MANILA, (ADB)-The Asian Development Bank (ADB) has approved a US$5.6 million (K25 million) grant to help the Federated States of Micronesia (FSM) contain fuel costs driven up by the Middle East conflict and keep essential public services running across the Pacific Island nation.
“In the outer islands, the price of fuel can determine whether a boat sails and medicine arrives,” said ADB President Masato Kanda.
“Those vital connections must not be cut by a conflict far beyond their shores. We are helping the Federated States of Micronesia protect its communities while it works to reduce its dependence on imported fuel.”
The grant will help finance the government’s US$20 million Crisis Response Plan, including a US$15 million Fuel Stabilisation Fund to cushion sharp increases in fuel prices. The plan will also help maintain essential services and provide temporary financial assistance to vulnerable households, while strengthening the country’s ability to withstand future economic shocks.
The Federated States of Micronesia imports all its petroleum. The state-owned FSM Petroleum Corporation reports that its daily fuel costs have surged by 76 percent, rapidly depleting reserves used to stabilise prices. Those reserves were expected to run out by the end of October.
The effects are already being felt. Electricity tariffs have risen across the country, by more than 32 percent in Kosrae, while higher transport costs have forced health authorities to reduce visits to outer islands, disrupting medical supply deliveries and immunisation services. Super Typhoon Sinlaku, which struck in April, has compounded the pressure on the country’s economy and essential infrastructure.
The programme aims to help at least 29,000 people in poor and vulnerable households maintain access to essential goods and services. The government will update its national social registry to identify households most in need and deliver temporary cash assistance, particularly in remote communities where transport and living costs are highest.
The grant is financed by the Asian Development Fund through ADB’s Countercyclical Support Facility. It will cover 28 percent of the government’s projected US$20 million financing gap for its crisis response, reducing the need for additional borrowing and protecting funds for essential services.
The assistance complements US$44.4 million in ADB-supported projects in renewable energy and more resilient energy and water systems. These ongoing projects will help the Federated States of Micronesia reduce its reliance on imported diesel and advance its goal of generating 70 percent of electricity from renewable sources by 2030.
ADB’s multi-donor-financed Asian Development Fund supports countries most in need to meet today’s challenges while building the foundations for lasting growth……PACNEWS