Pacific aid dropped sharply as COVID support ended, while China has re-emerged as the second largest donor in the region.
Aid to the Pacific dropped by 18 per cent following a COVID-era surge to help countries manage the fallout of the pandemic.As infrastructure is increasingly financed by loans and not grants, there are some worries for increased debt distress in the Pacific .The latest snapshot of Pacific aid shows development finance dropped sharply as COVID support fell away, while China has re-emerged as the second largest bilateral donor in the region.
Australia has notched a strategic victory in the Pacific after the region's leaders endorsed a major new initiative to reshape policing across the region.One of the reasons for the increase was that as borders reopened, Chinese workers could get back into the region, he added. Mr Dayant said Beijing had embraced a "smarter" approach by deploying more grants, rather than simply lending heavily to Pacific governments for major projects.In contrast, the map shows that Australia and other major donors have increasingly turned to lending in recent years: while loans accounted for only 12 per cent of the development "mix" in 2009, they accounted for 40 per cent in 2022.
"Some 60 per cent of infrastructure financing in the Pacific is now being financed by loans, and more and more donors want to invest in infrastructure" Mr Dayant said.
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