Aid spending hits record high in Pacific islands as COVID hits

SYDNEY, Oct 31 (Reuters) – A record $3.3 billion in aid flowed to the Pacific islands in 2020 as the COVID-19 pandemic hit, a 33% increase on the previous year, according to a report by the Lowy Institute think tank On Monday.

The pandemic has led to border closures, confronting tourism-dependent governments with the economic crisis. It has also led to a change in the way aid has been delivered, with more loans given than grants and more direct funding to help deliver essential services.

The Lowy Institute’s annual Pacific aid map showed Chinese aid to the region fell to $187 million in 2020, its lowest level since the institute began tracking aid flows in 2008.

Australia and New Zealand provided a third of all aid in 2020.

The map tracks development aid to the Pacific Islands, an effort the Institute says is increasing transparency in monetary flows, as China and the United States and its allies vie for influence in the strategically region. important.

Solomon Islands’ decision to sign a security pact with China in 2022 alarmed Washington and its allies, including Australia. Read more

Since 2008, Australia has provided 40% of all aid to the region, followed by New Zealand with 8.6%, Japan with 8.5% and China with 8.5% , according to the report. Chinese aid, mostly infrastructure loans, peaked in 2016.

Pacific Aid Map project director Alexandre Dayant said development aid remained a diplomatic tool for Beijing, with regional aid focusing on Kiribati and the Solomon Islands, which changed Taiwan’s diplomatic relations with Beijing a year earlier.

Dayant said the overall decline in Chinese aid to the region comes amid negative publicity over the cost of Chinese infrastructure loans and that Pacific island nations have more choice.

Australia, which has committed A$600m in infrastructure loans since 2019, is becoming a top lender in the Pacific and needed to take ‘considerable precautions’ not to contribute to debt problems of the region, according to the report.

Australia said last week it would spend an additional A$900 million ($576.99 million) in aid to the Pacific.

The United States also pledged an additional $800 million after hosting a dozen Pacific island leaders at a White House summit in September. Read more

($1 = 1.5598 Australian dollars)

(This story has been reclassified to correct a typo in paragraph 2)

Reporting by Kirsty Needham Editing by Tomasz Janowski

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