 Federated States of Micronesia (FSM)
Federated States of Micronesia (FSM) is made up of 607 volcanic islands spread over 3 million sq km of ocean, and has a population of 102,000 people. Consisting of four highly autonomous island states in the northern Pacific, FSM is currently strongly dependent on aid and retains a close affiliation to the United States under the Compact of Free Association. Compact I, from 1987-2001, provided grants which made up about half of GDP and the assistance provided under Compact II, covering the 20 years from 2004-2023, entails lower United States grant assistance and includes the creation of a trust fund to promote budgetary self-reliance. GDP growth continued contracting between 2006 and 2008 as a result of the global financial crisis, leading to lower than anticipated returns on the government’s trust fund, and high food and commodity prices. As these have stabilized alongside the development of a number of major infrastructure projects, estimated growth increased to 0.4 percent in 2009. However, the country remains vulnerable to volatile food and commodity prices. Analysis conducted by the World Bank in 2011 confirmed Micronesia as being eligible for World Bank assistance from the International Development Association (IDA, the part of the World Bank that provides assistance to the world's poorest and some of the smallest countries). The World Bank is currently providing technical assistance in the area of telecommunications to improve access and usage of mobile phones as it works with the Government to identify a targeted program of assistance.Â
 Fiji
Fiji is the largest economy of the Pacific Island countries. Its population, estimated at just over 860,600, has grown at a rate of less than one percent over the last decade. In the aftermath of the December 2006 coup, Fiji’s economy declined by 6.6 percent in 2007, led by a drop in the tourism and construction sectors. The heavy flooding of early 2009 added pressure to Fiji’s fragile economy, damaging crop fields and infrastructure, disrupting power supply, and once again decreasing tourist activity. The country is currently highly dependent on imports. In the last four years, the economy has either contracted or grown only marginally, with 0.3 percent estimated growth in 2010. Following the cyclone in 2010, the agricultural sector –sugarcane as well as other crops - performed particularly poorly, though tourism increased alongside continued ongoing strong contributions from remittances. Fiji’s relationships with key external partners remain strained, and restoration of full bilateral relations remains dependent on the country’s return to democracy. The Constitution was suspended in 2009 – the same year that Fiji was officially suspended from participation in the Pacific Islands’ Forum and the Commonwealth of Nations. The interim Prime Minister has stated that elections will not be held until 2014.
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 Kiribati
Kiribati is one of the most remote and geographically dispersed countries in the world, consisting of 33 islands spread over 3.5 million square kilometers of ocean, an area larger than India. None of the inhabited atolls in Kiribati lie more than a few meters above sea level, and the effects of rising sea-levels and associated soil salination are beginning to threaten already limited water supplies. The World Bank is working with the Government of Kiribati to address the existential threat posed by climate change. Beyond climate change, Kiribati remains geographically isolated and highly exposed to external shocks. The economy of Kiribati is dominated by the public sector. Key sources of income are fishing license fees, aid, remittances and the Revenue equalization Reserve Fund (RERF) established with proceeds from extraction of now-exhausted phosphate deposits. The World Bank Group is working to scale-up efforts to generate opportunities from closer regional and global integration, including through supporting labor mobility, and improved transport and telecommunications links to help connect Kiribati to the world. Similarly, support for regional measures to improve the sustainable management and returns to island countries from the tuna fishery offer considerable potential benefits.
 Marshall Islands
The Republic of the Marshall Islands is a group of 29 small atolls in the northern Pacific Ocean, with most of its population of 60,000 people concentrated on the islands of Majuro and Ebeye. Aid per capita in the Marshall Islands is among the highest of the Pacific Island countries and the country is currently heavily reliant on grants; a 20-year Compact Agreement of Free Association (2004-23) with the United States has been created to replace grant funding after 2023. Subsistence farming is the main economic activity in the country. From 2005, GDP was increasing steadily by 3-3.5 percent, but this fell to just 1.5 percent in 2008 due in large part to high energy costs – fuel imports claimed almost a fifth of the national budget. In July 2008 the government declared a state of economic emergency linked to high energy dependency on imported oil; high and volatile global oil prices and high levels of government debt. Efforts are currently being made to deliver public financial management and energy sector reforms to help build economic resilience and reduce vulnerability to external shocks. In 2011, analysis confirmed that the Marshall Islands was eligible to receive IDA assistance (the World Bank's financing window for the poorest and smallest countries) a decision that will allow the World Bank to work with the Government to develop a program that responds directly to the country's priorities. The World Bank is currently providing technical assistance in the area of telecommunications to assess the potential for increased private sector investment to help improve connectivity for the people of Marshall Islands.
