultative meetings with insurance stakeholders throughout 2023-2024 on the adoption of the IFRS 17 standard into their financial reporting. This new IFRS standard, issued by the International Accounting Standards Board (IASB), became mandatory for annual reporting beginning on 1 January 2023. The RBV undertook training on the new International Financial Standards in 2025. These standards are a cornerstone of financial oversight, providing the framework regulators need to safeguard market stability and protect policyholder interests. The majority of licensed insurance companies in the market have adopted the new standards as of 2025. Implementation of these international standards aligns with the industry with the RBV’s Financial Sector Stability goals, specifically fulfilling Key Action Plan 2 concerning compliance with the international standards. Revival of Insurance Industry Association The RBV is in preliminary talks with stakeholders to re-establish the Vanuatu Insurance Association (VIA), in alignment with the Insurance Act No. 54 of 2005, though formal meeting invitations are yet to take place. Establishing the VIA will bridge the gap between the industry and stakeholders, enabling them to navigate complex regulatory and reporting changes collaboratively. Furthermore, it should provide a unified voice that facilitates constructive dialogue with regulatory bodies, the Government and the public at large. Consumer Protection & Market Conduct – Implementation The RBV launched the Financial Consumer Protection (FCP) Guideline in July 2025 and advised industry players to align with the standards in November 2025. Insurers were asked to conduct a gap analysis on their businesses and submit a compliance action plan with the RBV’s FCP guidelines by 31 December 2025.
29Reserve Bank of Vanuatu - Annual Report 2025 2025 PERFORMANCE OUTCOMES • The financial system remained stable and resilient in 2025 despite disruptions from the December 2024 earthquake, supported by adequate capital, liquidity, operational capacity and effective business continuity arrangements across financial institutions. • Prudential and supervisory frameworks were strengthened through regulatory reforms, enhanced risk monitoring and improved risk- based supervision across regulated institutions. • Alignment with international standards improved through preparations for the 2026 Mutual Evaluation, adoption of IFRS 17 in the insurance sector and engagement with international partners, strengthening the credibility, transparency and integrity of the financial system. • Governance, accountability, market conduct and consumer protection in regulated institutions were strengthened through enhanced supervisory oversight and regulatory measures. • Regulatory oversight of mobile money operators, payment service providers and remittance services was expanded, strengthening supervision of digital financial services and supporting financial stability, compliance, innovation and financial inclusion. • Supervisory effectiveness improved through enhanced offsite surveillance, onsite inspections and reporting frameworks, enabling stronger risk identification, evidence-based decision making and early detection of emerging risks. • The insurance sector remained resilient despite elevated disaster- related claims, supported by improved solvency positions, industry adjustments and effective claims settlements. • Collaboration between the RBV, financial institutions, international partners and industry stakeholders strengthened regulatory effectiveness, institutional capacity and overall financial sector resilience.RKE Financial and money market functions support the implementation of monetary policy and foreign reserve management, contributing to the RBA’s overall objective of price stability. FOREIGN RESERVES MANAGEMENT The RBV, as mandated by the Reserve Bank of Vanuatu Act No. 37 of 2025, oversees custody and the management of the official foreign exchange reserves of Vanuatu, which are held to sustain Vanuatu’s exchange rate peg, balance of payments and ensure capital preservation. Official foreign reserves management is governed by the risk management framework of the RBV Board- approved Reserve Bank Investment Guideline (IG). The IG establishes parameters for managing reserve management risks, including credit, interest rate, liquidity, operational and compliance, and exchange rate risks. It promotes sound governance and a risk management framework comprising of the Board of Directors as policy decision makers, the Investment Committee (IC), which deliberates on strategic and tactical decisions and a Middle office that oversees investment rules, management operations and financial risks management. The three key objectives of the reserves management, in order of priority, are: 1) safety (capital preservation); 2) adequate liquidity for external obligations; and 3) optimising returns. The Strategic Asset Allocation (SAA) of foreign reserves remains a fundamental part of foreign reserves management in terms of the long-term strategic goal of reserves management. It is determined by the currency composition of foreign reserves, weighted according to the Vanuatu Vatu (VUV) trade-weighted basket. The RBV reviewed the weights in the Vatu currency basket in 2025 as a key priority agenda of the RBV’s Strategic Plan 2025-2030 since the Vatu basket was last reviewed in 2016. In June 2025, at the request of the RBV, an IMF technical assistance mission from the Monetary and Capital Markets (MCM) Department reviewed the Vatu currency basket framework, the trade-weights of the currency basket and the RBV’s FX market operations. This on-site mission followed a series of off-site meetings held in May 2025. The new weights were approved by the RBV Board of Directors in August and became effective in October 2025. The alignment led to the depreciation of the Vanuatu Vatu against major currencies through 2025. As part of its key action initiatives under the RBV’s strategic plan, the RBV diversified its foreign reserves portfolio into gold for the first time in 2025 through the purchase of 1,200 ounces of
30Reserve Bank of Vanuatu - Annual Report 2025 gold bars or Earmarked Loco with the Bank of England via the Bank for International Settlement (BIS) worth VT 481.60 million (USD 4.05 million). The diversification is intended to contribute to a strong balance sheet and healthy financial position. The RBV is the fiscal agent, depository for financial transactions with the IMF and holds the Fund’s Special Drawing Rights (SDR) as supplement to its official reserves. The RBV completed repayment of the IMF’s Rapid Credit Facility (RCF) in the June quarter of 2025. Vanuatu’s access to the RCF and the IMF’s Rapid Financing Instrument (RFI) were agreed as rapid financial assistance following Cyclone Pam in 2015 and provide rapid concessional financial assistance to low-income countries facing an urgent balance of payments need. The repayment completed Vanuatu’s debt to the IMF, reflecting the continued strength of the country’s balance of payments and bringing to a close a period of rapid emergency IMF financing, which included a series of reforms under the first- ever Safeguard Assessment agreed between the IMF and the RBV in 2016. It also signalled progress made by the RBV in completing the agreed reforms and recommendations of the Safeguard Assessment, and repayment of its financial obligations to the Fund, indicating a strengthening of foreign reserves management – a key action plan of the RBV Strategic Plan 2025 – 2030. In 2025, official foreign reserves comprised of; 96 per cent of Foreign Currency Cash, Bonds, Deposits and Notes; 3 per cent of IMF Special Drawing Rights – as part of the Vanuatu Government’s obligations to the IMF; and 1 per cent of gold (official gold reserves). 2025 FOREIGN RESERVES POSITION The RBV is mandated to ensure an adequate level of foreign exchange reserves at all times in order to meet Vanuatu’s external obligations. As at end of December 2025, official foreign reserves were maintained at levels way above its import cover threshold of four months. Growth in the RBV’s total foreign exchange reserves continued in 2025. Gross foreign reserves rose from VT 76.07 billion (USD 612.57 million) in 2024 to VT 83.35 billion, (USD 698.06 million) in 2025. The increase was supported by inflows from donor partners, including disaster recovery- related grants (December 2024 earthquake), RBV investment income, and from the impact of the new Vatu basket weight exchange rates. At the same time, outflows also rose to high levels in 2025 from high commercial bank FX trading demand, external debt settlements, RBV expenses and the Vanuatu Government external payment obligations. In 2025, the RBV sold VT 13.41 billion of foreign exchange reserves (compared to VT 8.80 billion in 2024) and purchased VT 11.14 billion (compared to VT 7.85 billion in 2024), resulting in a net sale of VT 2.27 billion. The RBV’s investment income on foreign assets decreased to VT 3.02 billion from VT 3.30 billion in 2024, or a net outflow of VT 278 million. The Vanuatu Vatu weakened against the Australian Dollar and the Euro, while it strengthened against the US Dollar and New Zealand Dollar in 2025. As part of its reserve management activities, the RBV also executed arbitrage deals (sell and buy) in the spot market on foreign currencies exchange to rebalance its books and manage currency risk effectively from a neutral stance. The Board approved an annual reserve management risk budget of VT 625 million, equivalent to three months of projected foreign exchange revenue for 2025. Consistent with the preceding year, the RBV allocated the entire risk budget to interest rate risks, while maintaining currency (exchange rate) risks close to zero, as it aligned currency distribution close to its neutral position. However, in the months of October to December, the RBV temporarily deviated from the neutral position as it aligned its portfolio to new currency weights in the Vatu trade-weighted basket. The RBV continued through the year to execute arbitrage deals (sell and buy) in the spot market on foreign currencies exchange to rebalance its books and reduce open foreign exchange currency positions to the approved limit. Chart 5: Volume of Foreign Exchange Reserves 2020 - 2025 INVESTMENT OF THE RBV’S FOREIGN RESERVES Economic uncertainties, including inflationary pressures and geopolitical risks, such as the conflict in the Middle East, contributed to significant
