Vanuatu

Key trends and development challenges

Vanuatu is an independent republic located in the Pacific sub-region of Melanesia. With a GDP of $1.27 billion, Vanuatu is the fifth-largest economy in the Pacific and accounts for 2.9% of regional GDP. Vanuatu has a population of 324,085, resulting in a GDP per capita of $3,903 — ranking 11th in the Pacific. Its exclusive economic zone (EEZ) spans 663,200 square kilometres, the 39th-largest globally, comparable in size to the EEZ of Malaysia.

Vanuatu has the tenth-highest official development assistance (ODA) to GDP ratio in the Pacific, with aid accounting for 21% of GDP. In a global context, Vanuatu remains among the most aid-reliant countries in the world, with its aid as a share of GDP ranking 20th among 125 developing countries.

The Vanuatu government’s development agenda focuses on the balance between the social, environmental, and economic pillars of sustainable development. Vanuatu has faced a series of major shocks: the national carrier, Air Vanuatu, entered liquidation in May 2024; and the capital, Port Vila, was struck by a large earthquake in December 2024. Real GDP growth was projected at 1.7% in 2025, supported by a rebound in air-arrival tourism, though the economy remains highly exposed to natural disasters. At 0.621, Vanuatu’s Human Development Index score ranks 146th out of 193 ranked countries.

Between 2008 and 2024, annual official development finance (ODF) disbursements to Vanuatu — including grants, loans, and other forms of assistance — averaged $194 million. During this period, 19% of the development finance received by Vanuatu came in the form of loans, predominantly provided by China for roads projects. Principal among these has been the multi-stage Tanna and Malekula Roads rehabilitation program, which has seen total debt-financed spending of more than $155 million. The International Monetary Fund ranks Vanuatu’s risk of debt distress as high.

Development partners and sector trends

Between 2008 and 2024, the vast majority of ODF support to Vanuatu came from five development partners, led by Australia (37%), China (16%), New Zealand (12%), Japan (9%), and the World Bank (7%). ODF disbursements in Vanuatu were largely consistent with regional trends in terms of sector distribution. The transport sector featured prominently, accounting for more than a quarter of incoming financing. Vanuatu also sees higher-than-average spending in the education and humanitarian aid sectors, the latter a product of the country’s intense exposure to climatic disaster events.

Since 2014, Vanuatu has seen a greater emphasis on infrastructure spending. Vanuatu was one of a small number of Pacific states that did not see a significant spike in human development spending during the pandemic.

Since 2008, Vanuatu has received $149 million in development financing with a “principal” focus on either climate adaptation or mitigation. Over this same period, the country has seen $887 million in development financing with a “significant” focus on climate outcomes. Since the mid-2010s, Vanuatu has seen a substantial rise in spending on climate-targeting projects. As a share of total ODF received by Vanuatu, “principal” climate projects made up 5% of total spending, below the regional average of 8%. Conversely, spending on “significant” climate projects in Vanuatu made up 27% of incoming funds, well above the regional average of 17%.

Between 2008 and 2024, Vanuatu received $155 million in development financing with a “principal” focus on gender equality, and $1.1 billion in development financing with a “significant” focus on gender equality. “Principal” gender equality financing constituted 5% of ODF received by the country, well above the regional average of 2%. Similarly, “significant” marked gender financing made up 32% of incoming ODF, substantially above the regional average of 23%. The largest project targeting gender equality outcomes in Vanuatu was the $40 million Vanuatu–Australia Policing and Justice Program, funded by Australia.