The Marshall Islands and the Federated States of Micronesia are expected to sign a new funding deal with the United States totalling close to 3 billion US dollars.
Negotiators from both island nations say they will initial a 20 year funding agreement in the next two weeks with what they call "reservations" after failing to reach agreement with US negotiators over the final figure.
The Marshall Islands negotiator, Robert Muller, says US negotiators refused to budge on certain key money amounts and subsidiary agreements, so the two island state decided to accept the offer and to lobby the US Congress to support their claims.
Long-term funding guaranteed to both island nations runs out late next year and the US Congress must enact new legislation for the flow of funds to continue.
Marshall Islands leaders are expected to initial the new agreement late next week while FSM officials are expected to sign their deal in early November.