Country Strategy and Program Update 2007-2011 - Republic of Marshall Islands

Table of Contents

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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 Assistance Levels

Country Strategy and Program Update 2007-2011: Republic of Marshall Islands

I. Country Strategy

1. The Asian Development Bank (ADB) strategy for the Republic of the Marshall Islands (RMI) prioritizes the provision of technical assistance and policy advise for

increasing public sector productivity with emphasis on basic social services
enhancing the environment for private sector investment, job creation, and growth.

2. Due to debt sustainability concerns and access of RMI to grants from bilateral sources, no lending is envisioned during the period. The strategy directly addresses the priorities of the poor—i.e., improved access to basic social services, and greater job and income opportunities¹—and the focus of the current Pacific Strategy.²Further, it supports the Government’s national development strategy³and the medium-term budgetary framework; and complements substantial grant financing by other funding agencies, including the renewed Compact of Free Association⁴with the US for 2004–2023.⁵

3. Most of the earlier investments in development by ADB and other funding agencies did not yield as planned because of widespread cross-cutting policy and institutional constraints to better performance of both the public and private sectors.⁶In 2004, the RMI country strategy was therefore updated, and it has subsequently been implemented, in a fully participatory manner covering 2005–2006, to increase the ownership of, and the demand for, reform and hence overcome the cross-cutting policy and institutional constraints to productivity.

4. Notwithstanding the country strategy focus on building ownership for reform, the economy continues to drift and social conditions are worsening. Continued civil society participation is unlikely unless the government effectively acts on stakeholder recommendations. Further ADB assistance must therefore depend on the government taking action on essential policy reform. The strategy and program will therefore be consolidated further and attach greater focus to achieving immediate and measurable results including a performance audit report in 2006 to the Chief Secretary on personnel of the Ministry of Education, an increase in land registrations and recordings, and the establishment of a secure transactions regime in 2006. A results-based framework is in Appendix 1. This framework will be refined as the relevant technical assistance projects (TAs) are implemented and reported on independently.

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ADB. 2002. Hardship in the Marshall Islands, the Priorities of the People. Manila.

ADB. 2005. Responding to the Priorities of the Poor: A Pacific Strategy for the Asian Development Bank, 2005–2009. Manila.

RMI Government Vision 2018. Majuro.

In October 2004, the governments of the US and RMI signed a 20-year agreement known as the Compact of Free Association. Under this agreement, the Government of RMI will receive annual grant payments and access federal support programs. In return, the Government of the US will retain certain rights to support the foreign affairs and defense interests of the RMI.

It should also be noted that the ADB Country Performance Assessment of 2005 confirms the focus of the country strategy, with lowest country ratings for (i) business regulatory environment, (ii) equity of public resource use, and (iii) quality of public administration.

See Economics and Research Department, ADB. 2002. A Framework for Establishing Priorities in a Country Poverty Reduction Strategy. ERD Working Paper Series No. 15. Manila.

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Country Strategy and Program Update 2007-2011: Republic of Marshall Islands

II. Current Development Trends and Issues

Regions and Countries

I. Country Strategy