Naoero shifting focus from aid to economic growth, president says

By Pacific Island Times News Staff

Naoero's economic transformation over the past decade reflects the strategy recommended by a New Zealand official, who advised Pacific leaders to cut reliance on aid and focus on growing domestic economies, President David Adeang said.

David Adeang

Naoero’s leader said his government has been pursuing a long-term economic strategy, which is delivering strong results.

 “From the outset we said that our future will not be defined by the UN’s ranking of Naoero as the world’s fifth most vulnerable nation to economic and climate shock,” Adeang said.

The Pacific island president issued the statement in support of New Zealand Foreign Minister Winston Peters’ remarks about the need for the Pacific region to "be far more clear about what we want going forward" and shift focus to bringing more partners into its economic development.

“It's unusual. I go to ASEAN, and it's all about the economy, the economy, economy, economy. I go to the Pacific, it's all about aid," Peters said in an interview with Pacific Mornings.

Supporting Peters’ call, Adeang noted that his own country has been driven “by bold thinking, innovation, close friendships with Australia, China and the ADB and long-term planning to create a stronger future.”

Naoero, formerly known as Nauru, experienced average annual growth in national income of 4.9 percent per capita between 2009 and 2024 and is anticipated to be classified as a high-income country, Adeang said, citing a report by Stephen Howes, director of the Development Policy Center at the Australian National University.

Howes highlighted Naoero’s economic transformation over the past decade, noting strong growth in national income, increased employment and the success of new sources of foreign income in supporting the nation’s development.

 His report also highlighted major economic improvements between the 2011 and 2021 censuses, including a 36 percent increase in jobs for men, a 74 percent increase in jobs for women, and employment growth from 47 percent to 64 percent of the population.

"While the 2021 census data is now a bit old, there is no sign of Naoero’s boom having ended," Howes wrote.

With a GDP of $168 million, Naoero is the third smallest economy in the Pacific, accounting for less than 0.5 percent of regional GDP. Nauru has a population of 11,905, resulting in a GDP per capita of $14,112—ranking fourth in the Pacific.

According to the Lowy Institute, Naoero has the ninth-highest official development assistance-to-GDP ratio in the Pacific, with aid accounting for 19 percent of GDP. In a global context, Nauru is among the most aid-reliant countries, with aid as a share of GDP ranking 14th out of 125 developing countries.

"The Nauruan government’s development agenda focuses on debt reduction and support for the transport sector," states the Lowy Institute's Pacific Aid report released in July.

Naoero's 2025–26 budget, themed “Leveraging Opportunities for Growth,” is structured around four pillars: economic diversification, social development, infrastructure and climate resilience.

"Between 2008 and 2024, annual official development finance (ODF) disbursements to Naoero—including grants, loans and other forms of assistance—averaged $42 million.

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The bulk of the loan financing Naoero received in 2020 came from Taiwan to support its national airline.

"However, due to Nauru’s switch of diplomatic recognition to China, the status of this loan is unclear. Despite the addition of this debt, the International Monetary Fund continues to rank the country’s risk of debt distress as sustainable," Lowy Institute said.

Reflecting on Naoero’s economic recovery journey, Adeang has previously highlighted the importance of transparency, trust and working closely with communities.

“We are succeeding because we were transparent, because we spoke directly with our people and because they trust that the sacrifices were for Naoero’s future,” he said.

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