 Palau
Palau became a sovereign state in 1994 having previously been under United Nations Trusteeship. Situated in the Micronesian group of islands in the northern Pacific with a population of 20,000 people, Palau is the World Bank Group's second smallest member (only Tuvalu has a smaller population). Until 2009 Palau received substantial assistance from the United States through the Compact of Free Association, and a package of renewed financial assistance was subsequently granted in January 2010 to the value of US $250 million. Apart from foreign aid, tourism – and to a lesser degree, fishing – is the mainstay of the economy. Palau has benefitted from increased regional air travel in the Pacific, although in recent years tourism has been subdued due to the closure of a charter-flight operator from Taipei, China and the impact of the global economic slowdown that has reduced the number of visitors from Japan and China. As a result the economy contracted by over 5 percent in 2008. While the economy seems to be stabilizing, Palau, like many small and isolated countries, remains vulnerable to external shocks from high and volatile commodity prices. The World Bank has had a limited engagement in Palau to date, but has provided technical assistance to help the Government establish a robust petroleum revenue management scheme and is currently exploring the prospects of providing affordable broadband internet access as part of a regional connectivity program.Back to top
 Samoa
Lying half way between Hawaii and New Zealand, the volcanic islands of Samoa are in the very centre of Polynesia. Samoa implemented a number of successful economic reforms in the mid-1990s which facilitated several years of steady growth, making it one of the stronger performing economies in the Pacific region. However, Samoa remains vulnerable to external economic shocks, and as a result of the global financial crisis real growth in GDP dropped by five percent in 2008/9. Samoa is also one of the most vulnerable countries to natural hazards such as cyclones, tsunamis and earthquakes, and the 2009 tsunami caused significant damage, particularly along the country's southern, eastern and southwestern coast. An expansion of donor and government reconstruction spending following the tsunami played a key role in offsetting the impacts of declining remittances and tourism arrivals in the context of the global economic crisis. Bank finance for Samoa has recently focused on reconstruction and recovery following the 2009 tsunami; disaster risk management; agricultural production, and reforms to the health sector to improve access and quality. The economy is estimated to have grown by 2.8 percent in 2010/11, driven by donor-financed capital projects and a gradual recovery in remittance flows and tourism numbers.
 Solomon Islands
Solomon Islands is the third largest archipelago in the South Pacific, comprising of 992 islands and covering a sea area of more than 1.35 million square kilometers. Eighty-five percent of a total population of just over 500, 000 lives in rural areas. The country experienced a low-level conflict between 1998 - 2003 which saw displacement and the stagnation of state functions. The Australian-led Regional Assistance Mission to Solomon Islands (RAMSI) has successfully managed law and order in the last eight years, and the government is leading a national process of peace and reconciliation. However the recovery is fragile. The Solomon Islands economy has performed well in 2010 and the economic outlook is for growth to strengthen to as much as 7 percent in 2011. However natural forest logging, which has been the leading export for decades, is projected to decline steeply by 2015. Mining, fisheries, and tourism all stand to offset but not fully replace the revenue and export losses from logging. Currently there is only one operating gold mine. Positioning the economy for long-term growth will require strong management of mining revenues as well as efforts to maximize Solomon Islands’ returns from the natural resource industries. Long term challenges include improving service delivery for a growing population, better management of urbanization, improving fiscal management and public sector performance, and improved oversight in the management of extractive industries. The World Bank is focused on rural development; increasing access to affordable energy; providing training and employment opportunities to disadvantaged youth and women; and supporting Government's fiscal and economic reforms through policy dialogue and budget support.
 Â Solomon Islands - Portfolio Overview (693kb pdf)
 Tonga
Development outcomes in the remote island archipelago of Tonga are relatively strong compared with other Pacific island member countries but progress has been volatile. Absolute poverty is rare, health and education indicators are relatively strong, and Tonga has made good progress against most MDG
indicators. Like many other small and remote island economies, however, Tonga's development prospects are shaped by its economic geography and the economy is highly vulnerable to external shocks. The World Bank Group has vastly increased support for Tonga. Currently activities in economic management, infrastructure and social services build on the successes that have been achieved to date such as the support for the telecoms revolution that has increased the number of Tongans with access to mobile phone services from 6% to 60% of the population.
 Tuvalu
This island group comprises nine atolls with a population around 11,000 people. Total land area is only 26 square kilometers, making Tuvalu the world’s third least populous nation and the World Bank Group’s smallest and newest member, having joined in June 2010. Poor soil, no known mineral resources, and few exports aside from access to substantial pelagic tuna fisheries, mean that the country is almost entirely dependent on imported fuel and food. Fewer than 1,000 tourists visit annually, but about 15 percent of the adult male population work as seamen on foreign merchant ships and contribute about US$2 million in remittances – critical to the economy. GDP per capita is at US$2,778 and the country's economic growth dropped by 0.5% in 2010 and growth in 2011 is estimated at just 1%. Tuvalu faces significant development challenges and increased economic vulnerability due to its small population, geographical remoteness and extreme susceptibility to external shocks like natural disasters or food and fuel price hikes. As the world’s second lowest-lying nation, it is also particularly vulnerable to impacts from climate change.
Tuvalu -Â Country Partnership Strategy
 Vanuatu
Vanuatu is made up of a group of 83 islands in the south-west Pacific and is governed as an independent republic. Vanuatu's economy is in its sixth year of expansion, with GDP growth averaging six percent over this period. With estimated GDP growth estimated to have been 2.2 percent in 2010 in a difficult economic environment, Vanuatu’s economy has performed strongly in weathering the economic crisis. Tourism has been a major contributor to the economy and remittances have risen to be the country's second largest foreign exchange earner, owing in large part to Vanuatu's success in the New Zealand seasonal work scheme. Since joining the World Bank Group in 1981, support has been provided in the areas of agricultural extension and training; transportation and education infrastructure; primary and secondary education; affordable housing, and a Learning and Innovation Loan.
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