The World Bank has approved an additional US$9 million in financing to help the Republic of the Marshall Islands manage sharply higher energy costs that are affecting households, businesses, public services and the national budget.
The new support will be provided through an existing Marshall Islands Development Policy Operation, which was first approved in July 2024 with US$21 million in funding. With this latest financing, total World Bank support under the operation rises to US$30 million, including US$12 million that remains available if the country faces an eligible catastrophe.
Marshall Islands Finance Minister David Paul said the assistance comes at an important moment as the government works to protect people from rising costs while keeping essential services running. He said the country remains focused on managing the current crisis responsibly while continuing reforms linked to public finances, energy security and long-term resilience.
Fuel dependence puts pressure on families and growth
The Marshall Islands is one of the world’s most dependent countries on imported fuel, food and essential goods, leaving it highly exposed to global energy market disruptions.
Fuel costs have tripled, and the country’s fuel import bill has increased by about US$40 million, equal to 11.5 percent of GDP. Economic growth for FY26 is now expected to slow to 2.0 percent, down from a pre-crisis forecast of 4.1 percent, while inflation is projected to reach 8.6 percent this fiscal year.
The impact is being felt across daily life and key sectors of the economy. Families are facing higher electricity, food and transport costs, while outer-island communities are especially vulnerable because they rely heavily on sea freight for basic supplies.
Fishing, which is the country’s largest source of export earnings and government revenue, is also expected to decline as higher fuel costs raise operating expenses and reduce activity.
Support linked to resilience and energy reform
The Marshall Islands declared a State of Economic Emergency on March 26, 2026, and has introduced measures to support households, protect essential services and manage fiscal pressures.
Omar Lyasse, World Bank Resident Representative for the North Pacific, said the financing gives the government needed breathing room while supporting reforms that can help build a stronger and more resilient economy.
The World Bank said the additional funding will help preserve progress on public financial management, disaster preparedness and climate resilience. It is also supporting the country’s longer-term energy transition through the Renewable Energy Generation and Access Increase Project, which is designed to reduce reliance on imported diesel.
Preparation of the supplemental financing was supported by the Africa Caribbean Pacific-European Union Disaster Risk Management Programme, managed by the Global Facility for Disaster Reduction and Recovery.
The assistance highlights the difficult balance facing small island economies as they respond to immediate cost-of-living pressures while investing in cleaner, more secure and more affordable energy systems for the future.
