2 May 2006

Marshall Islands government not expected to receive debt relief from ADB

3:25 pm on 2 May 2006

The Marshall Islands government is not expected to receive debt relief from the Asian Development bank over loans on which it has missed repayments.

Officials will request a reduction at the annual ADB meeting in India this week.

Our correspondent, Giff Johnson, says the repayments currently amount to 1 million U.S. dollars but because of the government's financial crisis, it has been unable to meet some.

He says the ADB is unlikely to agree to a reduction or to wipe the debt and is putting considerable pressure on the government to make the repayments or possibly face suspension of their technical assistance.

Giff Johnson says the government has been too quick to take loans on without proper evaluation.

"The problem with donor aid, and the loans certainly fall in that category, is that they are largely driven by the donors. The problem is that the island governments basically, say, oh yeah, that sounds great, where do we sign? And, they sign without necessarily evaluating it and then ten years later, they look back and say, oh that wasn't a very good loan."

Giff Johnson.