ADB Backs Palau’s Fiscal and Energy Resilience Amid Global Shocks, Expands North Pacific Presence

KOROR, PALAU (1 September 2026) - Asian Development Bank (ADB) President Masato Kanda met with Palau President Surangel S. Whipps, Jr. on the sidelines of the 55th Pacific Islands Forum to discuss how Palau's sound fiscal management and a faster energy transition can reduce the country's exposure to external shock, including the economic impacts of the Middle East conflict.

"Palau has built real fiscal strength, and that strength is what allows a small economy to absorb shocks it did not create," said Mr. Kanda. "The Middle East conflict has pushed up the cost of imported fuel, and that lands directly on households, businesses, and public budgets. Fiscal buffers buy time. Diversifying energy supply is what reduces the exposure itself."

To bring support closer to the countries it serves, ADB is expanding its presence across the North Pacific. Together with Presidents Whipps, Hilda C. Heine of the Marshall Islands, and Wesley W. Simina of the Federated States of Micronesia, Mr. Kanda launched the upgrade of ADB's Pohnpei office to a North Pacific Subregional Office, which is expected to be operational before year-end and bring ADB closer to members working on shared challenges. A private sector hub in ADB's Palau office will serve all three countries.

Mr. Kanda also witnessed the signing of a $12.5 million concessional loan that completes a program supporting Palau's fiscal resilience, cofinanced by New Zealand. The program, led by Palauan institutions, has helped reduce public debt while strengthening revenue collection and rebuilding fiscal buffers. It has also established lasting institutions, including a Debt and Investment Office, funds to cushion the economy against downturns and disasters, and a National Planning Office to guide public spending.

ADB has more than $600 million in energy projects under implementation across the Pacific. In the region, energy security cannot be achieved alone. Regional cooperation lets countries share expertise, get better connected, attract investment, and build energy systems that are more resilient to external shocks. In Palau, diesel generates about three-quarters of electricity, leaving households and businesses exposed whenever global fuel prices rise. Accelerating the build-out of renewables, together with the grids, storage, and skilled people needed to run them, offers Palau energy it can rely on and afford.

At the Pacific Islands Forum Leaders Meeting, a leaders' dialogue with Mr. Kanda highlighted ADB's forthcoming Pacific Approach, which will guide the bank's partnership with 12 Pacific members through 2030. At a separate dialogue, Mr. Kanda will set out ADB's approach to the region's energy transition, including grid modernization, battery storage, and utility capacity. Throughout the Forum, he is also meeting with leaders of Pacific island countries to discuss ADB's support for their national priorities.

ADB is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members-50 from the region.