ADB reclassifies help to Marshall Islands

Transcript

The Marshall Islands has been assured of increased financial support from the Asian Development Bank after the agency moved to reclassify its assistance.

Correspondent Giff Johnson told Jenny Meyer the change means the Marshall Islands can no longer borrow from ADB and will now only receive funding grants in an effort to relieve the country's debt burden.

GIFF JOHNSON; The reclassification of the Marshall Islands reflects the situation of its debt ratio to Gross Domestic Product which is extremely high. Because in the 1990's and early 2000's the Marshall Islands accepted quite a number of Asian Development Bank loans which although they are at a very low interest and have a ten year holiday on payback, all started clicking in for repayment a few years ago. And so I think the Marshalls owes the ADB in the range of 60 million US dollars and it also has significant debts for its utility companies to US lenders. The net effect of which is that its debt burden is pretty close to its annual government budget. Anyway as a result of this the ADB has classified the Marshalls as a country that isn't eligible for more loans and is only eligible for grants and assistance. This is actually a good thing and I think the Secretary of Finance here, Secretary Alfred, has made the point that this is helpful because the Marshalls is really doesn't need more loans. It needs move off that, repay the loans and lower its debt burden and the ADB does offer a lot of technical assistance and grant funding that can be put to good use.

JENNY MEYER; And so the purpose of further grant funding, is there any talk of that being used to write off other debt? Or is it kind of more looking forward towards other projects?

GJ; There were some efforts a few years ago by the Marshall Islands to try to get the ADB to forgive some of its debt. Particularly for a couple of loans that were really ill conceived and didn't produce anything. But that didn't go anywhere. And the Marshalls is paying, its got its debt servicing in order so that its in good standing with the ADB. And I think that the focus of the ADB relationship with the Marshall Islands is forward looking. There's a number of development initiatives. I know the Marshalls and some of the other small island countries are pushing the ADB to address both climate change and fisheries issues a bit more systematically. Whether that's going to have any effect on ADB policy towards the Pacific Islands, I don't know, but this is something that they are lobbying for.