Annual update of the Lowy Institute Pacific Aid Map
Covering 67 donors, tens of thousands of projects and activities, 70 million datapoints and more than US$36 billion in spending, the Lowy Institute Pacific Aid Map is the largest and most comprehensive database of aid and development funding ever assembled for the Pacific. The 2022 update now includes data on every aid project in the Pacific from 2008 to 2020.
The unprecedented disruption of the Covid-19 pandemic in the Pacific Islands also caused upheaval and significant changes in the scale and structure of aid programs from major donors to the region.
The 2022 edition of the Pacific Aid Map reveals the scale of this disruption. Major donors, such as Australia, reconfigured their aid programs and moved towards new forms of aid, including direct budget support in 2020. Multilateral donors, such as the Asian Development Bank, also made critical contributions to bolstering the region’s economies.
By contrast, China has played a very limited role in the region's overall pandemic response. However, its aid is ramping up in Kiribati and Solomon Islands, its two latest diplomatic partners.
- 2020 was the largest year on record in terms of aid to the Pacific. With more than US$3.3 billion disbursed, aid increased by 33 per cent from 2019 levels and more than doubled from 2008. Official development financing — the combination of grants, loans and other financial assistance — surged from US$3.1 billion in 2019 to reach a record US$4.2 billion in 2020, in response to the impact of the Covid-19 pandemic. Tourist-dependent countries received the largest percentage increase in development financing in 2020. Fiji’s and Palau’s more than doubled.
- China’s aggregate financing to the Pacific has continued to decline after peaking in 2016. Despite becoming a major new development partner in the Pacific, there has been surprisingly little visible response from China to the crisis in terms of the provision of new development financing. In fact, China’s total development finance fell to just US$187 million in 2020 — the lowest annual level recorded to date by the Pacific Aid Map since 2008. Moreover, our preliminary data suggests this decline has continued into 2021.
- China’s development assistance, however, remains a key diplomatic tool for Beijing in the Pacific. New Chinese development financing has become more closely targeted to specific countries, notably Kiribati and Solomon Islands — the two most recent Pacific Island countries to switch diplomatic ties from Taiwan to China. In both countries, sizeable new financing from China has displaced existing support from Taiwan. China has not given up on using development assistance to cement key relationships.
- The pandemic has led to a shift towards far greater direct budget support for Pacific governments whose economies have come under severe pressure due to the crisis, while other projects were disrupted by border and health restrictions. Significant budget support will likely continue for some time given the weak outlook for recovery and budget repair in the region.
- The record level of development finance reached in 2020 was primarily driven by a large increase in new loans to the Pacific, while total grant funding remained stagnant. Development financing flows to the Pacific have thus become much more reliant on loans rather than grants, dramatically accelerating the ongoing trend of the past decade.
- Australia is set to become an increasingly prominent lender to the Pacific at a time when debt sustainability in the region is already precarious. Considerable care will be required in implementing new loans to avoid contributing to future debt problems in the region.
ABOUT THE PACIFIC AID MAP
The Pacific Aid Map, launched in 2018, was designed to improve aid effectiveness in the Pacific through enhanced transparency. In 2022, the Pacific Aid Map interface has been updated to include a new filter for infrastructure spending, in addition to other streamlining. The Pacific Aid Map project receives funding from the Australian Government through the Department of Foreign Affairs and Trade.
Shane McLeod, Director Media and Communications