31Reserve Bank of Vanuatu - Annual Report 2025 uncertainties in the global economic outlook and global financial markets in 2025. The RBV’s foreign reserve strategic management centred on aligning foreign reserves with its investment strategies, thereby reducing risk exposure while taking advantage of favourable market interest rates. It maintained a conservative investment strategy, allocating approximately 72 per cent of its portfolio to short-term instruments. Although growth in foreign reserves continued in 2025, major central banks lowered policy rates to 2–3.75 per cent, from a range of 3–4.75 per cent in 2024. However, the RBV prioritised short-term investments in 2025 as a temporary strategy to transition to currency allocation under the newly- approved Vatu currency basket weights. Accordingly, the RBV’s external bond holdings accounted for only around 21 per cent of total foreign investible reserves in 2025. Gold investments comprised 1 per cent of its reserve portfolio, while the remaining 6 per cent was held in cash to support liquidity objectives. Table 3: Developments in Major Central Bank Policy Rates 2020 to 2025 CENTRAL BANKS 2020 2021 2022 2023 2024 2025 Federal Reserve Bank of US 0.25% 0.25% 4.50% 5.50% 4.50% 3.75% Reserve Bank of Australia 0.10% 0.10% 3.10% 4.35% 4.35% 3.85% Reserve Bank of New Zealand 0.25% 0.75% 4.20% 5.50% 4.25% 2.25% European Central Bank 0.00% 0.00% 2.50% 4.50% 3.00% 2.15% Bank of England 0.10% 0.25% 3.50% 5.25% 4.75% 3.75% EXCHANGE RATE REGIME Section 5 of the Reserve Bank Act mandates the RBV to formulate and implement exchange rate policy in Vanuatu. The exchange rate of the Vatu is pegged to a transactions-weighted (trade and tourism) undisclosed basket of foreign currencies. The IMF identified its exchange rate arrangement as “Other Conventional fixed peg arrangements”. The value of the Vatu is determined on a daily basis with reference to the movement of the currencies in the basket, which are, in turn, driven by the developments in the global financial markets. The RBV reviewed the weights of the currency basket in June 2025. The new weights were approved by RBV’s Board of Directors in August 2025 and adopted in October 2025. The RBV is mandated to set the daily Vatu exchange rate before 9:00 AM. The Vatu strengthened against the United States Dollar, Japanese Yen and New Zealand Dollar in 2025 and weakened against the Australian Dollar, British Pound Sterling, Canadian Dollar, Euro and the Chinese Yuan. Table 4: Monthly Average Rate of the Vatu Against Foreign Currencies in 2025 MONTHS (2025) USD JPY NZD GBP AUD EUR CAD CNH SDR January 123.41 0.7879 69.49 152.58 76.86 127.82 85.78 16.91 152.35 February 122.40 0.8057 69.51 153.33 77.11 127.41 85.55 16.83 151.86 March 121.83 0.8169 69.72 157.13 76.76 131.43 84.83 16.80 153.47 April 121.22 0.8393 70.57 159.04 76.17 135.68 86.57 16.62 155.05 May 119.60 0.8266 70.95 159.76 76.80 134.90 86.26 16.57 153.68 June 118.61 0.8207 71.42 160.68 77.04 136.49 86.69 16.52 153.66 July 118.11 0.8047 70.89 159.59 77.25 138.06 86.36 16.47 157.15 August 118.80 0.8048 70.14 159.70 77.20 138.28 86.08 16.56 162.32 September 117.97 0.7979 69.45 159.32 77.74 138.42 85.34 16.56 161.76 October 120.38 0.7960 69.16 160.90 78.80 140.20 86.05 16.89 164.29 November 121.03 0.7801 68.44 158.99 78.73 139.89 86.11 17.02 164.33 December 119.84 0.7684 69.35 160.38 79.57 140.34 86.82 17.02 163.76 DOMESTIC MARKET DEVELOPMENTS The RBV is responsible for monetary policy implementation. Open Market Operations (OMO) in RBV securities remained its dominant policy instrument in 2025. It continued issue of RBV securities in maturities of 7, 14, 28, 63 and 91 days. However, high levels of excess liquidity continued into 2025, a factor that continued to have a bearing on the effectiveness of monetary policy transmission in 2025. The RBV, on behalf of the Government, issued VT 2 billion worth of Government bonds to the market in 2025. In collaboration with the Treasury Department, the RBV introduced Treasury bills as a new debt instrument in the final quarter of 2025. Given market preference, this short- term instrument attracted significant interest and brought new participants into the domestic securities market. The 3-month Treasury bill was issued with an initial offering of VT 300 million, however was highly oversubscribed with bids exceeding VT 900 million. The RBV started work on exploring ways to develop the secondary market in Vanuatu following passage of the new Act, which required it to participate in fiscal financing only in the secondary market in future. As preparation for
32Reserve Bank of Vanuatu - Annual Report 2025 this requirement, an RBV delegation undertook a study tour to explore operations of the secondary market at the Bank of Papua New Guinea at the end of 2025. The RBV also developed a policy framework for inter-bank collateralised overnight lending, and engaged with the Vanuatu Central Security Depository (VCSD) System vendor for an upgrade to the VCSD system that allows for the green and blue bond instruments, and adds other features to existing debt instruments. 2025 PERFORMANCE OUTCOMES • The RBV maintained a strong financial position through prudent reserve management, with gross foreign reserves remaining above the adequacy benchmark and diversifying foreign reserve holdings through gold investments. • The RBV strengthened governance, accountability, risk management and prudent external reserves management through compliance with the risk standards established under its Board-approved Investment Guideline and enhanced Middle Office oversight. • The RBV completed full repayment of the IMF’s Rapid Credit Facility (RCF), drawn following Tropical Cyclone Pam in 2015. • The RBV revised the Vatu currency trade-weighted basket and aligned its weights with Vanuatu’s current trade patterns. Its foreign reserve investment strategy met its objectives for capital preservation, liquidity and investment returns in 2025, despite uncertain global market and financial conditions. • The RBV progressed a number of domestic financial market development initiatives through bond and Treasury bill issuances, continued enhancement to the VCSD and preparatory work towards the development of the secondary market. • The RBV strengthened the domestic financial market infrastructure through development of a policy framework for overnight collateralised lending and system enhancements that support the issue of green and blue bonds, reinforcing financial innovation and long-term market resilience. 1.4 NATIONAL PAYMENTS INFRASTRUCTURE The RBV administers and supervises the payment system and provides clearing and settlement services with the aim of ensuring a safe and efficient system that contributes to a strong, resilient and inclusive financial structure and financial stability in Vanuatu. This facilitates the functioning of the short-term money markets, liquidity and the implementation of monetary policy. BANKING AND CUSTOMER SERVICES Operations of the RBV’s Banking and Customer Services continued to be administered effectively to customers. Services provided to the Government include the facilitation of deposit processing, over- the-counter cash encashment, registry services and fund transfers. In addition, the RBV processes and monitors transactions of commercial banks and other financial institutions through their Exchange Settlement Accounts at the RBV. The Clearing Facility, which remains one of the RBV’s mandatory core functions, operated efficiently in 2025. It provides a platform for the daily exchange and settlement of cheques among all commercial banks under the supervision of the RBV. Clearing exchanges are conducted at 8:30 AM each morning from Monday to Friday. The RBV formalised an additional clearing facility in Luganville, Santo, in 2025, enabling daily clearances and summary reports to be submitted to the RBV before 11:00 AM each morning. Table 5 represents a ten-year summary of transactions processed through the Clearing House from 2015. Table 5: Port Vila Clearing Summary from 2015 -2025 PERIOD NO. OF EFFECTS VALUE (MVT) 2015 339,352 60,232 2016 340,546 67,548 2017 350,005 75,567 2018 375,450 79,587 2019 400,757 90,458 2020 450,545 100,654 2021 480,345 130,245 2022 505,459 145,986 2023 490,674 125,982 2024 301,436 101,359 2025 255,487 89,544
33Reserve Bank of Vanuatu - Annual Report 2025 Over the past ten years, both the number of effects and the value of transactions processed through the Port Vila Clearing House showed a steady increase, reflecting continued growth in banking activities and the effectiveness of the clearing operations. A slight decrease was noted in both the number and value of cheques cleared since 2023 compared to previous years, mainly from increased use of the automated National Payment System by commercial banks. However, the volume of cheque items and the value of transactions processed through the Port Vila Clearing House remained significant, averaging over 255,000 cheque items and valued between VT 80 billion to VT 90 billion, respectively, for the year-ended 2025. SETTLEMENT The Society for Worldwide Interbank Financial Telecommunications (SWIFT), a secure and standardised messaging network, is operated by the RBV’s Settlement Office to carry out: • Processing of daily foreign currency invoice payments; • Processing of Government debt repayments, • Receiving and processing of settlement instructions from its customers, in particular commercial banks; and • Confirmation and settlement of foreign currency trades by the RBV. The RBV upgraded its SWIFT system in 2020 from Alliance Access to SWIFT Lite2, a partly cloud-based platform designed to enhance business continuity and operational resilience. The upgrade incorporated the latest system changes and feature enhancements introduced by SWIFT. The migration process was completed successfully with the assistance of the RBV’s ICT Unit and has improved functionality and efficiency. VANKLIA VANKLIA is the automated national payment system in Vanuatu – owned, operated and administered by the RBV. Its principal component comprises a Real Time Gross Settlement System (RTGS) and an Automatic Clearing House (ACH) Electronic Fund Transfer (EFT) platform, which provide immediate settlement of interbank payments while facilitating liquidity management and ensuring smooth and efficient functioning of the domestic financial and payment system. The RBV is expected to launch the ACH Instant Funds Transfers (IFT) platform in 2026 as part of the second phase of the National Payment System (NPS) Project in Vanuatu. This new feature will operate alongside the existing RTGS and ACH EFT systems and will enable improved efficient processing and clearing of retail fund transfers, which are generally characterised by low-value but high-volume transactions. The ACH platform introduces enhanced capabilities for commercial banks by accommodating two types of electronic payments, namely EFTs, commonly referred to as bulk transfers and IFTs. The IFT functionality will enable customers to make payments that are processed and cleared within seconds and will be available 24 hours a day, seven days a week, thereby significantly improving the accessibility and convenience of payment services in Vanuatu. VANKLIA also supports the RBV’s role as registrar of debt securities issued by the Government of Vanuatu and certain statutory entities. This responsibility requires the proper and timely settlement, through VANKLIA, of all coupon and redemption payments to investors of domestic bonds held in custody by the VCSD. The VCSD maintains securities accounts in digital form for issuers and investors, enabling the secure holding, transfer and settlement of securities. It also provides safekeeping services for investors together with asset-related services, such as interest payment processing, redemption administration and registrar services. In addition, VANKLIA serves as the primary platform, through which advances under the Government’s refinancing facilities are injected into the financial system, thereby supporting liquidity distribution and broader financial sector stability. Since Go-Live in 2023 to date, the system has processed a substantial volume of both RTGS and ACH transactions. A total of 410,138 Sending RTGS transactions were recorded, amounting to VT 112.16 billion, while Receiving RTGS transactions totalled 393,394 with a combined value of VT 108.83 billion. In addition, Sending ACH transactions reached 639,752 with a total amount of VT 553.58 million, whereas Receiving ACH transactions stood at 621,309 amounting to VT 535.99 million. These figures demonstrate the continued high usage and operational significance of the automated payment system since its inception. MOBILE WALLETS AND PAYMENT SOLUTIONS The RBV continued to support and promote the development of mobile wallets and digital payment solutions by financial institutions and payment service providers, aimed at improving the accessibility, efficiency, interoperability and resilience of electronic payment services while advancing financial inclusion and the modernisation of the domestic payment ecosystem. The key indicators show significant growth in mobile money accounts, transaction values, agent networks, deposit accounts and access to
34Reserve Bank of Vanuatu - Annual Report 2025 2025 KEY INDICATORS OF FINANCIAL SERVICES ACCESS AND USAGE REGISTERED MOBILE MONEY ACCOUNTS In 2025, the total number of registered mobile money accounts increased significantly by 197 per cent, reaching over 135,000 accounts. The strong growth reflects the expanding adoption of digital financial services, increased outreach by service providers and growing consumer confidence in mobile-based transactions. The upward trend demonstrates continued progress toward enhancing financial access, particularly for underserved and remote communities. Chart 6: Registered Mobile Money (MM) Accounts 2023 to 2025 10,976 45,441 135,127 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 2023 2024 2025 Number of MM Accounts Year TOTAL MOBILE MONEY TRANSACTION VALUE Total Mobile Money Transaction Value refers to the aggregate monetary value of all financial transactions processed through mobile money platforms within a given reporting period. This includes person-to-person transfers, cash-in and cash-out transactions, bill payments, merchant payments, airtime purchases, remittances and other digital financial services conducted via mobile money accounts. Chart 7: Total Mobile Money Transaction Value 2023 to 2025 477 2,668 5,126 - 1,000 2,000 3,000 4,000 5,000 6,000 2023 2024 2025 Value (Millions) 350 Total Mobile Money Transaction Value increased by 92 per cent in 2025, reaching VT5.1 billion (Chart 7). This growth reflects rising usage intensity among mobile money users, with customers conducting higher-value and more frequent transactions through digital channels. The increase signals growing confidence in mobile money as a secure and convenient payment mechanism, while also demonstrating continued progress toward reducing cash dependency and strengthening digital financial inclusion across Vanuatu. TOTAL NUMBER MOBILE MONEY (MM) AGENTS The mobile money market experienced a large increase in total number of registered mobile money agents by 176 per cent in 2025, reaching 320 agents nationwide. The significant expansion reflects strengthened distribution networks and deliberate efforts by service providers to extend digital financial services to the underserved and remote communities in Vanuatu. Notably, 94 per cent of these agents were active, having conducted at least one transaction within the past 90 days. The high level of agent activity demonstrates strong operational viability, sustained customer demand, and improved liquidity management within the agent network. Together, these developments indicate a maturing mobile money ecosystem and enhanced accessibility of digital financial services across Vanuatu. Chart 8: Total Number of Mobile Money Agents 2023 to 2025 477 2,668 5,126 - 1,000 2,000 3,000 4,000 5,000 6,000 2023 2024 2025 Value (Millions) 47 116 320 0 50 100 150 200 250 300 350 2023 2024 2025 Number of MM Agents 99,707 110,713 190,947 - 50,000 100,000 150,000 200,000 250,000 2023 2024 2025 No. Of Accounts TOTAL DEPOSIT ACCOUNTS A strong and consistent upward trend in the total number of bank deposit accounts was recorded in 2025, culminating in a peak of 190,947 accounts (Chart 9). Overall, this represents a substantial increase of 72 per cent over the period observed, indicating significant growth in financial inclusion, improved access to banking services and possibly rising public confidence in the formal financial system.
35Reserve Bank of Vanuatu - Annual Report 2025 Chart 9: Total Deposit Accounts 2023 to 2025 0 2023 2024 2025 99,707 110,713 190,947 - 50,000 100,000 150,000 200,000 250,000 2023 2024 2025 No. Of Accounts BANK DEPOSIT ACCOUNTS PER 1,000 ADULTS IN VANUATU The level of Deposit Accounts per 1,000 adults is a key financial inclusion indicator that measures the level of access to formal banking services within the adult population. It provides insight into how widely deposit products are being used and helps the RBV to assess its progress toward broader financial inclusion objectives. A higher ratio generally indicates improved access to savings facilities, stronger financial participation, and deeper integration of individuals into the formal financial system. Chart 10: Total Deposit Account per 1,000 Adults 2023 to 2025 507 550 927 0 100 200 300 400 500 600 700 800 900 1000 2023 2024 2025 No. of Deposit Accounts 5,201 11,432 13,897 262 224 334 4,829 11,052 11,805 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2023 2024 2025 No. of Borrowers Total Borrowers SME Borrowers Household Borrowers Deposit accounts per 1,000 adults in Vanuatu rose significantly to 927 in 2025, representing a 69 per cent annual increase. This upward trend reflects enhanced access to formal banking services and deeper penetration of deposit accounts within Vanuatu’s adult population. The growth suggests that financial institutions have expanded outreach and service delivery, while an increasing number of Ni-Vanuatu people are actively engaging with the formal financial system – an indication of progress in financial inclusion, increased financial literacy and greater trust in banking services. BORROWERS Overall, total borrowers increased significantly from 5,201 in 2023 to 13,897 in 2025. This reflects a rapid uptake in credit, more than doubling between 2023 and 2024, and continuing to grow into 2025. The growth suggests improved access to lending services and possibly increased demand for credit in the economy. Looking at the composition, household borrowers dominate throughout the period. Their numbers rose sharply from 4,829 in 2023 to 11,805 in 2025. However, the growth rate between 2024 and 2025 was relatively modest at 7 per cent, indicating that while households remain the largest segment, their expansion is beginning to stabilise after the sharp jump in 2024. In contrast, SME borrowers show a more volatile but ultimately strong upward trend. After a slight decline in 2024, the number of SMEs that borrowed rebounded significantly to 334 in 2025, representing a 49 per cent increase. This suggests renewed confidence or improved access to finance for small and medium-sized enterprises in 2025. Chart 11: Total Number of Borrowers 2023 to 2025 507 550 927 0 100 200 300 400 500 600 700 800 900 1000 2023 2024 2025 No. of Deposit Accounts 5,201 11,432 13,897 262 224 334 4,829 11,052 11,805 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2023 2024 2025 No. of Borrowers Total Borrowers SME Borrowers Household Borrowers 52,741 53,459 45,274 40,000 42,000 44,000 46,000 48,000 50,000 52,000 54,000 56,000 2023 2024 2025 Loan Value (Million VUV) The total borrower annual growth of 22 per cent in 2025 was therefore driven by both steady household demand and a strong recovery in SME lending (Chart 11). Overall, there was a broad- based credit growth, with households leading in volume and SMEs showing encouraging momentum in recent expansion. SME LOAN VALUES The SME loan value increased only marginally from 52,741 in 2023 to 53,459 in 2024, suggesting a period of stability with only slight growth (about 1 per cent). However, this trend reversed in 2025, and the loan value to SMEs dropped significantly to 45,274 (approximately 15 per cent).
