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Marshall Islands and ADB

ADB will continue to respond to government requests for assistance in developing the Marshall Islands’ outer islands, and to further improve the quality of basic education in the country.

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:
$4.06 million

Paid-in capital subscription:
$0.2 million

The Republic of the Marshall Islands (RMI) comprises more than 1,000 islets and atolls spread across just 181 square kilometers in the North Pacific. Its economy relies on fisheries and development assistance, including grants under its Compact of Free Association with the United States (the Compact). Compact grants have been decreasing since 2003, and the RMI is in negotiations to extend the free association beyond 2023.

In 2020, border closures associated with the coronavirus disease (COVID-19) pandemic disrupted fishery supply chains, which proved highly detrimental to the economy. The country is also tasked with balancing resources for its urban and rural populations, and enhancing resilience to climate change.

Factory ships on the seas of the RMI.

ADB has supported the RMI since 1990, with assistance focused on developing renewable energy, water, and sanitation assets, in addition to supporting education, private sector growth, and disaster resilience.

Since 1990, ADB has committed loans of $93.1 million, grants of $72.7 million, technical assistance worth $20.9 million, and ADB-administered cofinancing of $10.7 million for the RMI.

Cumulative loan and grant disbursements to the RMI amount to $111.1 million. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.


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, improving education outcomes, and developing the private sector.

In 2020, ADB committed $24.5 million for COVID-19 response in the RMI, comprising $16 million from the Health Expenditure and Livelihoods Support Program, $6 million from Phase 3 of the Pacific Disaster Resilience Program, $1.5 million from the Ebeye Solid Water Management Project, and $1 million from COVID-19 Emergency Response.

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

In addition to pandemic-related funding in 2020, ADB also committed $3 million for the Ebeye Water Supply and Sanitation Project and $5 million for solid waste management in Ebeye.

ADB continues to support efforts by the Government of the Marshall Islands to promote renewable energy sources and shore up energy security, raise education standards, improve water supply and solid waste management, enhance public financial management, and strengthen governance in the RMI.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments in loans and equity investments from ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020.

Financing Partnerships

Financing partnerships enable ADB’s financing 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 and Supply Chain Finance Program and Microfinance 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.

A summary of cofinanced projects is available at the Marshall Islands: Cofinancing.

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 boost private sector development and ensure long-term economic sustainability.

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. To foster green and sustainable recovery beyond the COVID-19 pandemic, the bank will also support 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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