Marshall Islands Minister of Finance and ADB Governor Alfred Alfred Jr. (left), ADB Public Sector Economist Rommel
Rabanal, and ADB Pacific Department Deputy Director General Emma Veve at the signing of the additional financing grant
for the Marshall Islands Public Financial Management Project.
MAJURO, MARSHALL ISLANDS (6 August 2021) — The Asian Development Bank (ADB) and the Government of the Marshall Islands signed a $2 million grant today to extend
and expand support for public financial management and state-owned enterprise (SOE) reforms in the country.
Marshall Islands Minister of Finance and ADB Governor Alfred Alfred Jr. and ADB Pacific Department Deputy Director
General Emma Veve signed the grant agreement for the second additional financing for the Marshall Islands Public
Financial Management Project.
The $2 million additional financing will fund a 3-year extension of the project until the end of 2024 and three new
areas of reform support: improving the management of non-tax revenue; strengthening control over contingent liabilities;
and introducing performance-based budgeting for local governments.
“This project has already helped implement numerous reforms to improve management of public finances and SOEs in the
Marshall Islands, demonstrating the strong commitment of the government and ADB’s close coordination with development
partners,” said Ms. Veve. “The additional financing will allow capacity to be built to prioritize and implement further
reforms, including finalizing the government’s tax reform agenda, and establishing community service obligation
frameworks with SOEs.”
Due to its size, remoteness, exposure to external shocks, and reliance on development assistance, the Marshall Islands
has struggled with limited financial governance capacity.
The project, established through a $2 million grant in 2017 with $500,000 additional financing in 2019, funded the
creation of a reform coordination unit in the Ministry of Finance. This expert team builds capacity and provides
day-to-day advice and assistance to update and implement the Marshall Islands’ Public Financial Management Reform
Roadmap.
Through the project, 12 reform areas identified in the roadmap have been advanced. These include the building of
capacity to undertake tax reform and manage the Marshall Islands’ budgeting and investment framework, a recently drafted
fiscal responsibility and debt management bill, and the identification and costing of community service obligations for
SOEs. The project is also helping improve gender balance on SOE boards by providing training for potential women
directors.
Coronavirus-related border closures saw the Marshall Islands’ economy contract by 5.5% in fiscal year (FY) 2020 (ended
30 September 2020). ADB projects a further 1.4% contraction for FY2021 before returning to 2.5% growth in FY2022. The
Marshall Islands receives grants averaging 18.4% of its gross domestic product through its Compact of Free Association
with the United States, an extension of which is not yet finalized.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining
its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.