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Marshall Islands and ADB

ADB is working to promote renewable energy sources, shore up energy security, raise educational standards, strengthen public financial management, and improve governance in the Marshall Islands.

ADB's Work in the Marshall Islands

ADB Membership

Joined 1990

Shareholding and Voting Power

Number of shares held:
282 (0.003% of total shares)

Votes:
39,396 (0.296% of total membership, 0.455% of total regional membership)

Overall capital subscription:
$3.90 million

Paid-in capital subscription:
$0.19 million

Just 181 square kilometers in area, the Republic of the Marshall Islands (RMI) became a member of ADB in 1990.

Situated amid a rich fishing region in the North Pacific, the RMI contains over 1,000 islets grouped together into 29 atolls and 5 single islands. While the capital, Majuro, and the atoll of Ebeye are highly urbanized, small populations are dispersed across the country’s outer atolls.

Factory ships on the seas of the RMI.

ADB has been supporting the RMI since 1990 and has committed loans of $93.1 million, grants of $41.0 million, and technical assistance projects worth $22.2 million.

Annual grant assistance to the RMI under the Compact of Free Association with the United States (the Compact) has been diminishing since 2003. While waiting for negotiations to be finalized on extending the Compact grant period beyond 2023, the RMI is expected to complement domestic revenues with returns from its Compact Trust Fund, which receives annual savings from fiscal surpluses and contributions from development partners.

Cumulative loan and grant disbursements to the RMI from regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds amount to $86.4 million.


ADB-Supported Projects and Programs

ADB’s Pacific Approach, 2016–2020 serves as the country partnership strategy for the RMI. The approach focuses on a three-pronged strategy to help small island nations reduce costs, manage risks, and create economic value. The bank’s development program in the RMI seeks to reduce costs by increasing the supply of renewable energy, manage risks by improving disaster risk financing, and create economic value by delivering safe water and sanitation services and developing the private sector.

Under those broader objectives, ADB is working to promote renewable energy sources, shore up energy security, raise educational standards, strengthen public financial management, and improve governance in the RMI.

The Ebeye Water Supply and Sanitation Project has improved access to safe water.

In 2019, the bank committed a $6 million grant to the RMI as part of the second phase of its regional program on disaster resilience in the Pacific. The grant will act as contingent financing for disaster response, early recovery, and reconstruction activity. ADB also committed additional grant financing of $500,000 in 2019 for the Public Financial Management Project, which is assisting the RMI’s Ministry of Finance to prioritize and implement its road map for public financial management reform and providing operational support to reform state-owned enterprises.

In energy, ADB has committed financing for the Energy Security Project, which will help the Marshalls Energy Company upgrade its fuel tank farm to ensure safe and reliable operations and supply of fuel to power generation facilities throughout the country. Meanwhile, the Majuro Power Network Strengthening Project is reducing network losses in the RMI, while conducting fiscal and macroeconomic analyses to improve the financial and operational sustainability of the Marshalls Energy Company.

The Improving the Quality of Basic Education in the North Pacific Project is improving teacher training, strengthening student assessment, broadening access to teaching and learning resources, building educational leadership, and engaging parents and communities in education.

ADB has helped expand access to financial services for small and medium-sized enterprises.

Additionally, the Ebeye Water Supply and Sanitation Project is designed to reduce the incidence of waterborne diseases by improving access to safe water and sanitation on the RMI’s most populous island. With financing from the Government of Australia, ADB is helping implement three community initiatives as part of the project: (i) upgrading the Ebeye drainage system to mitigate flooding, (ii) constructing new saltwater wells to deliver more volume to the island’s desalination plant, and (iii) establishing a community radio station to disseminate information and increase awareness of safe water use.

Through ADB’s Pacific Private Sector Development Initiative, an assessment of the RMI’s private sector has identified reform priorities that the bank, in partnership with the Government of the RMI, is supporting to increase private sector development and diversify sources of economic growth for the country.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3.00 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2019, ADB mobilized $3.28 billion of long-term cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Financing Partners

Financing partnerships enable ADB’s development partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade Finance Program and Supply Chain Finance Program.

ADB began cofinancing operations in the RMI in 1992. Since then, sovereign cofinancing commitments for the RMI have amounted to $5.76 million for two investment projects and $3.97 million for eight technical assistance projects.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

The gradual reduction in the value of the RMI’s annual Compact grants has resulted in budget constraints affecting the government’s ability to provide basic services. To achieve fiscal sustainability, government spending and revenue generation need to be managed more effectively. Budgetary consolidation and structural reforms are also needed to ensure long-term economic sustainability and boost private sector development.

ADB continues to support key institutional reforms in the RMI, and the government has shown strong commitment to implementing these. However, local capacity constraints present challenges to this process, so maintaining reform momentum is critical.

Future Directions

ADB will continue to respond to government requests for assistance in developing the RMI’s outer islands, and to further improve the quality of basic education in the country. The bank will also support integrated strategic planning for investments in renewable energy and the institutional strengthening of the Ministry of Finance. Future ADB operations will be complemented by regional technical assistance programs, particularly in the areas of economic management, private sector development, and public sector management.

Raising educational standards is among ADB's priorities for the Marshall Islands

This article was originally published in the ADB and the Marshall Islands: Fact Sheet. Updated yearly, this ADB Fact Sheet provides concise information on ADB's operations in the country and contact information.

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