Countries and Regions

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Country Strategy and Program Update 2004-2006: Vanuatu

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I. Country Strategy

1. The strategy of the Asian Development Bank (ADB) for Vanuatu addresses the underlying institutional constraints on Vanuatu's economic development. These include a lack of consistency and transparency in government decision making, a high-cost and uncertain environment for business, and a lack of fiscal capacity to expand essential public services. The strategy aims to help (i) build capacity for sound economic management and good governance; (ii) create an enabling environment for private sector development; and (iii) reduce poverty. It will help increase the rate of economic growth to a level higher than population growth. A summary statement of strategy is in Appendix 1.

2. The Government of Vanuatu gives priority to (i) improving governance and public service delivery via strengthened law enforcement and macroeconomic management capacity; (ii) improving the lives of rural people through better access to markets and management of natural resources; (iii) raising private investment by lowering obstacles to private enterprise; (iv) enabling greater stakeholder participation in policy formulation; and (v) increasing equity in access to services and employment opportunities.¹ Vanuatu suffers from low economic and social development indicators: gross domestic product (GDP) growth that has not kept up with the high rate of population growth; increasing unemployment; low private sector investment; substantial budget deficits; and an adult literacy rate of only about 75% (50% for women).

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