The International Monetary Fund says Vanuatu's economy is gradually turning around with growth last year at about 2 percent after tourism recovered strongly.
It says inflation remains low at 0.8 percent, and in 2013 continued growth in tourism and the bottoming out of construction are projected to increase growth to three percent.
The IMF group says it was encouraged by the Government and the Reserve Bank of Vanuatu's conservative approach to macroeconomic and prudential management.
They also added that maintaining low debt and high reserves should be a policy priority.
The IMF says to seize growth opportunities, public investment needs to be complemented by enhanced competition, reform of government business enterprises, a strengthened and reformed civil service, and active promotion of private sector investment, especially in tourism and agriculture.