2024 Pacific Aid Map: Key Insights
The Facts -
- ODF to the Pacific dropped by 18% from 2021, with rising loan reliance.
- China reclaims its spot as the Pacific's 2nd largest bilateral donor.
- Aid securitisation focuses on infrastructure, risking health and education.
Key Findings
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Rhetoric outpaces action in the Pacific: ODF to the Pacific Islands region dropped by 18% from 2021, with reduced grant support and increased reliance on non-concessional financing.
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China reclaims its position: China narrowly surpassed the US as the Pacific's second-largest donor, increasing project commitments post-pandemic.
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Beijing’s strategy evolves: China's ODF now focuses more on influence via grants and community outreach.
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Global headwinds affect ODF: Covid assistance fell 60%, with non-pandemic support also down by 13%.
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Securitisation of aid impacts development: Focus on infrastructure leaves gaps in health and education.
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Infrastructure debt risks grow: 60% of Pacific infrastructure financing now from loans.
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Geopolitical fragmentation: More donors, smaller projects dilute aid per capita.
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Taiwan's influence wanes: Taiwan's ODF reduced to $7.2 million in 2022.
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Pandemic response boosts priorities: Progress in gender equality, climate action, and aid localisation observed, but more needed.
Overview
Fragility and rivalry: 2024 Pacific Aid Map
In 2022, official development finance (ODF) to the Pacific — grants, concessional loans (ODA), and other non-concessional loans (OOF) — recorded its largest annual fall, decreasing by 18% due to fading Covid-19 support, global budget cuts, and the Ukraine War.
Despite 2022 ODF being 19% above 2019 levels, the aid composition has shifted towards less concessional forms and loans. Grant support fell to pre-pandemic levels, threatening the region's fragile economies struggling with pandemic aftermath and slow human development gains.
The geopolitical rivalry with China intensified ODF securitisation, yielding mixed results. An influx of smaller donors has fragmented the aid landscape, diverting focus from human development despite declining health and education metrics. Infrastructure-centric financing has heightened regional debt risks.
Australia remains the largest donor, with ODF to the Pacific above 2019 figures, although its grants have dipped slightly. While rhetoric on Pacific engagement remains, US, New Zealand, and Japan's aid dropped significantly in 2022, below pre-pandemic levels. US aid for non-Compact states is particularly low.
China regained its place as the second-largest donor with increased spending and new aid modalities like direct budget transfers, securing ties with Kiribati and Solomon Islands at Taipei's expense. There's been a rise in small grants and gifts directly administered by Chinese embassies.
China's increased spending coincides with new project commitments, reviving its ambition for major Pacific infrastructure projects. The $135 million Vanua Levu Road Upgrade in Fiji is China's largest-ever grant program in the region, with similar commitments in Solomon Islands and Vanuatu.
The future of Pacific development support is uncertain. Major bilateral donor aid forecasts indicate flat ODA in coming years, with pressures on both donor and Pacific budgets increasing. Geopolitical influences increasingly shape major donor development budgets.
Despite a pandemic-induced surge, Pacific development support is inadequate, stuck between heightened needs, economic fragility, and geopolitical pressures.
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