The Asian Development Bank (ADB) and Australia are providing US$3.8 million in grants to help Nauru strengthen its fiscal sustainability by building on earlier reforms in public financial management, state-owned enterprises, and fiscal policy management.
ADB’s is extending a US$2 million policy-based grant from its Asian Development Fund, while the Government of Australia is providing US$1.8 million for the Nauru Fiscal Sustainability Reform Programme.
“The Nauru Fiscal Sustainability Reform Programme will help the Government of Nauru to establish the Nauru Intergenerational Trust Fund to save currently high public revenue for the future,” said Andrea Iffland, Regional Director of ADB’s Pacific Liaison and Coordination Office in Australia. ”The programme will help the Government of Nauru deliver improved social services.”
Among the programme activities will be measures to improve budget execution and financial controls; steps to strengthen the efficiency of service delivery by the Nauru Utilities Corporation; and the establishment of a stronger funding mechanism for future service delivery via the Nauru Intergenerational Trust Fund.
The fund, established through a memorandum of understanding between Nauru and Australia, is designed to provide a future stream of public revenue to support investments in health, education, the environment, and infrastructure.
Nauru faces many development challenges with almost no private sector, limited banking services, little arable land, limited fresh water, and high level levels of debt. Education outcomes are improving but are still poor by international standards and have contributed to high rates of youth employment. Nauru has some of the highest rates of non-communicable diseases in the world such as diabetes and heart disease.
Nauru, located in the central Pacific just south of the equator, is one of the world’s smallest countries with a population of about 9,000 people. It is one of the three great rock phosphate islands in the Pacific Ocean, with a total land area of only 21 square kilometers.