The New Zealand government and the Asian Development Bank have agreed to help Vanuatu upgrade its ports and improve interisland shipping services.
The ADB says the project will provide subsidies to encourage private sector ship operators to provide services to remote, otherwise commercially unviable destinations.
It says Vanuatu's economy is dependent on agriculture, with production taking place mostly in remote, rural areas with poor access to suitable maritime infrastructure or reliable shipping services.
The project is expected to cost about 27 million US dollars.
The New Zealand government is to provide a grant of 12.6 million dollars, with the ADB offering a loan of almost 11 million.