Donors Stress Reforms Needed to Boost Results in Micronesia

News Release | 9 November 2006

MANILA, PHILIPPINES - Donors this week called for reforms to be stepped up in the Federated States of Micronesia (FSM) to assure greater progress in future assistance programs.

Development partners and officials from FSM met at ADB Headquarters in Manila to discuss ways to overcome constraints to achieving better results from development assistance.

Talks at the fifth Consultative Group meeting for FSM focused on advancing good governance, increasing aid effectiveness, promoting macroeconomic stability and ensuring long-term sustainability, creating the environment for private sector led growth, and providing basic social services.

FSM continues to rely heavily on foreign aid, particularly from grants provided by the United States government under the Compact of Free Association approved in 1986.

The FSM delegation, led by Vice-President Redley Killion, highlighted its efforts to plan and carry out policies and programs in the light of reducing funds from the Compact. The delegates recognized that there were weaknesses in external and internal coordination, capacity and communication, and slow implementation of infrastructure development projects.

They stressed that a comprehensive and well-coordinated package of assistance was essential, and should comprise a combination of financial and technical assistance.

Development partners noted that significant levels of assistance are received by FSM, but previous programs have not always achieved their objectives.

They urged the Government to demonstrate its commitment to achieving improved results through speedier reforms to

  • Promote more effective donor coordination
  • Improve national/state coordination and cooperation
  • Strengthen the focus on performance-based budgeting and results monitoring
  • Provide appropriate counterparts and financial contributions to development partner supported activities
  • Improve the climate for business, including foreign investment
  • Raise public awareness and understanding of reform priorities and development objectives.

In considering FSM's development priorities, development partners committed to improved coordination, with a particular focus on supporting the use of Compact funds and US grant assistance, to push faster progress in the country's Strategic Development Plan.

Consultative Group meetings are held to enable the international donor community to coordinate assistance to a developing country in line with the country's own national development priorities.

Participating development partners this week included ADB, France, United States, International Finance Corporation, International Monetary Fund, Pacific Islands Forum Secretariat, United Nations Educational, Scientific and Cultural Organization, and the World Health Organization.

ADB's strategy in the FSM focuses on three broad objectives: good governance, social service development, and pro-poor economic growth. Since joining ADB in 1990, FSM has received more than $97 million in assistance, comprised of eight loans, worth more than $75 million, and 40 technical assistance programs worth $23.28 million.