36Reserve Bank of Vanuatu - Annual Report 2025 Chart 12: SME Loan Value 2023 to 2025 Total Borrowers SME Borrowers Household Borrowers 52,741 53,459 45,274 40,000 42,000 44,000 46,000 48,000 50,000 52,000 54,000 56,000 2023 2024 2025 Loan Value (Million VUV) This pattern suggests that while SMEs may have maintained borrowing levels initially, there was a contraction in the total value of loans extended in 2025. When considered alongside the increase in the number of SME borrowers (from 224 in 2024 to 334 in 2025), it implied that while more SMEs are accessing credit, the average loan size has decreased. This could reflect tighter lending conditions, smaller financing needs or a shift toward micro and small enterprises accessing lower-value loans. Overall, the trend points to broader access to SME financing, but with reduced loan sizes, which may indicate a move toward more inclusive, but smaller-scale, lending. DIGITAL BANKING CUSTOMERS Data on ATM usage (Chart 13) showed a significant annual decline in 2025 to 48,723, following a sharp rise in 2024 (97, 892). This drop may indicate a shift away from cash-based transactions toward more digital alternatives or changes in reporting or usage behaviour after a peak year. Chart 13: Digital Banking Customers 2023 to 2025 22,892 97,892 48,723 10,777 17,350 18,731 8,456 29,760 35,017 - 20,000 40,000 60,000 80,000 100,000 120,000 2023 2024 2025 No. Of Digital Customers ATM Internet Banking Mobile Banking 106 80 100 120 80 100 120 ff Internet banking demonstrated steady and consistent growth in 2025. It also rose by 8 per cent from 2024, suggesting a gradual but sustained adoption, likely driven by improved accessibility and user familiarity with online financial services. Data on mobile banking in Vanuatu showed the strongest and most consistent upward trend in 2025, rising sharply to 35,017, from just 8,456 in 2023. This increase reinforces a growing preference for mobile platforms, reflecting convenience, increased smartphone penetration and expanded mobile banking services. Overall, the data suggests a clear digital transformation in banking behaviour in Vanuatu, with customers increasingly shifting away from ATM usage to mobile and internet banking channels, particularly mobile banking as the fastest-growing platform. 2025 PERFORMANCE OUTCOMES • The RBV continued enhancements to its clearing and settlement systems. The operations of VANKLIA and the VCSD strengthened the resilience, efficiency, security, interoperability and reliability of the national payments and securities settlement infrastructure, and provided support to liquidity management and financial stability. • The RBV expanded electronic payment channels, digital banking platforms and mobile money services. Increases in banking access points accelerated the transition to a more digitally connected financial system and reduced reliance on cash transactions. • Growth in mobile money accounts, deposit accounts, and digital financial services expanded access to formal financial services for households, SMEs and underserved communities, supporting the financial inclusion goals under the National Financial Inclusion Strategy 2025-2030. • Ongoing modernisation of the National Payment System, including preparations for the ACH IFT platform and continued collaboration among financial sector stakeholders, strengthened governance, coordination, transparency and customer-focused payment services.
37Reserve Bank of Vanuatu - Annual Report 2025 1.5 DATA GOVERNANCE Data Governance remains a key cross- cutting strategic priority for the RBV, aimed at strengthening the Bank’s data management, reporting, security and automation capabilities over the medium to long term. The initiative is intended to support improved institutional coordination, enhanced data integrity and achieve more efficient reporting processes across all departments. While no major activities were undertaken during 2025, preliminary discussions recognised the importance of establishing a structured data governance framework to support the RBV’s evolving operational and policy needs. Implementation of this initiative will continue as part of the RBV’s medium- to long-term strategic agenda. Figure 5: Wan Solwara event in Port Vila
38Reserve Bank of Vanuatu - Annual Report 2025 STRATEGY THEME 2: ENABLING A CONDUCIVE AND RESILIENT ENVIRONMENT Chart 14: Staff Gender Composition 22,892 10,777 17,350 18,731 8,456 29,760 - 20,000 40,000 2023 2024 2025 No. Of D ATM Internet Banking Mobile Banking 63 43 106 0 20 40 60 80 100 120 0 20 40 60 80 100 120 Male Female Total No. of Staff Furthermore, the RBV continues to foster a professional work environment that promotes diversity, inclusion and equal participation, ensuring that all Ni-Vanuatu employees are provided with opportunities for growth, development and advancement. Ongoing initiatives are directed towards strengthening gender balance and embedding diversity and inclusion as core elements of the RBV’s organisational culture and long-term human capital strategy. STAFF CHANGES AND RECRUITMENT During the 2025 financial year, the RBV recorded the departure of two members of senior management, comprising one resignation and one retirement of a long-serving employee. These transitions reflect the natural progression of the Bank’s workforce and leadership succession dynamics. The RBV places strong emphasis on leadership continuity, succession planning and effective knowledge transfer. In this regard, appropriate transition arrangements were implemented to ensure the seamless transfer of responsibilities and the preservation of institutional knowledge. The RBV formally acknowledges the significant contributions of the departing officers and extends its sincere appreciation for their professionalism, dedication and longstanding service to the institution. During the reporting period, the RBV successfully filled several key positions across various departments, thereby strengthening institutional capacity and enhancing overall operational effectiveness. The RBV made the following strategic appointments in 2025: 2.1 PEOPLE DEVELOPMENT The RBV continued to advance its people development agenda in 2025, with a strategic focus on strengthening human capital capability, modernising HR systems, enhancing governance frameworks, and supporting effective workforce planning. These initiatives were closely aligned with the RBV’s broader strategic objective of building a competent, resilient and future-ready workforce that is capable of meeting evolving institutional demands. During the year, the HR Office sustained its efforts towards the modernisation and integration of human resource management systems aimed at improving operational efficiency, data accuracy and accessibility of HR information. While full system transformation remains ongoing, incremental enhancements were successfully implemented to support core HR functions, including recruitment processes, leave administration, training coordination and performance monitoring. These improvements contributed to more streamlined operations and better-informed decision making across departments. A key milestone achieved during the year was the development and rollout of the revised RBV Staff Policy 2025. The RBV’s HR Office actively promoted the adoption of the policy across the RBV through targeted awareness sessions, structured guidance materials and continuous engagement with departments. This initiative significantly strengthened governance awareness, improved policy clarity and supported greater consistency and transparency in the application of HR practices across the RBV. In addition, comprehensive training needs assessments were conducted across all departments to identify critical competency gaps and prioritise development areas. The outcomes of these assessments informed the design and implementation of targeted training programs, which were aimed at enhancing staff capability, supporting career development and improving overall organisational performance. STAFFING AND GENDER COMPOSITION The RBV’s total workforce stood at 106 employees as of 31 December 2025, comprising 63 males and 43 females. This composition reflects the RBV’s ongoing commitment to fostering a balanced, inclusive and representative workforce. The RBV continued to uphold the principles of merit-based recruitment, equal employment opportunity and fairness across all human resource practices.
