Vanuatu's Prime Minister, Joe Natuman, and the Minister for Justice, Alfred Carlot, say New Zealand has agreed to fund the building and renovating of the country's jails.
The leaders says more than 9.3 million US dollars is being provided.
They say the new Correctional Facility near Port Vila is to be at Etas, which is 15 kilometres south of the capital.
The Director General for Justice, Joe Ligo, says the funding will also cover the renovation of the Low Risk Correctional Centre and the women's jail.
A juvenile section is to be included in the new Port Vila facility and the jails in Luganville on Santo and Isangel in Tanna.