What is the Public Expenditure Review (PER) for Nine Pacific Island Countries? - Key Findings and Recommendations

Jul 19, 2026

The Public Expenditure Review (PER) for Nine Pacific Island Countries, titled Raising Pasifika: Strengthening Government Finances to Enhance Human Capital in the Pacific, targets more efficient public spending in health, education, and social sectors while increasing domestic revenues. It highlights an education crisis, a high burden from non-communicable diseases, and extreme vulnerability to climate shocks and disasters. Recommendations cover carefully managing public spending, raising revenue without overburdening vulnerable people, improving education outcomes and data, and strengthening health system governance, referrals, and supply chains.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages4

Reading Time10 min

Overview of PER for PIC-9

Importance of reviewing public finances

Key areas of concern

Human capital and education gaps

Non-communicable diseases burden

Revenue risks and fiscal shocks

Pub lic Disclosure Authorized Pub lic Disclosure Authorized Pub lic Disclosure Authorized Pub lic Disclosure Authorized What is the Public Expenditure Review (PER) for Nine Pacific Island Countries? The Public Expenditure Review (PER) for Nine Pacific Island Countries – titled Raising Pasifika: Strengthening Government Finances to Enhance Human Capital in the Pacific – aims to improve the efficiency of public spending in the health, education, and social sectors, and to increase domestic revenues across nine Pacific Island Countries (specifically, the ‘PIC-9’): Republic of the Marshall Islands (RMI) Federated States of Micronesia (FSM) Palau Samoa Tonga Tuvalu Vanuatu This new World Bank report provides a set of recommendations for the PIC-9 governments to address many of their key public spending challenges and ultimately help each country and the wider Pacific region achieve its development goals. Why is a review of public finances so important Public finance has a critical role to play in building the knowledge, skills, and health that people need to reach their potential (known as ‘human capital’). This is a central element for a green, resilient, and inclusive recovery. Human capital is a crucial driver of economic growth and development, poverty reduction, and improved wellbeing. Limited human capital is a key constraint to inclusive growth in the PIC-9. Yet, human development in the PIC-9 (measured by the Human Capital Index, HCI) was low prior to the pandemic, relative to their level of income and public spending. As the PIC-9 emerge from the pandemic and other shocks, Pacific governments will need to turn their attention to building back fiscal buffers, supporting growth, and addressing key development goals. The pandemic and associated border closures have highlighted that to improve livelihoods and support a diversification in the drivers of economic growth, the PIC-9 must invest in their greatest resource: their people. What are the report’s key areas of concern? An education crisis, the non-communicable diseases (NCDs) epidemic, and high vulnerability to climate change and natural disasters impose substantial costs on the PIC-9 that require urgent action. The Human Capital Index shows that the average child born in the PIC-9 today will be only half as productive when they grow up as they would have been if they had optimal health and education. Across the region (except Palau), too many 10-year-olds are not acquiring minimum proficiency in literacy and numeracy. Largely due to Non-Communicable Diseases (NCDs) , Pacific Islanders lose over 37 years of life from premature morbidity and mortality for every 100 citizens , 16 percent more than in similar countries. Without intervention to address the NCDs epidemic, the economic burden is projected to increase by 5–9 percent of GDP by 2040. Implementation of the Pacific Agreement on Closer Economic Relations (PACER Plus)—a regional free trade agreement—could result in losses of 2–14 percent of revenues, curbing the region’s capacity to finance key development spending Finally, the Pacific is one of the world’s most disaster-prone regions , and among the most exposed to sea-level rise. Left unaddressed, these challenges risk making the economies weaker, societies more unequal, and families poorer and more vulnerable. D HALF AS PRODUCTIVE as if they’d had optimal health and education B A C What are the report’s key recommendations? 1 CAREFULLY MANAGE PUBLIC SPENDING Fiscal consolidation is necessary to balance country budgets, and to avoid a sharp cut to public services in the future. The fiscal adjustment could include a gradual increase in domestic revenues and containing expenditure at prudent levels, along with improving the quality of spending. A medium-term fiscal adjustment is needed to meet the region’s large development spending needs, while managing the risk of debt distress and rebuilding fiscal buffers to

FAQs

What is the goal of the PER for the PIC-9?

It aims to improve the efficiency of public spending in health, education, and social sectors and to increase domestic revenues across nine Pacific Island Countries.

Why is public finance review important for PIC-9 development?

Public finance underpins the human capital people need to build skills, health, and long-term well-being, supporting growth, poverty reduction, and inclusive recovery.

What are the report’s key recommendations for governments?

They include carefully managing public spending, increasing domestic revenue through fair and progressive measures, improving education outcomes and education data, and strengthening health care quality through governance, referrals, and supply chain systems.

Jul 19, 2026

Upload by Lucas Martin