39Reserve Bank of Vanuatu - Annual Report 2025 • Mrs. Cynthia Ngweleduru – Head of Department, Economics, Research and Statistics • Mr. Louis Vakaran – Manager, Legal • Mrs. Marinette Abbil – Head of Department, Financial Regulation These appointments contributed to strengthening the RBV’s technical expertise, operational support functions and regulatory oversight capacity, thereby reinforcing its ability to effectively deliver on its mandate. In line with the RBV’s commitment to attracting, developing and retaining a highly professional workforce, its Human Resources Office continued to provide counselling and support services to both new and existing staff. These services play an important role in supporting employee well- being, workplace adjustment and overall staff engagement. Reaffirming its commitment to continuous learning and professional development, the RBV approved one staff member to continue pursuing a Master of Commerce in Accounting at the University of the South Pacific (USP), with an expected return to the RBV in April 2027. In addition, several staff members are currently undertaking part- time studies at USP’s Emalus Campus in Port Vila. These initiatives underscore the RBV’s sustained investment in higher education and its commitment to building internal capacity through ongoing professional development. 2025 PERFORMANCE OUTCOMES • Continued modernisation of HR systems, strengthened recruitment, leave management, training coordination and performance management processes. • Development and Bank-wide advocacy of the revised RBV Staff Policy 2025, strengthened HR governance and policy alignment across the Bank. • The establishment and progressive implementation of a succession planning framework strengthened leadership continuity and workforce sustainability. • Performance management practices were strengthened to enhance accountability, staff development and organisational performance. • Targeted and strategic recruitment initiatives, improved workforce capability and organisational effectiveness. • Enhanced focus on workforce capability development and forward- looking workforce planning, strengthened institutional capacity and long-term workforce resilience. Overall, the People Development initiatives implemented in 2025 have contributed to strengthening the RBV’s human capital foundation. Through continued advancements in HR systems, policy development, succession planning and strategic recruitment, the RBV has enhanced institutional capability and workforce readiness. It remains committed to further advancing HR modernisation efforts and supporting the development of a high-performing, agile and future-ready workforce, aligned with the RBV’s long-term strategic objectives. 2.2 RISK MANAGEMENT AND COMPLIANCE The year 2025 marked a significant transition in the RBV’s approach to risk management, with a stronger emphasis on integration, resilience and forward-looking risk oversight, aligned with the RBV Strategic Plan 2025–2030. DISASTER RESPONSE PLAN (DRP) AND BUSINESS CONTINUITY PLANNING (BCP) The RBV activated its DRP and BCP following the earthquake of December 2024 to safeguard staff and property, and ensure the uninterrupted delivery of critical banking operations and services. The implementation of the BCP was overseen by the Business Continuity Committee (BCC), chaired by the RBV’s Chief Risk Officer. 2025 BCC KEY ACTIVITIES • BCP Report Handover: The BCC formally submitted the BCP Report to the Governor on 7 February 2025, marking the conclusion of the Committee’s delegated responsibility for post-earthquake recovery management. Responsibility for ongoing recovery oversight was subsequently transitioned to the Governor and the RBV’s Management Committee. • BCC Workshop: The RBV hosted a workshop for BCC members at the Ramada Resort in February 2025. The workshop presented the RBV’s proposed Business Continuity Management (BCM) Framework and Business
40Reserve Bank of Vanuatu - Annual Report 2025 Impact Assessment (BIA). The sessions included tabletop exercises that enabled members to contribute to the development of the RBV’s emergency response protocols, discuss the BIA and endorse the BCM implementation matrix. STRATEGIC ALIGNMENT AND STRUCTURAL REFORMS A key strategic objective of the RBV is to ensure that risk management is integrated into all decision-making processes across the organisation. During 2025, the RBV continued aligning its organisational structure and key appointments with the provisions of the newly-enacted Act. As part of this transition, the RBV adopted a new organisational structure in 2025 to strengthen governance and operational effectiveness. Under the new structure, the number of functional departments at the RBV was increased from four to six, and the Deputy Governor positions, from one to two. Under the Reserve Bank Act, the RBV Board is required to establish members of the Board Audit Committee, one of which must possess substantial expertise in accounting, auditing or financial reporting. This is currently being filled and, once established, it will further strengthen the RBV’s risk management framework, internal controls and governance oversight. Additional strategic initiatives undertaken to enhance the RBV’s resilience include: • Technology and Data Analytics: Increased use of technology and data analytics in risk management processes. Data analytics tools were utilised to detect anomalies and strengthen early warning systems relating to cyber risk, liquidity stress and fraud. • National Payment System Oversight: Continued enhancement of the national payment system oversight framework to support operational resilience, efficiency and financial stability. 2025 PERFORMANCE OUTCOMES • The RBV undertook initiatives in 2025 to strengthen its risk management framework, governance arrangements and institutional resilience in alignment with the RBV Strategic Plan 2025–2030, IMF Article IV recommendations and the Reserve Bank of Vanuatu Act No. 37 of 2025. • The RBV activated the DRP and BCP following the December 2024 earthquake, ensuring continuity of critical operations, and strengthened emergency preparedness and recovery coordination. • The RBV continued alignment of governance structures with the Reserve Bank Act, together with increased use of technology and data analytics, enhanced institutional oversight, early warning capabilities and identification of emerging cyber, liquidity and fraud risks. 2.3 TECHNOLOGICAL ADVANCEMENT The RBV attaches great importance to Information and Communications Technology (ICT), ensuring that the critical systems and processes supporting its operations remain continuously functional without disruption. The RBV engages an independent external auditor each year to review its systems, policies and ICT processes. To strengthen resilience, it enforces and regularly reviews its internal ICT policies in line with best practice standards. It also maintains a fully operational disaster recovery site to support its overall Business Continuity Plan (BCP). Core operations have been successfully simulated from this site, with areas for improvement identified for ongoing enhancement. The RBV’s ICT Office manages daily network operations, security updates, backup services, email and communication services, while also maintaining core banking systems, including the National Payment System and administration of the RBV’s website and e-commerce platforms. In light of persistent cyber threats and findings from vulnerability assessments, the RBV’s core systems and network continue to undergo security audits and annual attestations in accordance with international ICT security standards. Moreover, the December 2024 earthquake served as a significant test of the RBV’s resilience and operational continuity. Despite the disruption, essential services were successfully restored and maintained through the disaster recovery site. Looking ahead, the RBV Strategic Plan 2025– 2030 prioritises the strengthening of business continuity alongside broader technological initiatives. The RBV continues to place emphasis on secure cloud services, artificial intelligence and the digitisation of services in alignment with evolving central banking practices.
41Reserve Bank of Vanuatu - Annual Report 2025 2025 PERFORMANCE OUTCOMES • ICT governance, cybersecurity and operational resilience were strengthened through continuous system reviews, independent ICT audits, compliance with international security standards and effective ICT infrastructure management. • Successful operation and testing of the disaster recovery site strengthened business continuity preparedness and ensured continuity of critical operations during disruptive events, including the December 2024 earthquake. • The reliability, security and continuity of core banking systems, payment systems and digital communication platforms were maintained through effective ICT infrastructure management and ongoing security monitoring. • The RBV’s digital transformation agenda advanced through strategic investments in secure cloud services, artificial intelligence and service digitisation, strengthening operational efficiency, technological resilience, alignment with international central banking practice, and cost-effective support for the RBV’s legislative responsibilities. 2.4 CORPORATE SERVICES The RBV’s corporate services played a critical role in maintaining operational continuity during a period marked by significant disruption and recovery following the earthquake. Despite resource constraints and decentralised operations, the RBV demonstrated resilience, adaptability and commitment in ensuring that essential services across logistics, property, security and library functions were sustained in 2025. SECURITY ACCESS CONTROL The RBV continued efforts to strengthen and modernise security access control systems across all of its properties to ensure secure entry management, improved monitoring and enhanced protection of staff, assets and information. These measures supported the RBV’s broader objective of strengthening institutional security and mitigating operational risks. Following the earthquake, heightened security measures were implemented across all RBV properties to mitigate the risks of looting and unauthorised access. This created significant operational challenges, as security personnel were required to maintain continuous coverage across three operational sites on a 24/7 basis. To address capacity constraints and ensure effective security coverage, the Business Continuity Committee (BCC) recommended the outsourcing of security services for the RBV’s Lagoon property to an external security provider, which was subsequently implemented in January 2026. Key activities and achievements during the year included: • Expanded security operations to cover multiple sites on a 24/7 basis, increasing pressure on limited personnel; • Outsourced security services for the Lagoon property to ensure adequate coverage; • Deployed additional personnel to support major events (such as the 2025 RBV Economic Symposium in Santo); • Initiated recruitment to address staff shortages; and • Maintained focus on property protection, contractor monitoring, and customer and operational support. PROCUREMENT AND RESOURCE MANAGEMENT In 2025, the RBV continued efforts to strengthen and automate procurement and resource management processes with the objective of improving efficiency, transparency and compliance in procurement activities. The initiative also aimed to reduce manual interventions and enhance accountability in the management of public resources. Procurement activities remained critical throughout the year in supporting both the RBV’s recovery efforts following the earthquake and its ongoing operational requirements. Key activities and achievements during the year included: • Facilitating the timely sourcing of goods and services, including emergency supplies, office equipment and event logistics; • Managing key procurement activities such as coin shipments, staff uniform sourcing and other operational materials;
42Reserve Bank of Vanuatu - Annual Report 2025 • Ensuring compliance with procurement policies and procedures while maintaining effective coordination with suppliers; and • Monitoring utility expenditures, with electricity usage remaining relatively stable while water and telephone costs declined during the year. ASSET MANAGEMENT AND REGISTRY The RBV also continued efforts to strengthen asset management and registry processes during 2025. Key activities included: • Continued registration and tagging of newly-acquired assets to support recovery operations and ongoing business activities; • Enhancement of asset registers, including assets associated with the Business Continuity Plan (BCP); • Strengthened coordination with the Human Resources Unit in relation to staff exit clearance procedures and asset verification processes; and • Identification of operational gaps, including unreported asset transfers and delays in asset registration, with corrective measures underway to improve compliance, accountability and asset tracking systems. INFRASTRUCTURE AND CAPITAL PROJECTS PROPERTY DEVELOPMENT OF RBV SITES The RBV’s Property and Assets function played a critical role in ensuring operational continuity following the December 2024 earthquake, while also progressing key infrastructure projects, maintenance programs and asset management improvements throughout 2025. During the year, the RBV’s operations were temporarily decentralised across multiple locations, including the headquarters, disaster recovery site, Seaside property and Santo Office. This required a high level of coordination, adaptability and resource management to ensure the continuity of operations and support services. KEY ACTIVITIES Headquarters Earthquake Repairs: • Renovation and repair works at the headquarters building commenced during the year following the engagement of PBEG as the contractor; and • External oversight and technical supervision of the repair works were provided by Kramer Asia Pacific to ensure compliance with engineering and safety requirements. Engineering Assessments: • Dual engineering assessments were undertaken by Kramer Asia Pacific and Engco Ltd New Zealand to assess the structural condition of the headquarters building; and • The assessments confirmed the structural integrity of the building while recommending strengthening and rehabilitation works to enhance long-term resilience. RBV SANTO OPERATIONS • Ground-breaking and contract signing for the RBV Santo were completed during 2025; and • Construction works commenced as part of the RBV’s broader strategy to strengthen operational resilience and regional presence. Figure 6: Ground-breaking, as well as contract signing for the Northern Operation Centre. ICT AND UTILITIES UPGRADES The RBV also undertook several ICT and utilities infrastructure improvements during the year, including: • Installation of a fibre connection between the Disaster Recovery Site and Seaside property to strengthen connectivity and operational resilience; • Upgrades to server infrastructure and supporting ICT systems; and • Completion of key electrical repairs and utility-related improvement works across operational sites. MAINTENANCE AND FACILITIES MANAGEMENT Maintenance and facilities management activities remained a priority during 2025, particularly in response to the operational disruptions caused by the earthquake.
