Vanuatu received VT25.4 billion in official development finance in 2024, the second-highest annual total on record, according to the Lowy Institute’s 2026 Pacific Aid Map launched today in Port Vila.

The report says development partners have disbursed VT355 billion to Vanuatu through more than 4,000 projects since 2008. Annual funding has remained between VT20 billion and VT26 billion since 2016, following the increase in support after Cyclone Pam in 2015.

Australia Remains Vanuatu’s Largest Partner

Australia remains Vanuatu’s largest development partner, providing VT128 billion since 2008, representing 37 per cent of all development finance received by the country. All Australian funding recorded in the report was provided as grants.

China is the second-largest partner, contributing VT56 billion, or 16 per cent, followed by New Zealand with VT41 billion, Japan with VT32 billion and the World Bank with VT25 billion.

Together, these five partners account for more than 80 per cent of Vanuatu’s development finance.

The report also highlights the growing role of multilateral institutions, whose share of annual funding increased from less than five per cent in 2008 to 27 per cent, or VT7.1 billion, in 2024.

Loans and Debt Repayments Increase

Although grants continue to make up most development finance, loans have become a more significant part of the funding mix.

Loans accounted for 15 per cent of development finance in 2024, totalling VT3.8 billion. Since 2008, Vanuatu has received VT66 billion in loans, representing 19 per cent of all development finance recorded.

China is Vanuatu’s largest lender, providing VT35 billion in loans, more than half of all lending to the country. Much of this funding supported road infrastructure, including the multi-stage Tanna and Malekula roads programme.

Other major lenders include the World Bank, which provided VT14 billion in loans, Japan with VT10 billion and the Asian Development Bank with VT5 billion.

The report warns that repayments on external public debt are expected to rise. World Bank data cited in the report shows repayments increasing from VT1.9 billion in 2024 to VT3.2 billion in 2026, reaching about VT3.6 billion annually by 2028.

China accounts for close to two-thirds of these payments. Based on International Monetary Fund projections, debt servicing is expected to take close to seven per cent of government revenue from 2026, nearly double the 2024 share.

The IMF rates Vanuatu’s risk of debt distress as high.

Infrastructure Funding Rises as Social Spending Falls

Infrastructure remains the largest area of development spending, reaching VT8 billion in 2024. Transport accounted for VT7.4 billion, representing more than a quarter of all development finance to Vanuatu.

Support for government and civil society also reached a record VT5.5 billion in 2024, up from VT4.3 billion in 2023.

However, funding for human development has declined since its pandemic-era peak. It fell from VT8.5 billion in 2021 to VT5.3 billion in 2024.

Education funding decreased from VT3.9 billion to VT2.5 billion over the same period, while health funding fell to VT1.4 billion in 2024, compared with VT3.7 billion in 2020.

Energy funding has also fluctuated. It reached a record VT1.8 billion in 2023 before dropping to VT200 million in 2024, despite Vanuatu’s target of achieving 100 per cent renewable electricity by 2035.

Economic Pressures Add to the Challenge

The report notes that Vanuatu faces rising debt repayments amid economic pressures, including the December 2024 Port Vila earthquake and the collapse of Air Vanuatu.

It also identifies higher fuel and food import costs across the Pacific following the Iran war as an additional pressure.

The Lowy Institute’s Pacific Aid Map tracks development finance across the Pacific and provides an overview of where funding comes from, how it is delivered and the sectors it supports.