The Asian Development Bank (ADB) said Sunday it has cancelled a 7.9 million dollar loan to the Marshall Islands because of mounting concerns about the cash-trapped Pacific nation's debt levels.
The loan was initially approved in 2002 to improve channels and harbors, navigational markers and other transportation-related aids for far-flung islands, where about one-third of the country's 58,000 people live.
But when the project moved into its design phase this year, an Australian contractor "substantially exceeded the project budget" which ballooned from 7.9 million dollars to 20 million, presidential office spokesman Bob Jericho said.
The "costs increased substantially, questioning the viability" of the loan, the ADB's desk officer for the Marshall Islands, Stephen Pollard, said.
According to the ADB's five-year strategy for the Marshall Islands, there are no new loan plans "due to Marshall Islands prior need to strengthen policy implementation, public institutions, and governance, and the government's continuing ADB loan arrears".
The tiny central Pacific state has been behind on loan repayments since late last year, and has paid back less than half of what it owes.
The Marshall Islands joined the ADB in 1992 and has received 11 loans totalling 78.2 million dollars and 47 technical assistance projects worth 18.4 million.
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