Vanuatu has now reportedly finalised negotiations with the United States through Washington's Millennium Challenge Corporation.
This clears the way for millions of dollars in aid and the first ever Compact Agreement between the two countries.
The Daily Post newspaper reports negotiations have been held over the past week in Sydney for a five-year agreement from 2006.
The Vanuatu delegation was led by the Director-General of the office of the Prime Minister, Jean Sese.
The document must now be endorsed by the Vanuatu parliament, the US Congress and the board of the state-owned Millennium Challenge Corporation.
It's not clear what projects the Vanuatu government wants funding for, or what policies the US would like to see taken up by the Vanuatu government in return for the money.