43Reserve Bank of Vanuatu - Annual Report 2025 Key activities included: • Prioritisation of ongoing maintenance works at the disaster recovery site and Seaside properties; • Installation of water tanks, electrical and plumbing repairs, air-conditioning upgrades and minor structural maintenance works; • Expanded maintenance support for symposium events and headquarters restoration activities; and • Management of increased operational demands associated with multi-site operations. TRANSPORT AND FLEET MANAGEMENT Transport and fleet management operations experienced significantly higher demand during the year due to the RBV’s decentralised operational arrangements. Key developments included: • Increased utilisation of the RBV’s vehicle fleet to support operations across multiple sites; • Operational challenges relating to driver shortages and non-compliance with vehicle booking procedures; • Implementation of mitigation measures, including operational support from supervisors and security personnel, as well as the recruitment of additional drivers; • Procurement of new vehicles to strengthen fleet capacity, while older fleet assets were successfully tendered to staff; and • Continued maintenance of all vehicles to ensure they remained in safe and roadworthy condition throughout the year. FRANKLIN KERE LIBRARY The RBV Franklyn Kere Library functions to improve access to information, strengthen digital resources, and support research and knowledge management, thereby contributing to staff productivity, institutional learning and informed decision making across the RBV. ENHANCED LIBRARY SERVICES Consistent with this mandate, the library continued to support the RBV’s knowledge management, research and public engagement functions, despite operational disruptions and infrastructure challenges following the December 2024 earthquake. OPERATIONAL CONTINUITY AND DISASTER RESPONSE Following the seismic events, the library successfully maintained essential services from the Seaside location despite limitations relating to space, infrastructure and resources. The availability of digitised records proved critical in ensuring operational continuity and highlighted the importance of accelerating the RBV’s digital transformation and records management initiatives. The library continued to strengthen its disaster preparedness and archives management processes through the implementation of key stages under the Library and Archives Disaster Management framework. Diagram 1: Library and Archives Disaster Management – Key Stages. DISASTER MANAGEMENT PREVENTION PREPARATION RESPONSE RECOVERY CORE SERVICES AND USER SUPPORT The library maintained its core services to the RBV staff in 2025, including: • Access to physical and digital information resources; • Research and reference support services; • Document services, including binding, scanning, laminating and printing; and • Daily dissemination of news and information updates through the library’s Current Affairs Corner. RESEARCH AND ACADEMIC ENGAGEMENT The Franklyn Kere Library continued to serve as a research hub for students, staff and external stakeholders. In 2025, it facilitated research in topics that included monetary policy, GDP, and the functions and role of the RBV. The library provides access to diverse information and resources, offering help to students and researchers by library staff. In 2025, Year 13 students from Onesua College conducted research and held discussions with RBV economists, helping strengthen the RBV’s contribution to academic development and knowledge sharing within the community.
44Reserve Bank of Vanuatu - Annual Report 2025 DIGITAL ACCESS AND KNOWLEDGE MANAGEMENT Significant progress was made during the year in improving digital access to information and strengthening knowledge management systems. The Franklyn Kere Library enhanced its intranet platform in 2025 and provided RBV staff with improved access to key resources, including Government Gazettes and institutional publications. In addition, it carried out Gazette indexation initiatives, which improved the efficiency of information retrieval and document management processes. The library also commenced preparatory work towards the implementation of a Document Management System and archive digitisation initiatives planned for 2026, supported by the procurement of specialised scanning equipment. PUBLIC ENGAGEMENT AND OUTREACH The library provides support to the RBV’s outreach and public awareness programmes and participated in various awareness activities conducted by the RBV in 2025, including: • Participation in the RBV’s Economic Symposium in Santo; • Support for financial literacy and public awareness programmes; and • Participation in the 2025 Vanuatu Made Week, an event showcasing Vanuatu-made products and services. 2025 KEY CHALLENGES During 2025, the implementation of the Corporate Services strategic priorities experienced several operational challenges, particularly following the decentralisation of operations across multiple sites after the December 2024 earthquake. These challenges affected the delivery of key action plans relating to security access control systems, procurement and resource management, property development and library services. The key operational challenges in 2025 included: • Decentralised operations across multiple locations, affecting operational efficiency, coordination and service delivery; • Driver shortages and transport coordination were constrained from multi-site operations; • Non-compliance with certain operational procedures, including vehicle booking, asset tracking and overtime reporting processes; • Communication limitations arising from infrastructure constraints and temporary operational arrangements; • Resource and staffing shortages across key operational support functions; • Increased workloads associated with maintaining business continuity across multiple operational sites; • Delays relating to headquarters certification, restoration and infrastructure rehabilitation works; and • Scheduling and communication inefficiencies during peak operational periods. Despite these challenges, the RBV maintained continuity of critical support services and operational functions throughout the year. KEY IMPROVEMENTS AND ACTIONS In response to these operational challenges, several improvement measures and corrective actions were implemented in 2025 to support the achievement of strategic priorities and success measures. These included: • Strengthening compliance with internal policies, operational procedures and control mechanisms; • Recruitment initiatives to address staffing shortages and operational capacity gaps; • Continued investment in infrastructure, ICT systems, security arrangements and operational support services; • Improved coordination and collaboration across departments to enhance operational efficiency and service delivery; • Ongoing efforts to strengthen security access control systems and institutional risk management measures; • Continued enhancement of procurement, asset management and resource management processes; and • Progression of infrastructure restoration and property development initiatives, including preparations for improved operational facilities and digital systems. The RBV’s corporate services demonstrated strong resilience, adaptability and operational effectiveness in supporting the RBV’s recovery efforts and ongoing operations in 2025. The RBV successfully maintained continuity of critical support services, progressed key infrastructure and operational initiatives, and continued to strengthen institutional systems and operational support functions across multiple locations. The experiences and lessons learned from the year reinforced the importance of operational resilience, effective coordination, strong internal controls and continued investment in infrastructure, digital systems and support services.
