Countries and Regions

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Country Strategy and Program Update 2005-2006: 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, uncertain business environment; and a continuing lack of fiscal capacity to expand essential public services. In line with the Government’s Priorities and Action Agenda (PAA),¹ 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 by improving service delivery to rural populations. It will help increase economic growth to a rate that surpasses population growth. A summary statement of the 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.² However, Vanuatu suffers from low economic and social development indicators; gross domestic product (GDP) growth that has not kept pace with the 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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