Marshall Islands strengthens public financial management and state-owned enterprise reforms

Given its heavy dependence on external development assistance, a major challenge facing the Marshall Islands is achieving fiscal sustainability when grants under the Compact of Free Association with the United States expire in 2023.

“Strong management of public finances and the improved performance of SOEs will strengthen the fiscal position,” said Ananya Basu, Principal Economist from ADB’s Pacific Department. “The government is committed to implementing critical PFM reforms, which the project aims to support through capacity-building measures and improved donor coordination.”

The Public Financial Management Project, consistent with ADB’s Pacific Approach 2016-2020, will help the Ministry of Finance prioritize and implement the Marshall Islands’ PFM Reform Roadmap. Specifically, the project will establish a Reform Coordination Unit (RCU), consisting of national and international consultants reporting to the secretary for finance. The RCU will strengthen the Ministry of Finance’s capacity to implement the roadmap through advice and training, in close coordination with development partners.

The grant will also provide operational support to SOE reforms through the appointment of two experts who will concentrate on reforming inefficient SOEs by streamlining subsidies to match public service delivery costs. An SOE monitoring unit within the Ministry of Finance will be established by the project.

ADB has been working with the Government of the Marshall Islands since 1990 and has approved 14 loans for USD92.63 million, six grants for USD11.26 million, and 52 technical assistance projects worth USD22.17 million./.