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LESSONS:

Republic of the Marshall Islands: Outer Island Transport Infrastructure Project

sector: Transport | country: Marshall Islands, Republic of the

The project completion report (PCR) made a number of observations and suggests lessons, which remain valid. ADB should have recognized the Republic of the Marshall Islands’ (RMI) financial limitations even during project preparation and funded certain activities that were crucial to the success of the Project, such as the project management unit (PMU). Also, ADB staff could have provided more direct assistance in activities (such as consultant selection) where the executing agency (EA) was demonstrably weak. The PCR cited several other lessons. An important one with wider application involves ADB’s procurement guidelines, which do not cater well to small isolated countries with many and diverse subprojects. This needs to be reviewed and considered further. Similarly, the PCR suggested that applying overseas environmental practices and standards was probably not appropriate to the RMI and the small level of subproject impact.

The country’s poor financial situation was recognized as a risk from the beginning. The PCR rightfully raised the question as to ‘….whether ADB as the principle lender to RMI could have anticipated these difficulties and should have acted sooner’ than it did to limit wasted time and resources. The answer is likely yes, but this would have required additional ADB resources for monitoring and analysis. Nevertheless, this is a relevant question that should be raised during preparation and implementation of future projects prepared under similar circumstances.

The Project also demonstrates the importance of fiscal sustainability, especially for operation and maintenance, and for large projects in small countries. Guidelines on economic analysis of projects stipulate that such analysis is necessary when a project is large in relation to the Borrower’s economy.

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