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Vanuatu and ADB

Consistent with its Strategy 2030, ADB will focus its assistance to Vanuatu on helping to improve public financial management, transport, urban infrastructure, renewable energy, disaster risk management, water and sanitation, access to finance, and social protection.

ADB's Work in Vanuatu

ADB Membership

Joined 1981

Shareholding and Voting Power

Number of shares held:
708 (0.007% of total shares)

Votes:
39,822 (0.299% of total membership, 0.460% of total regional membership)

Overall capital subscription:
$10.20 million

Paid-in capital subscription:
$0.50 million

Vanuatu is an archipelago with a population of about 297,000 people spread across 84 islands in the West Pacific. It is ranked the most vulnerable country in the world to natural disasters and the effects of climate change.

Economic growth has traditionally been driven by tourism, public spending on infrastructure, private sector construction activities, and aid flows. The largely rural population is engaged in subsistence farming and limited production of copra, beef, cocoa, and kava for export.

In March 2020, the coronavirus disease (COVID-19) pandemic forced the Government of Vanuatu to close the country’s borders, leading to a collapse in tourism revenues and high socioeconomic costs. In April, Vanuatu was struck by Cyclone Harold, which caused significant crop losses and had cascading effects on employment and the economy.

Fishermen exploring the waters for a catch in Malekula, Vanuatu.

The Asian Development Bank (ADB) has supported Vanuatu since 1981, with robust assistance to build economic resilience, upgrade transport and energy assets, and improve urban infrastructure and health systems.

Since 1981, ADB has committed loans totaling $96.8 million, grants of $64.2 million, technical assistance worth $25.3 million, and ADB-administered cofinancing of $71.3 million for Vanuatu.

Cumulative loan and grant disbursements to Vanuatu amount to $107.6 million. These were financed by concessional ordinary capital resources, the Asian Development Fund, and other special funds.


ADB-Supported Projects and Programs

In response to the combined effects of the COVID-19 pandemic and Cyclone Harold, ADB provided multilayered assistance to Vanuatu. It committed a $1 million grant from the Asia Pacific Disaster Response Fund in April, a $1.5 million COVID-19Emergency Response grant in July, and a $16.9 million countercyclical support grant in December to help alleviate the socioeconomic impacts of pandemic restrictions.

Also in 2020, Phase 3 of ADB’s Pacific Disaster Resilience Program, with a $5 million grant available to Vanuatu, was approved as contingent disaster finance for early recovery and reconstruction activities following disasters caused by natural hazards and health emergencies.

Also in 2020, Phase 3 of ADB’s Pacific Disaster Resilience Program, with a $5 million grant available to Vanuatu, was approved as contingent disaster finance for early recovery and reconstruction activities following disasters caused by natural hazards and health emergencies.

To further protect against future crises, the Greater Port Vila Urban Resilience Project will build on the completed 2018 Port Vila Urban Development Project, which upgraded road networks and drainage systems and improved sanitation facilities in villages and the rural-urban hinterland. The $9.64 million resilience project covers construction of two multipurpose emergency shelters, capacity building, and institutional strengthening.

The $15 million Energy Access Project is expanding the availability of electricity through renewable energy generation on the island of Malekula replacing diesel generation with hydropower, and extending power distribution grids on both Espiritu Santo and Malekula.

The Interisland Shipping Support Project comprises two major components; investing in shipping infrastructure across Port Vila and the outer islands, and establishing a shipping support scheme to help provide more services to remote destinations.

In the health sector, ADB has committed a $25.1 million package to support the introduction of new vaccines in Vanuatu through the System Strengthening for Effective Coverage of New Vaccines in the Pacific Project. This project will further strengthen immunization programs in response to the COVID-19 pandemic.

The Interisland Shipping Support Project will finance a new interisland shipping terminal in the capital, Port Vila

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 Vanuatu in 1992. Since then, sovereign cofinancing commitments for Vanuatu have amounted to $65.8 million for five investment projects and $3.46 million for six technical assistance projects.

A summary of cofinanced projects is available at Vanuatu: Cofinancing.

Mother and child at the Efate Port Vila market in Vanuatu

Operational Challenges

In 1980, Vanuatu gained independence from France and the United Kingdom, after 76 years of joint administration. ADB’s engagement with the country since 1981 has been primarily in transport, water and sanitation, and urban infrastructure. The bank has also provided disaster relief financing and helped strengthen coverage of new vaccines.

In the past, the sustainability of projects in Vanuatu has been fragile, with attention to administration often lacking and institutional capacity often inadequate. Upstream design work on projects has sometimes failed to incorporate lessons from previous implementations, and designs have remained complex and overly ambitious, with difficulties in tendering processes.

Future Directions

As a tourism-dependent economy that is also highly exposed to destruction from natural disasters, Vanuatu will require short-term support to overcome the impacts of the COVID-19 pandemic, as well as longer-term assistance to build resilience to catastrophic climate events.

ADB operations in the country are aligned with the strategic priorities in Vanuatu 2030–the People’s Plan, which has, as its core priority, improvement to lives and livelihoods. Consistent with its Strategy 2030, ADB will focus its assistance to Vanuatu on improved public financial management, transport, urban infrastructure, renewable energy, disaster risk management, water and sanitation, access to finance, and social protection.

Santo-Pekoa International Airport is located in Luganville, Espiritu Santo, Vanuatu.

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

Spotlight on Vanuatu

News Release

ADB Provides $1 Million in Relief for Vanuatu After Cyclone Harold

ADB today announced a $1 million grant to the Government of Vanuatu to help fund priority recovery activities following Tropical Cyclone Harold, which tore through the center of Vanuatu on 6 April.

News Release

Tourism-Driven Economies in the Pacific to Feel Brunt of COVID-19 Pandemic — ADB

The economies of the Cook Islands, Fiji, Palau, Samoa, and Vanuatu are the Pacific countries likely to feel the brunt of the COVID-19 pandemic, according to a new report by ADB released today.

Project Result / Case Study

Vaccinating in Vanuatu for a Healthier Future

A $15 million grant from an Asian Development Fund (ADF) 12 facility will reduce the burden of pneumonia and diarrhea in children and increase protection against the human papilloma virus in women.

Institutional Document

Pacific Energy Update 2019

This document highlights how ADB technical assistance and energy sector projects are helping to build resilient, low-carbon economies, while increasing access to clean, reliable power in the Pacific.