The International Monetary Fund is predicting bigger financial deficits in Vanuatu as it takes on more concessional loans for infrastructure projects.
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The organisation is also forecasting decreased revenues from passport sales and pressure from an ambitious tourism plan involving new aircraft.
The findings are part of a report released on Thursday by the International Monetary Fund based on April consultations in Vanuatu.
It said Vanuatu should prioritise infrastructure investment, introduce income taxes and reduce reliance on passport sales to make debt more sustainable.
The report added that Vanuatu's graduation from least developed country status would have little impact on economic growth and the country had nearly fully recovered from damage from 2015's Cyclone Pam, which caused extensive damage.