45Reserve Bank of Vanuatu - Annual Report 2025 2025 PERFORMANCE OUTCOMES • The enhanced security arrangements across operational sites strengthened institutional resilience, safeguarded staff and assets, and ensured operational continuity following the earthquake. • Improvements in digital systems, ICT connectivity, records management and preparatory work for a Document Management System strengthened knowledge sharing, information accessibility, digital transformation and business continuity. • Strengthened procurement, asset management and operational support processes improved accountability, coordination, efficiency and resource management in support of recovery and ongoing operations. • Progress in infrastructure rehabilitation, engineering assessments, ICT and utilities upgrades, and the RBV Santo project strengthened operational resilience, regional presence and infrastructure modernisation. • The RBV’s corporate services maintained continuity of essential maintenance, transport, logistical and operational support services across all sites despite increased operational demands. • The Franklyn Kere Library enhanced research support, knowledge management, digital access, public engagement and disaster preparedness, strengthening institutional learning and information services. 2.5 FINANCIAL MANAGEMENT During 2025, the RBV maintained sound financial management practices, supported by prudent management of its financial resources, effective budget and expenditure controls, appropriate investment and reserve management, sound financial risk management, and continued strengthening of internal controls and financial reporting. 2025 KEY DEVELOPMENTS • Diversification of the external reserve’s portfolio through the introduction of gold holdings. Gold was introduced as a new reserve asset class during the year, with holdings valued at VT 621.1 million at year end. This further diversified the Bank’s external reserves portfolio across different asset classes. • Strengthening of the RBV’s capital base. The Bank’s paid-up capital increased from VT 500 million to VT 1 billion, following approval by the Board and the Minister of Finance and Economic Management. The increase strengthened the Bank’s financial position and its capacity to absorb potential financial losses arising from the conduct of its statutory functions. • Implementation of the statutory reserve and profit distribution framework under the Reserve Bank of Vanuatu Act No. 37 of 2025. During the year, VT 1.31 billion was transferred from the General Reserve to the Special Retained Earnings Reserve, while a dividend of VT 700 million was declared to the Government of Vanuatu, in accordance with the Bank’s profit distribution framework. • Correction of a prior-period error in the RBV’s financial records. A review of RBV Notes records identified a prior-period error, resulting in the restatement of comparative financial information in accordance with International Accounting Standard (IAS) 8. The adjustment strengthened the accuracy and transparency of the Bank’s financial reporting. These measures supported sound financial governance and the effective management of the RBV’s financial resources. The RBV maintained a sound liquidity and reserve position during the year, with external assets equivalent to 106 per cent of total demand liabilities. The Bank’s liquidity coverage ratio stood at 32 per cent, well above the 10 per cent minimum threshold. FINANCIAL PERFORMANCE The RBV recorded a net profit of VT 2.34 billion for the year ended 31 December 2025, broadly unchanged from VT 2.35 billion in 2024. Total revenue increased by 14.9 per cent to VT 4.34 billion, from VT 3.77 billion in 2024, while total expenses increased by 39.7 per cent to VT 2.00 billion, from VT 1.43 billion. The stronger growth in revenue was largely offset by higher operating expenses, resulting in a broadly stable net profit.
46Reserve Bank of Vanuatu - Annual Report 2025 Total expenses increased during the year, mainly reflecting higher personnel expenses, which rose by 40.9 per cent to VT 896.2 million, from VT 636.3 million in 2024. The increase reflected higher staff-related costs, training expenses and business travel. Other operating expenses increased by 64.6 per cent to VT 835.2 million, from VT 507.4 million, largely due to a one-off grant expense of VT100 million, higher expenditure associated with business and official events, and increased amortisation and depreciation charges. Overall, the RBV maintained a sound financial position during 2025, supported by a strong capital and liquidity position. The Bank’s financial position continued to provide an appropriate basis for the effective and independent implementation of its statutory responsibilities. The increase in total revenue was primarily driven by higher net currency translation gains, which increased to VT 530.5 million, from VT 25.7 million in 2024, reflecting movements in exchange rates affecting the Bank’s foreign currency-denominated assets. Net gains on foreign securities market prices also increased to VT 246.9 million, from VT 11.8 million in 2024. Other income also increased, supported by higher sundry income and dealing profits. These gains were partly offset by lower interest income, which declined to VT 3.42 billion, from VT 3.66 billion in 2024. The decline primarily reflected lower returns on overseas short-term investments, partly offset by higher income from overseas long-term investments. Figure 7: Vanuatu Bank notes
47Reserve Bank of Vanuatu - Annual Report 2025 STRATEGY THEME 3: EMBRACING INNOVATION AND INCLUSIVITY TECHNICAL WORKING GROUPS Technical Working Groups (TWGs) were established in 2025 to support the implementation of the NFIS through four thematic pillars: • Digital Financial Services (DFS); • Financial Education, Capability and Consumer Protection (FECCP); • MSME Finance (MSMEF); and • Inclusive Green Finance (IGF). The TWGs bring together representatives from government agencies, regulatory authorities, financial institutions, telecommunications providers, development partners, and civil society organisations to coordinate technical inputs and support implementation of the NFIS. The RBV serves as the Secretariat to the TWGs and is responsible for reporting progress to the NFIT. This governance structure provides a coordinated and accountable mechanism for translating the strategic priorities of the NFIS into practical actions and measurable outcomes across Vanuatu. DIGITAL FINANCIAL SERVICES (DFS) TWG Figure 8: 2025 DFS TWG members in the 2nd TWG Meeting at Ramada in Port Vila. The DFS TWG was formally operationalised in October 2025 following the endorsement of its Terms of Reference and Implementation Plan. During the year, the TWG established its governance, membership and reporting arrangements to support implementation of the DFS pillar under the NFIS 2025–2030. Two meetings were convened during 2025, during which members identified and agreed on key priority areas, including: • Financial system interoperability; • Expansion of mobile money services; • Strengthening regulatory and supervisory frameworks; • Enhancement of digital infrastructure; • AML/CTF compliance measures; • Consumer protection; and • Public awareness and financial literacy initiatives. Participating institutions also committed to coordinated implementation and quarterly progress reporting mechanisms. 3.1 FINANCIAL SYSTEM DEVELOPMENT The RBV’s role in Financial System Development functions to support its strategic priority of fostering a more innovative, inclusive and resilient financial system. Through ongoing collaboration with key stakeholders, the RBV advanced financial system development initiatives aimed at strengthening financial inclusion, promoting digital financial services, encouraging innovation within the financial sector, and improving access to secure and efficient financial services for all Ni-Vanuatu people. These initiatives are aligned with the RBV’s National Financial Inclusion Strategy 2025–2030 (NFIS), which seeks to enhance access to quality and affordable financial services, promote financial literacy, strengthen digital financial ecosystems and support inclusive economic growth across Vanuatu. Together, these efforts contributed to the RBV’s broader objective of supporting sustainable economic development, increasing financial participation, and fostering greater innovation and inclusivity within the financial sector in 2025. NATIONAL FINANCIAL INCLUSION TASKFORCE (NFIT) MEETING The NFIT is responsible for oversight and management of the NFIS, including the coordination and supervision of the Technical Working Groups (TWGs) established under the Strategy. The NFIT is chaired by the Governor of the RBV, with the Director-General of the Ministry of Finance and Economic Management (MFEM) serving as Co-Chair. Membership of the Taskforce also includes senior officials from key government ministries and agencies, namely the Prime Minister’s Office, Ministry of Education and Training, Ministry of Trade, Tourism, Commerce and Ni-Vanuatu Business, Ministry of Climate Change, Ministry of Agriculture, Livestock, Forestry, Fisheries and Biosecurity, as well as the Chairs of the Technical Working Groups. The inaugural NFIT meeting was held on 20 August 2025. Key outcomes from the meeting included the endorsement of the NFIT Terms of Reference, the Financial Inclusion Demand Side Survey, and the National Financial Inclusion Strategy (NFIS) 2025–2030.
48Reserve Bank of Vanuatu - Annual Report 2025 INCLUSIVE GREEN FINANCE (IGF) TWG Figure 9: 2025 IGF TWG members in the 2nd TWG Meeting at Ramada in Port Vila. The IGF TWG endorsed its Terms of Reference and Implementation Plan in October 2025 and commenced implementation of activities supporting climate-resilient and inclusive financial systems. Priority areas identified during the year included: • Development of an IGF Roadmap; • Assessment of a national Green Taxonomy framework; • Promotion of digital payment solutions for disaster response and recovery; and • Strengthening sustainable finance and climate-risk financing initiatives. Progress during 2025 also focused on expanding financial outreach to vulnerable communities, strengthening interoperability and agent networks, and advancing discussions on parametric insurance and other sustainable finance mechanisms in support of the NFIS objectives. MSME FINANCE TWG Figure 10: 2025 MSME TWG members in the 2nd TWG Meeting at Ramada. The MSME Finance TWG was established in October 2025 and finalised its Implementation Work Plan in November 2025 in alignment with the NFIS 2025–2030. Key areas of progress in 2025 included: • Advancing reforms in MSME finance policy frameworks; • Strengthening credit bureau and credit guarantee arrangements; • Supporting the digitisation of savings groups; • Enhancing regulatory frameworks for microfinance institutions and moneylenders; and • Promoting integration of insurance and climate-risk financing products. The RBV was also tasked with leading the monitoring and tracking of implementation progress through the development of an implementation dashboard. FINANCIAL EDUCATION, CAPABILITY AND CONSUMER PROTECTION (FECCP) TWG Figure 11: 2025 FECCP TWG members in the 2nd TWG Meeting at Ramada. The FECCP TWG endorsed its Terms of Reference and Implementation Plan in October 2025 and commenced implementation of short-term activities for 2025–2026. Key priority actions focused on: • Strengthening financial literacy and consumer awareness; • Enhancing public understanding of AML/CTF risks and scam prevention; • Expanding rural outreach and community engagement programmes; • Promoting media-based financial education initiatives, beginning with savings awareness campaigns; and • Aligning implementation activities with the national Consumer Protection Policy framework. The TWG also strengthened partnerships and coordination among regulators, financial service providers, telecommunications companies, non- government organisations and media stakeholders to support the safe and effective use of financial services nationwide. 2025 PERFORMANCE OUTCOMES • The NFIT and the operationalisation of the TWGs during 2025 represented significant progress towards the implementation of the National Financial Inclusion Strategy 2025– 2030 and the achievement of the RBV’s financial inclusion objectives.
