Japan says that aid to the Marshall Islands will be reduced by 10 percent this year and that tighter monitoring of aid funds will be introduced to ensure accountability.
Japan's Charge d'Affaires, Toru Hayashi, says his country's economic woes and a critical public attitude towards aid spending has contributed to the reduction and tighter scrutiny controls.
He says the Japanese are criticial of the level of overseas aid when domestic social problems such as unemployment are on the rise.
In the last six years, Japan has provided more than 2.2 million US dollars in 29 small grants and devoted tens of millions of dollars to infrastructure development.
Mr Hayashi says there may be additional cuts in Japan's overseas aid next year.