ADB's Work in the Marshall Islands

The Republic of the Marshall Islands (RMI) comprises over 1,000 islets and atolls in the North Pacific. Its economy relies on fisheries and development assistance, including grants under its Compact of Free Association with the United States. The Compact grants are scheduled to expire in 2023, and the RMI is in negotiations to extend assistance.

The Pacific Approach, 2021–2025 of the ADB is the country partnership strategy for the RMI, and focuses on building resilience against economic shocks, delivering sustainable services, and promoting inclusive and sustainable growth. It introduces new priorities including programmatic approach to climate change, longer-term capacity support, flexible procurement practices, and emphasis on gender equality.

To date, ADB has committed 77 public sector loans, grants, and technical assistance totaling $197.7 million to the Marshall Islands. Cumulative loan and grant disbursements to the RMI amount to $113.8 million. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds. ADB’s ongoing sovereign portfolio in the Marshall Islands includes 14 grants worth $59.2 million.

Border closures associated with the coronavirus disease (COVID-19) pandemic have disrupted fishery supply chains and the broader economy. The country is also working to enhance climate resilience and balance resources between its urban and rural populations.

ADB has provided a total of $24.5 million in grants to assist the RMI’s COVID-19 response. A $16 million health and livelihood program grant provided budget support to mitigate pandemic impacts on health, tourism, and social protection. A $1 million COVID-19 Emergency Response Project grant provided life-preserving goods and services to communities affected by the pandemic. The $1.5 million grant under the Ebeye Solid Waste Management initiative is preventing the spread of COVID-19 and other transmittable diseases by improving medical waste disposal and management. Phase three of ADB’s Pacific Disaster Resilience Program will provide a $6 million disaster-contingent financing grant for early recovery and reconstruction following disasters caused by natural hazards or health emergencies.

ADB is supporting the RMI to strengthen energy security, develop water and sanitation infrastructure, raise educational standards, strengthen public financial management, and improve governance. In 2021, ADB provided an additional $2 million grant for the Public Financial Management Project to support state-owned enterprise (SOE) reforms and help implement the public financial management road map.

ADB is also supporting the improvement of business conditions in the RMI—leveraging the Private Sector Development Initiative to increase access to finance and strengthen SOEs

Factory ships on the seas of the Republic of the Marshall Islands. Photo: Eric Sales/ADB

Operational challenges. Compact assistance to the RMI has been declining since 2003. The gradual reduction of the annual Compact grants has resulted in budget constraints affecting the Government of the RMI’s ability to provide basic services. To achieve fiscal sustainability, government spending and revenue generation need to be managed more effectively. Budgetary consolidation and structural reforms are also needed to ensure long-term economic sustainability and to boost private sector development. ADB continues to support key institutional reforms in the RMI, and the government has shown strong commitment to implementing these. However, local capacity constraints present challenges to this process, so maintaining reform momentum is critical.

Knowledge Work

ADB brings added value beyond its role in project financing. ADB cohosted a webinar on achieving long-term climate change resilience for Pacific small island developing states beyond the pandemic and stressed the need to improve climate adaptation and build resilience to help the most vulnerable communities adapt to the impacts of climate change.

ADB also publishes knowledge products on macroeconomic forecasting and public sector management in its Asian Development Outlook and Pacific Economic Monitor. Recent publications discuss progress on COVID-19 vaccinations across the Pacific, impacts of pandemic-related school closures on learning outcomes and potential earning capacity, medium-term revenue strategies to build fiscal sustainability, and addressing gaps to support recovery in the tourism sector.

  ADB Projects in the Marshall Islands Project data sheets for loans, grants, TAs

Future Directions

ADB will continue to respond to government requests for assistance in developing the RMI’s outer islands and further improving the quality of basic education in the country. To foster green and sustainable recovery beyond the COVID-19 pandemic, ADB will also support investments in water and sanitation, solid waste management, renewable energy, social protection, and institutional strengthening for the Ministry of Finance. ADB complemented future operations with regional technical assistance, particularly in the areas of economic and public sector management, and private sector development.