49Reserve Bank of Vanuatu - Annual Report 2025 3.2 CORPORATE COMMUNICATIONS In line with the theme of Embracing Innovation and Inclusiveness, the RBV continued efforts to strengthen its communication approaches and engagement platforms to ensure that accurate, timely and accessible information is made available to stakeholders and the wider public. These efforts also supported improved understanding of the RBV’s policies, mandates and functions while helping to manage public and stakeholder expectations during a period of economic uncertainty and operational disruption following the December 2024 earthquake. In 2025, the RBV’s key communication priorities focused on: • Implementing communication on monetary policy decisions and managing stakeholder expectations; and • Undertaking regular public awareness and stakeholder engagement activities. The RBV utilised various communication platforms and outreach initiatives in 2025 to improve public access to information relating to monetary policy, financial inclusion, economic developments and the Bank’s operations. Public awareness activities, stakeholder consultations, symposium participation and media engagement initiatives contributed towards strengthening transparency, institutional visibility, and public confidence in the Bank’s role and functions. The Bank recognised the growing importance of strategic communication, digital engagement and stakeholder relations in supporting institutional resilience and public trust. In this regard, a new position for a Corporate Communication Officer was established within the Office of the Governor to strengthen coordination of communication functions and enhance the Bank’s strategic communication capability. Figure 12: Vanuatu Bank coins
50Reserve Bank of Vanuatu - Annual Report 2025 2025 KEY MILESTONES GOVERNANCE AND LEGAL REFORM OCTOBER Parliament enacted the Reserve Bank of Vanuatu Act No. 37 of 2025, providing a modern legal framework for central banking, institutional autonomy, governance, accountability and policy clarity. OCTOBER Parliament amended the Financial Institutions Act (CAP 254) to support the establishment of a comprehensive credit reporting framework. STRATEGY AND INSTITUTIONAL STRENGTHENING DECEMBER The Board approved the RBV Strategic Plan 2025–2030, establishing the RBV’s medium-term strategic direction. DECEMBER The Board approved the RBV’s new organisational structure. MARCH The RBV adopted the revised Staff Policy 2025. MONETARY POLICY AND RESERVE MANAGEMENT OCTOBER The weights of the Vatu trade-weighted currency basket were revised following a review by the IMF. AUGUST The RBV acquired official gold reserves for the first time, strengthening reserve diversification. NOVEMBER Treasury Bills were introduced as a money market instrument. END 2025 Work commenced on a secondary market framework FINANCIAL SECTOR DEVELOPMENT AND INCLUSION JULY Launching of the second National Financial Inclusion Strategy (NFIS) 2025–2030. JULY Launching of the National Regulatory Sandbox Guideline, the Financial Consumer Protection Guideline and the Mobile Money Service Providers Operating Guideline. OCTOBER Financial Inclusion Technical Working Groups were established. OCTOBER RBV approved the first inclusive Green Finance Roadmap. STRATEGIC PARTNERSHIPS AND INFRASTRUCTURE MAY The RBV hosted the inaugural Asia-Pacific Applied Economics Association (APAEA) Conference in Port Vila. SEPTEMBER The RBV signed a long-term banknote supply agreement with Note Printing Australia. JULY RBV Santo ground-breaking ceremony was conducted. MACROECONOMIC AND FINANCIAL STABILITY OUTCOMES END 2025 Inflation and official reserves remained within the RBV’s policy targets, while capital adequacy and liquidity indicators remained above regulatory minimum requirements.
2025 FINANCIAL STATEMENTS
7KPMG, a Fiji partnership, is part of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Independent Auditor’s Report To the Honorable Minister of Finance and Economic Management of the Republic of Vanuatu Report on the audit of the Financial Statements Opinion We have audited the financial statements of Reserve Bank of Vanuatu (“the Bank”), which comprise the statement of financial position as at 31 December 2025, the statements of profit or loss and comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising material accounting policies and other explanatory information set out in notes 1 to 27. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Bank as at 31 December 2025, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards Accounting Standards (IFRS Accounting Standards) and the financial reporting provisions of the Reserve Bank of Vanuatu Act No. 37 of 2025 (the “RBV Act”). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with International Ethics Standards Board for Accountants International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), together with the RBV Act, and the ethical requirements that are relevant to our audit of the financial statements in Vanuatu and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Emphasis of Matter – comparative information We draw attention to Note 26 to the financial statements which indicates that the comparative information presented as at and for the year ended 31 December 2024 has been restated. Our opinion is not modified in respect of this matter. Other matter The financial statements of Reserve Bank of Vanuatu as at and for the year ended 31 December 2024 were audited by another auditor who expressed an unmodified opinion on those financial statements on 27 August 2025.
8 As part of our audit of the financial statements as at and for the year ended 31 December 2025, we also audited the adjustments described in Note 26 that were applied to restate the comparative information. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the financial statements as at and for the year ended 31 December 2024 of Reserve Bank of Vanuatu other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the financial statements as at and for the year ended 31 December 2024 taken as a whole. Other information Other information is financial and non-financial in Reserve Bank of Vanuatu’s Annual Report which is provided in addition to the Financial Reports and the Auditor’s Report. The Directors are responsible for Other Information. The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report and the Statement by Directors. Governor’s Foreword and Financial Inclusion 2025 Highlights included in the Bank’s Annual Report are expected to be made available to us after the date of the Auditor’s Report. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and will not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information and, based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report. Based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report in relation to the Directors’ Report and Statement by Directors. Responsibilities of Management and Those Charged with Governance for the Financial Statements Directors and management are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards and the financial reporting provisions of the Reserve Bank of Vanuatu No.37 of 2025, and for such internal control as Directors and management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, Directors and management are responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so. The Directors of the Bank are responsible for overseeing the Bank’s financial reporting process. Auditors’ responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a
9 whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank's internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Bank to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. KPMG Sharvek Naidu Partner Nadi, Fiji 25 August, 2026
95Reserve Bank of Vanuatu - Annual Report 2025 ABBREVIATIONS ACH Automatic Clearing House AFD Agence Francaise de Development AFI Alliance for Financial Inclusion AML Anti-Money Laundering APAEA Asia-Pacific Applied Economics Association BCC Business Continuity Committee BCP Business Continuity Plan BIA Business Impact Assessment BIS Bank for International Settlement BPNG Bank of Papua New Guinea BSA Bank Supervision Application CAR Capital Adequacy Ratio CCR Comprehensive Credit Reporting CCVL Credit Corporation Vanuatu Limited COI Commission of Inquiry COM Council of Ministers CTF Counter-Terrorism Financing DCO Development Committee of Officials DERS Department of Economics, Research and Statistics DFM Department of Financial Markets DRP Disaster Response Plan EFT Electronic Fund Transfer FECCP Financial Education, Capability and Consumer Protection FCP Financial Consumer Protection FID Financial Inclusion Data FSSR Financial Sector Stability Review GGGI Global Green Growth Institute GPF Global Policy Forum IAIS International Association of Insurance Supervisors IAS International Accounting Standard IASB International Accounting Standards Board ICT Information and Communications Technology IFT Instant Funds Transfers IG Investment Guidelines IGF Inclusion Green Finance IMF International Monetary Fund LAR Liquid Asset Ratio LTSA Long-Term Service Agreement MCM Monetary and Capital Markets MFEM Minister of Finance and Economic Management MMSP Mobile Money Services Providers MPC Monetary Policy Committee MVT Millions of Vatu NFIS National Financial Inclusion Strategy NFIT National Financial Inclusion Taskforce NPA Note Printing Australia NPL Non-Performing Loans NPS National Payment System NUV National University of Vanuatu OMO Open Market Operations PCC Policy Coordinating Committee PFTAC Pacific Financial Technical Assistance Centre PIRI Pacific Islands Regional Initiative RBA Reserve Bank of Australia RBV Reserve Bank of Vanuatu RCF Rapid Credit Facility RFI Rapid Financing Instrument ROA Return on Assets ROE Return on Equity RTF Regulatory Task Force RTGS Real Time Gross Settlement System SAA Strategic Asset Allocation SDR Special Drawing Rights SME Small- and Medium-Sized Enterprises SMEF SME Finance SRD Statutory Reserve Deposit SWIFT Society for Worldwide Interbank Financial Telecommunications TRWA Total Risk-Weighted Assets TWG Technical Working Group VARTC Vanuatu Agriculture Research and Technical Centre VAT Value Added Tax VBTC Vanuatu Broadcasting and Television Corporation VCSD Vanuatu Central Security Depository VFIU Vanuatu Financial Intelligence Unit VIA Vanuatu Insurance Association VIPO Vanuatu Intellectual Property Office VNPF Vanuatu National Provident Fund VRCS Vanuatu Red Cross Society VRDB Vanuatu Rural Development Bank WVV World Vision Vanuatu
