Foreign Assistance: Lessons Learned From Donors' Experiences in the Pacific Region Page: 23 of 60
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strategies are more likely to ensure the political commitment of the
recipient and are more likely to achieve outcomes. The ADB's approach
contrasts with the current structure of Compact assistance for the FSM
and the RMI, which generally applies the same objectives and strategies
for the two countries.
* Flexible Strategies Are Important to Adapt Assistance to Changing
Circumstances and Needs.
Flexibility in assistance strategies is enabling the donors to respond to
changing conditions in the Pacific. Flexibility not only allows donors to
curtail assistance if the funds are not used effectively or properly, but it
also permits donors to (1) adjust strategies to meet changing needs, such
as transferring resources from one sector to another, and (2) provide
rewards or incentives for good performance. The United States' assistance
to the FSM and the RMI through the first 15 years of the Compact was
distributed according to a negotiated formula that did not allow changes in
the distribution of the funds. Moreover, Interior officials believed that the
provision of assistance with the "full faith and credit" of the United States,
combined with a lack of controls typically available with domestic grant
assistance, severely limited the ability to change funding levels, even in
cases of misuse of funds.
* Well-designed Trust Funds Can Provide a Sustainable Source of Assistance
and Reduce Long-term Aid Dependence.
Successful trust funds in the Pacific can be designed to maintain and
protect the fund value through prudent investment and management.
Independent economic advisers, as required in the Tuvalu Trust Fund
agreement, can also provide guidance to the government on the most
effective use of fund proceeds. If the funds produce sufficient annual
revenue to meet recipient budget needs and the revenues are used wisely,
as has been the case with the Tuvalu Trust Fund, donors may have
opportunities to reduce their annual assistance levels. The Compact
negotiator has discussed similar trust funds for the FSM and the RMI in his
approach for further assistance. According to FSM and RMI officials, the
two countries have adopted their own trust fund agreements and
anticipate using the agreements to invest the funds from future Compact
* Sectorwide Approaches Depend on Recipient Governments' Commitment
GAO-01-808 Pacific Development Assistance Strategies
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United States. General Accounting Office. Foreign Assistance: Lessons Learned From Donors' Experiences in the Pacific Region, report, August 17, 2001; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc293232/m1/23/: accessed February 23, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.