ADB's Work in the Marshall Islands

The Republic of the Marshall Islands comprises over 1,000 islets and atolls 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). Like its neighboring countries, the Marshall Islands’ economy was impacted by border closures linked to the coronavirus disease (COVID-19) pandemic, particularly in fisheries and onshore fleet services, hotels and restaurants, and construction.

The Pacific Approach, 2021–2025 of ADB serves as the country partnership strategy for the Marshall Islands, and focuses on building resilience against economic shocks, delivering sustainable services, and promoting inclusive and sustainable growth. It introduces new priorities including a programmatic approach to climate change, longer-term capacity support, flexible procurement practices, and a greater emphasis on gender equality. Recognizing the need for capacity support to complement physical infrastructure, ADB is helping improve public sector performance alongside infrastructure works.

To date, ADB has committed 78 public sector loans, grants, and technical assistance totaling $202.2 million to the Marshall Islands. Cumulative loan and grant disbursements to the Marshall Islands amount to $126.21 million. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds. ADB’s ongoing sovereign portfolio in the Marshall Islands includes 8 grants worth $44.7 million.

Border closures associated with the COVID-19 pandemic have disrupted fishery supply chains and the broader economy. The country is working to enhance climate resilience and to balance resources between its urban and rural populations. Ongoing projects in the Marshall Islands involve basic education, network strengthening, energy security, solid waste management, water supply and sanitation, public financial management, and a project readiness financing to prepare an integrated urban investment. Further technical assistance addressed a range of areas, including strengthening the enabling environment for improved and sustainable services, community outreach and hygiene awareness, and deployment of hygiene kits to vulnerable households during the peak periods of community transmission.

ADB is supporting the Marshall Islands to strengthen energy security, develop water and sanitation infrastructure, raise educational standards, strengthen public financial management, and improve governance. ADB is also supporting the improvement of business conditions in the country, leveraging the Private Sector Development Initiative to increase access to finance and strengthen state-owned enterprises.

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

Operational challenges. The Compact’s assistance to the Marshall Islands has been declining since 2003. The gradual reduction of the annual Compact grants has resulted in budget constraints affecting the Government of the Marshall Islands’ 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 to boost private sector development. ADB continues to support key institutional reforms in the Marshall Islands, and the government has shown strong commitment in implementing these reforms. However, given that local capacity constraints present challenges to this process, maintaining reform momentum is critical.

Knowledge Work

ADB brings added value beyond its role in project financing. ADB cohosted a webinar on achieving long-term climate change resilience for Pacific small island developing states beyond the pandemic, and stressed the need to improve climate adaptation and build resilience among the most vulnerable communities.

ADB also publishes knowledge products on macroeconomic forecasting and public sector management in its Asian Development Outlook and Pacific Economic Monitor. Recent publications discuss the effects of rising fuel prices on public service, commodity and transport costs, and how Pacific governments have provided public relief measures in response to these issues. ADB is also conducting assessments of the tourism industry, and on the potential economic impacts of the cessation of current Compact assistance in fiscal year 2023.

  ADB Projects in the Marshall Islands Project data sheets for loans, grants, TAs