Regions and Countries

	Table of Contents
p. 16 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Federated States of Micronesia

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V. Donor Activities and Aid Coordination

39. The major program of external assistance to FSM remains the Compact of Free Association with the Government of the USA. Annual grants of $60 million for the first five years (1986/87 to 1990/1991) were reduced to $51 million for the next five years and to $40 million for the final five years. A wide range of Federal and non-Federal US services and programs of assistance are also available to the governments and to other organizations in the FSM. The US Pacific Islands Training Institute (PITI) also finances the training of accountants and auditors, which will also complement ADB-funded activities. The overall external assistance to FSM is shown in Appendix 3.

40. Japan is the second largest bilateral donor to FSM supplying annual grants of some $10 million, mainly linked to fisheries agreements. These grants are provided to the four States basically on an annual rotation and have commonly financed the construction of government-owned wharves, port and fisheries infrastructure, and small solar power projects in the outer islands. Japan also provides an annual sum of up to $1 million for small-scale fisheries projects, and it funds a regional program to repair earlier Japan-funded equipment.

41. Australia provided approximately $1.3 million equivalent in aid to FSM per year mainly for education and training, and health. Technical advisors to strengthen fisheries monitoring and surveillance in support of the FSM sea patrol program are also funded under Australia's Defense Cooperation Program. Australia's regional Policy and Management Reform Fund also supplies advisory technical assistance complementary to ADB's program. Particularly, assistance for health care policy design and health care financing will contribute to the formulation of state and national health strategy plans to be included in the new Government's Strategic Policy Framework.

42. In addition to its annual Article IV consultations, the International Monetary Fund has given technical assistance in support of ADB-sponsored reforms, mostly in the fiscal area. The World Bank has mounted only a very limited program of assistance in recent years with its bi-annual preparation of a regional report and occasional TA, including advice on fisheries privatization.

43. The United Nations Development Programme (UNDP) previously financed UN volunteer economists and associate experts in economic planning, and two new UNDP funded economists are to be recruited to assist the governments of the two most populous states of Chuuk and Pohnpei. This complements the work of TA No. 3024 (EMPAT II). The UNDP also finances the Micronesian Entrepreneur Development Center project which has successfully helped mitigate the impact of the early retirement schemes under the PSRP. Regional UNDP public sector reform and governance programs also include FSM.

44. The People's Republic of China (PRC) provides small grants, concentrated in the fisheries, health, and education sectors. PRC offers two scholarships each year to FSM for higher education or technical training in the PRC and soft loans for construction projects

45. Main aid coordination area over the next few years include the health and education sectors under the Basic Social Services Project in 2000. Capacity building in core areas of tax, audit, legal sector, and statistics will need continued efforts for aid coordination.

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