Overview of Australia's aid program to the Federated States of Micronesia

How we are helping

2014-15 Bilateral Outcome for the North Pacific
$4.7 million

2015-16 Bilateral Budget Estimate for the North Pacific
$5.0 million

2015-16 Total Australian ODA Estimate for the North Pacific
$12.0 million

Australia’s aid program in the North Pacific is focused on the Federated States of Micronesia (FSM), the Republic of Palau and the Republic of the Marshall Islands. The Australian Government will provide an estimated $12.0 million in total Official Development Assistance (ODA) to the North Pacific in 2015–16. This will include an estimated $5 million in bilateral funding to the North Pacific. For the FSM, Australia will provide an estimated $4.2 million total ODA in 2015–16, which will include an estimated $1.7 million in bilateral aid and an estimated $2.5 million from regional programs.

Australia’s regional programs are closely linked and complementary to our bilateral programs across the Pacific. Our regional programs assist FSM including through, amongst other things: support for fisheries management, via the Forum Fisheries Agency; support to prepare for and mitigate the impacts of severe climate, tidal and oceanographic events through the Climate and Oceans Support Program in the Pacific; and support for strengthening governance and accountability through the Pacific Islands Centre for Public Administration, the Pacific Financial Technical Assistance Centre and the Pacific Regional Audit Initiative.

Australia and FSM share a common interest in supporting economic and human development. The two countries enjoy a close bilateral relationship supported by shared regional interests, particularly ensuring maritime and transnational security and sustainable management of fisheries. The physical isolation of FSM along with its small population and fragile natural environment present particular development challenges; transport and communication costs are high, and the skills base of the country is low. As a regional neighbour, Australia is well placed to work closely with the Federated States of Micronesia Government and civil society to support FSM’s development efforts.

Many Micronesians live in poverty, have poor health, and cannot access good education or work opportunities. Australia is supporting FSM to overcome these development challenges and improve the livelihoods and security of its people, including support for a quality public sector with sound economic policies and a coordinated approach to aid delivery. Our bilateral aid program is organised around the following strategic objectives:

Objective 1: Development coordination

Australia works with FSM to improve the coordination of external development assistance to ensure greater alignment of external assistance with FSM policies and strategies. FSM is planning for the expiration of the US Compact grants in 2023, which are a major source of revenue. Australia is helping to improve FSM’s ability to manage and use development assistance. We are supporting an ODA coordination adviser who is working with the government to help implement FSM’s nation-wide ODA policy. This work aims to strengthen the quality of development programs, by increasing coordination between donors, and improving the financial administration and performance reporting of development programs.

Objective 2: Budgetary and economic reforms

Australia has provided advice to the FSM government to modernise the FSM fiscal framework, improve revenue collections and voluntary compliance. We are also providing support through the Asian Development Bank (ADB) towards Strengthening Public Sector Management in the North Pacific through technical assistance.

Objective 3: Education support

Australia has provided an Education Adviser to assist the FSM Ministry of Education with the effective implementation of a larger ADB program that aims to improve the effectiveness and efficiency of national education systems in FSM. Through our Australia Awards Scholarships and Australia Awards Pacific Scholarships programs we are also helping to build FSM’s workforce by providing scholarships for Micronesians to study in Australia and the region.

Objective 4: Disaster preparedness

Australia has implemented the Climate Adaptation and Disaster Risk Reduction and Education (CADRE) program which aims to build the resilience of vulnerable communities in both FSM and the Republic of the Marshall Islands (RMI) to natural hazards, including those that are climate change induced. The program educates school children and communities about climate change and disaster risks, helping them determine appropriate responses and implement priority activities in their local communities to support higher level national plans and strategies. It is expected that 10,000 school-aged children in up to 50 schools and surrounding communities will benefit from CADRE.

Objective 5: Gender equality

Australia is working to address issues of gender equality in FSM by funding priority initiatives under the Pacific Women Shaping Pacific Development FSM Country Plan 2015–18. This is part of the Australian Government’s Pacific Women Shaping Pacific Development regional program which commits $320 million over 10 years to improve the political, economic and social opportunities of Pacific women in 14 Pacific countries. The FSM country plan aims to foster economic empowerment of women, increase the participation of women in public life and decision making and reduce the incidence of gender based violence.

Our results

  • A 20 per cent increase in Chuuk State revenue since 2009 through the help of an Australian adviser working to address tax compliance issues.
  • The placement of an ODA Advisor within the Office of Statistics, Budget and Economic Management, Overseas Development Assistance and Compact Management (SBOC), who supported the development and ratification of the Overseas Development Assistance Policy to help FSM improve the development effectiveness of donor financial resources.
  • The updating of FSM’s Environmental Protection Act. Australian aid also supported the implementation of the new Act through specialist volunteer placements in State environmental protection agencies.
  • 54 Australian scholarship awardees from FSM having completed tertiary studies in Australia and the region since 1996.

Our changing program

Our changing aid program in FSM reflects the priorities of the FSM Government as well as Australia’s new aid policy. The program will have an increased focus on economic growth as we expand our support for economic infrastructure, in line with Australia’s economic diplomacy agenda. We have been providing initial technical support for the Palau-FSM ICT Connectivity Project (a joint World Bank-Asian Development Bank initiative) through Australia’s regional Pacific program, and plan to expand our engagement in this sector through the bilateral program in the future.

The Australian bilateral aid program for FSM will also fund priority initiatives under the Pacific Women Shaping Pacific Development FSM Country Plan 2015–18, under the Australian Government’s Pacific Women Shaping Pacific Development initiative.

Our aid investments focus on key enablers for economic growth, social stability and development in FSM. We will work together to ensure development resources are effectively and transparently managed.