The World Bank is providing Vanuatu with a concessional loan to improve the safety and efficiency of the country's aviation sector.
The loan is for $US59.5 million dollars.
The Bank says properly functioning air services are critical to Vanuatu's social and economic development, and a key part of its disaster management and recovery.
It will improve aviation infrastructure and navigational and communication equipment at the country's three international airports.
This will include new runway lighting and improved safety and security equipment for luggage and cargo screening.
The runway at Bauerfield International Airport will undergo an urgent rehabilitation and a new domestic terminal will be built there.
Last year, controversial plans for a huge development of Vanuatu's airports, projected to cost $US350 million dollars, were instrumental in the collapse of the Moana Carcasses government.