Nauru

Key trends and development challenges

Nauru is a small island developing state located in the Pacific sub-region of Micronesia. With a GDP of $198 million, Nauru is the third-smallest economy in the Pacific Islands, accounting for less than 0.5% of regional GDP. Nauru has a population of 12,000, resulting in a GDP per capita of $16,790, ranking third in the Pacific.

Nauru has the ninth-highest official development assistance (ODA) to gross domestic product (GDP) ratio in the Pacific Islands region, with aid accounting for 19% of GDP. In a global context, Nauru is among the most aid-reliant countries in the world, with its aid as a share of GDP ranking 14th among 125 developing countries. The Nauruan government’s development agenda is focused on debt reduction and supporting the transport sector. At 0.703, Nauru’s Human Development Index score ranks 124th out of 193 ranked countries.

Between 2008 and 2023, annual official development finance (ODF) disbursements to Nauru — including grants, loans, and other forms of assistance — averaged $41 million. Less than 3% of the development finance received by Nauru during this period came in the form of loans. Almost all of the loan financing received by Nauru came in 2020 in the form of a support loan from Taiwan for new aircraft for the country’s national airline. However, due to Nauru’s switch of diplomatic recognition to China, the status of this loan is unclear. Despite the addition of this debt, the International Monetary Fund continues to rank the country’s risk of debt levels as sustainable.

Development partners and sector trends

More than 90% of ODF support to Nauru in 2023 came from three development partners — Australia (57%), Japan (29%), and New Zealand (5%).

ODF in Nauru was largely distinct from regional trends in terms of sector distribution. The country sees little spending on the communications sector but a high allocation of financing towards energy projects, when compared with the rest of the region. With the exception of the transport sector loan provided by Taiwan mentioned previously, spending on human development has largely outpaced infrastructure spending.

Since 2008, Nauru has received $85 million in development financing with a “principal” focus on either climate adaptation or mitigation. Over this same period, the country has seen $80 million in development financing with a “significant” focus on climate outcomes. Since the mid-2010s, Nauru has seen a gradual rise in climate-targeting projects. As a share of total ODF received by Nauru, “principal” climate projects made up 13% of total spending, above the Pacific regional average of 8%. Conversely, spending on “significant” climate projects in Nauru made up 11% of incoming funds, slightly below the regional average of 12%.

Between 2008 and 2023, Nauru received $3 million in development financing with a “principal” focus on gender equality, and $113 million in development financing with a “significant” focus on gender equality. “Principal” gender equality financing constituted less than 1% of ODF received by the country, below the regional average of 2%. “Significant” marked gender financing made up 17% of incoming ODF, below the regional average of 22%. The largest project directly targeting gender equality in Nauru was the multi-year Pacific Women Shaping Pacific Development program, funded by Australia.