Tuvalu

Key trends and development challenges

Tuvalu is one of the world’s smallest independent nations, comprising nine low-lying coral atolls. With a GDP of $60 million, Tuvalu is the second-smallest economy in the Pacific, and accounts for 0.1% of regional GDP. Tuvalu has a population of 11,000 (2022), resulting in a GDP per capita of $5,300, ranking sixth in the Pacific. Despite its small size, Tuvalu’s Exclusive Economic Zone (EEZ) covers almost 750,000 square kilometres, the 38th-largest globally, and is comparable in size to the EEZ of China.

Tuvalu has the highest Official Development Assistance (ODA) to Gross National Income (GNI) ratio in the Pacific Islands region, with aid accounting for 80% of national income. In a global context, Tuvalu is the most aid-reliant country in the world, ranking first among 127 developing countries for its ODA/GNI ratio.

The Tuvalu government’s development agenda highlights five strategic areas: sustainable development, economic development, social development and inclusion, islands and culture, and infrastructure development. At 0.653, Tuvalu’s Human Development Index score ranks 132nd out of 193 ranked countries.

Development partners and sector trends

Between 2008 and 2022, annual Official Development Finance (ODF) disbursements to Tuvalu — including grants, loans, and other forms of assistance — averaged $44 million. Since 2011, Tuvalu has seen exclusively grant-based development financing. Tuvalu is the second-highest per capita aid recipient in the Pacific, in large part a product of its small population size. The International Monetary Fund ranks Tuvalu’s risk of debt distress as high.

The vast majority (85%) of ODF support to Tuvalu has come from six development partners, led by Australia (22%), Japan (15%), New Zealand (14%), the World Bank (14%), Taiwan (12%), and the Asian Development Bank (8%).

ODF disbursements in Tuvalu were largely consistent with regional trends in terms of sector distribution. The government and civil society sector featured prominently, accounting for more than 40% of incoming financing. Tuvalu also sees slightly higher than average spending in transportation, energy, and humanitarian aid. From 2014 onwards, Tuvalu has seen a greater emphasis on infrastructure spending. Tuvalu was one of the small number of Pacific states that did not see a significant spike in human development spending during the pandemic.

Since 2008, Tuvalu has received $92 million in development financing with a “principal” focus on either climate adaptation or mitigation. Over this same period, the country has seen $72 million in development financing with a “significant” focus on climate outcomes. From 2018, Tuvalu has seen a substantial rise in spending on climate-targeting projects. As a share of total ODF received by Tuvalu, “principal” climate projects make up 16% of total spending, well above the regional average of 9%. Spending on “significant” climate projects in Tuvalu makes up 13% of incoming funds, matching the regional average.

Between 2008 and 2022, Tuvalu received $6 million in development financing with a “principal” focus on gender equality, and $115 million in development financing with a “significant” focus on gender equality. “Principal” gender equality financing constituted 1% of ODF received by the country, around half the regional average of 2%. Conversely, “significant” marked gender financing made up 17% of incoming ODF, only slightly under the regional average of 21%. The largest project directly targeting gender equality in Tuvalu was the $1 million Pacific Women Shaping Pacific Development program, funded by Australia.