Regions and Countries

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p. 4 of 5 BACK | NEXT I. Country Strategy II. Current Development Trends and Issues III. Implementation of the Country Strategy and Program IV. Portfolio Management Issues V. Country Performance and Lending Levels

Country Strategy and Program Update 2003-2005: Republic of Marshall Islands

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IV. Portfolio Management Issues

A. Portfolio Performance

32. Since joining ADB in 1990, the RMI has received 11 loans totaling $71.125 million and 37 TAs totaling $15.477 million, of which 6 loans of $41.077 million and 9 TAs of $3.9 million were active at the end of 2001. Thirty-three percent of the RMI portfolio was in the at-risk category in 2001 compared with the ADB-wide average of 24%. Two loans have problems compared with none from the preceding year. No loans have potential problems. As such RMI performance in 2001 was similar to the regional average, but poorer than the ADB-wide average. In 2001, the contract award ratio reached 29.3%, higher than the ADB-wide average of 14.9%. Actual contract awards total $6.6 million, or 73.0% of projections in 2001, compared with 110.0% of the projection for 2000. In 2001, the disbursement ratio was 32.6%, higher than the ADB-wide average of 20.5%. Actual disbursement of $8.3 million, or 79.0% of the projection in 2001, compared unfavorably with 106% of the projection for 2000. Of the active TAs, all except one were performing satisfactorily. Details of the portfolio performance and portfolio status are shown in Appendix 2, Tables A2.6 and A2.7.

33. Project implementation experienced delays because of (i) weak implementation capability, (ii) procurement delays due to transportation problems, and (iii) lack of qualified counterpart staff. Through regular monitoring follow-up and support, most of the loans and TAs are on schedule. In recent years, the strong support by ministers and heads of executing agencies, and the timely provision of counterpart funds have helped speed up implementation and disbursements. Although 2 of the 6 ongoing loans are currently rated partly satisfactory and at risk, portfolio performance is generally satisfactory. Both these loans will be closed by June 2002; their problems mainly arose from project design. The Health and Population Project⁹ had a component for supplying equipment to the new Ebeye hospital—this could not be procured until the hospital was completed under the EHI Project. For the Majuro Water Supply and Sanitation Project,¹⁰ most components were completed on time, despite design issues and problems with the contractor on the cost of contract variations. Both these matters have now been resolved and a negotiated settlement reached between the Government and the contractor. The EHI Project is expected to be completed ahead of schedule while the FFMP is on track.

B. Performance Monitoring and Evaluation

34. ADB maintains close interaction with the Government’s development efforts. The project performance reporting system enables ADB to closely monitor and evaluate the impact of its loans and TAs. ADB provides assistance to undertake periodic reviews of the economy and development strategies (for example, Meto 2000). An annual portfolio performance review is usually undertaken together with country programming. For 2002, the portfolio review was done together with the review of the EHI Project.

35. Based on the latest economic performance evaluation by ADB, the overall score for the RMI is below the average for the PDMCs. The management of public expenditure (primarily in the area of management of the budget and the planning process) has been a major weakness for many years. However, this improved somewhat in 2001 with a commitment to establish and place funds in the MIITF, to adopt the medium-term budget framework, and to improve the budgeting and accounting systems.

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