Marshall Islands officials want the United States to extend grant funding because they are concerned a national trust fund will not be adequately capitalised when the funding is due to end in 2023.
The trust fund, established six years ago, is supposed to provide the Marshall Islands with a base for financing government operations when US assistance under the Compact of Free Association ends.
But in two of the first five years of its establishment, the trust fund lost money and its earnings in the other years have been poor.
Our correspondent in Majuro, Giff Johnson, says there could be severe repercussions for the Marshalls Islands if the US doesn't agree to an extension.
"The International Monetary Fund has projected that if the trust fund continues pretty much the way it has been going, it will only be producing about half what the US grant funding is providing in the last year of the compact funding arrangement, so it could be a very serious problem for the government."