The territorial government of Wallis and Futuna has deployed various policy measures and initiatives to boost long-term economic growth and resilience. But persistent commercial disadvantages may warrant ongoing subsidies rather than self-sufficiency.
Since the COVID-19 crisis erupted, stimulus spending has focused on replacing lost visitor spending to stabilize incomes and demand. These emergency funds supported struggling households and protected jobs by subsidizing payrolls of tourism-dependent businesses. Bailouts to public and private sector employers alike aimed to prevent widespread bankruptcies.
Looking beyond recovery in Wallis and Futuna — the government has launched a public investment program concentrating on infrastructure upgrades to roads, ports, airports and telecoms. These projects focus on facilitating trade, connectivity and entrepreneurship. There are also initiatives to develop agricultural exports, build renewable energy systems and improve vocational training.
Past infrastructure improvements in Wallis and Futuna have strengthened connections to neighboring French collectivities. A new freight ship service launched in 2021 now provides cheaper transportation costs for exports to New Caledonia in particular. Ongoing enhancements to critical infrastructure should continue lowering overhead expenses for business and trade over time.
However— Wallis and Futuna still depends heavily on annual subsidies from France worth around $60 million annually, or almost 80 percent of territorial GDP. The tiny islands inherently lack economies of scale and have geographic obstacles to self-sufficiency. Reducing or removing subsidies without replacement revenue sources would sharply lower living standards.
To capitalize on the opportunities and address the challenges— the territorial government should focus on improving job creation, diversifying the economy and foster a collaborative approach between the public and private sectors.
Maintaining French subsidies while also supporting new industries, especially tourism, offers the most realistic path for sustainable economic progress. If tourism fully recovers post-pandemic, it can again deliver major tax revenue and foreign exchange earnings to supplement budget aid. Expanding other exports would provide additional small-scale gains. But subsidies will remain essential to bridge the substantial gap indefinitely.
