Development Overview

Total Australian aid to Vanuatu in 2005-06 is estimated at AUD34.1 million. Annual growth of Australian funding reflects the importance Australia places on ensuring the momentum of the Vanuatu Government’s reform program is maintained.

Australia's Aid Program

The last decade has seen numerous changes of government as well as the most serious effort at meaningful economic and bureaucratic reform in Vanuatu’s history (the Comprehensive Reform Program – CRP). Throughout this period, Australia has been the most significant aid donor to Vanuatu and remains the largest, providing assistance across the sectors of health, education, economic governance, public sector reform, rural development and the productive sectors including agriculture and tourism.

Like many of its Pacific neighbours, Vanuatu faces problems of individual economic hardship, limited economic growth and political instability. As with other countries in Melanesia, rapid population growth continues to undermine real growth and development prospects. In Vanuatu, social unrest and – in the worst case scenario – serious instability is a real prospect in the next decade without sustained commitment to reform from the Vanuatu Government, a strong civil society and strategic support from donors such as Australia.

Why Do We Have a Development Program?

Australia has an on-going development program with Vanuatu because i) a stable and economically viable Vanuatu which contributes constructively to the region is in Australia’s national interests; ii) poverty, hardship and vulnerability remain substantial problems requiring address; and iii) Australia can make a valuable contribution.

Vanuatu's Key Development Challenges

Key development challenges for Vanuatu include:

nation-building in the face of continued demographic change and pressure on traditional structures;

translating the Vanuatu Government’s Comprehensive Reform Program (CRP) and Prioritised Action Agenda (PAA) into substantive and sustainable gowth; and

providing income opportunities for young, growing populations and ensuring their access to essential social services.

Focus and Achievements

Since 1997 Australia’s aid program has matched the reform mandate of the CRP and has targeted key governance issues, particularly economic, financial, public sector and law enforcement agencies. Areas of particular focus and achievement have been:

prevention of a severe economic decline and breakdown in macroeconomic stability in the late 90’s, through Australia-funded in-house Ministry of Finance and Economic Management institutional strengthening project. In particular, reducing government as a percentage of GDP, reducing the government deficit as a percentage of GDP and reducing inflation;

economic reform at central and line agency level, including implementation of a modern, transparent financial management system and the development of regional best practice national accounts;

public sector reform through the Public Service Commission;

provision of basic health services through strengthening Ministry of Health and community-based health centres;

enhanced educational opportunities following a concerted Australian effort to strengthen the quality of teaching and facilities at a number of institutions; and

reform and strengthening of the legal and policing systems, including functioning public legal offices and Vanuatu Government endorsement of a wide-ranging police reform program.