Marshall Islands Correspondent

The Marshall Islands has been limited to a single roundtrip Guam-Honolulu United Airlines Island Hopper flight per month since April. Majuro United ground staff donned full personal protection equipment for servicing the flights in May and June.
Photo courtesy of Jack Niedenthal

MAJURO, Marshall Islands — The heavy reliance of the Marshall Islands economy on government grants — not tourism, as is the case in Palau and the Federated States of Micronesia — has muted the COVID-19 impact on the country so far.

Majuro’s two hotels and an outer islands water sports resort have been hard hit by a government ban on inbound travel since March 8, and some local restaurants have seen the consequent downturn in customers. Except for fisheries and aviation fuel sales by Mobil, other sectors in the Marshall Islands remained relatively unscathed.

Both the Marshall Islands and FSM are projected to see a nearly 7% decline in their gross domestic product sover the next 18 months, while Palau, with its heavy reliance on its tourism industry, is facing a possible 22% decline, according to an economic analysis of the Covid-19 impact on these three US-affiliated islands by the Graduate School USA issued in May.

The Graduate School USA’s report on the Marshall Islands recommended the government together with donor partners consider a “COVID-19 response and mitigation program” in five areas, including: Health sector strengthening, an unemployment relief program through the social security program for workers not supported by the US CARES Act, a business relief program, a government spending control program, and acceleration of donor-funded infrastructure projects to expand employment options.

Interestingly, the FSM has been successful in both accessing U.S. CARES Act unemployment benefits funding and rolling out its program, while the Marshall Islands has been delayed in getting the program going.

In mid-June, the FSM government opened offices in each of its four states to assist citizens who have lost their jobs or suffered reduced income because of Covid-19. The offices were set up to assist FSM citizens to apply for financial support under the Pandemic Unemployment Assistance Program, which is funded by the U.S. government through the CARES Act.

In contrast, the Marshall Islands Labor Division as of early July did not have a date for when it will start rolling out the U.S.-funded PUA program. An official indicated “it will be very soon.”

The Marshall Islands “needs to prepare the necessary operational procedures it needs to run a smooth program, such as securing office space, contracting of temporary staff, and training on the different areas of the implementation plan which includes other agencies of the government such as Ministry of Finance and the Attorney General’s office, who have a role on the implementation of the program,” said Labor Division Deputy Director Peggy Trevor.

In June, the Marshall Islands government approved a $42 million COVID-19 response plan funded mainly by donor aid. It includes a $6 million relief fund for businesses. This was beginning to roll out in late June, with the Ministry of Finance managing the program that required businesses to show the impact through changes in tax filings and other information. The FSM started a business relief program in mid-May injecting nearly $1 million of funds to COVID-impacted companies, largely in the tourism industry.

Both FSM and the Marshall Islands have been limited to a single roundtrip Guam-Honolulu United Airlines Island Hopper flight per month since April. While the flow of visitors has dropped to virtually nothing, mail and cargo is still moving, with Asia Pacific Airlines flights twice weekly into Majuro and the FSM. mbj