By Giff Johnson
For Variety

MAJURO — Although a Marshall Islands trust fund is now over $75 million, with Taiwan joining the United States as a major contributor, Marshall Islands government officials worry that the trust fund will not be big enough to replace American aid to this central Pacific nation when grant funding ends in 2023.
A government report released this week in Majuro said that Taiwan has committed to providing $40 million over the next 16 years to the trust fund, joining annual U.S. funding.
But even with the additional funding from Taiwan, government officials in Majuro are expressing concern that the interest generate from the trust fund may not be able to replace the large-scale U.S. grant funding to the country.
The Marshall Islands, a former U.S. territory that remains heavily reliant on funding from Washington, is one of six Pacific islands that diplomatically recognize Taiwan. U.S. and Taiwan grants already account for about 70 percent of this year’s government budget of $124 million.
The trust fund stood at $66.1 million at the end of the last fiscal year (Sept. 30, 2006), a gain of about $6.8 million — or 11.5 percent — for the year, according to government officials. The trust fund is being managed by Wall Street financial firm Goldman Sachs.
This year’s annual U.S. contribution to the trust fund was about $8.9 million. The U.S. annual trust fund contribution increases each year by about $500,000, while its grant assistance declines by the same amount until 2023.
The U.S. Government Accountability Office reported last year that if trust fund investment earnings are low, the trust fund may be inadequate to replace U.S. government funding that will end in 2023.
But there is also little else to take the place of government funding, the GAO said. “The economic environments in the Federated States of Micronesia and the Marshall Islands have not improved significantly in recent years, and both countries show limited potential for development objectives of budgetary self-reliance and long-term economic advancement,” a GAO report said recently.
Marshall Islands government officials confirmed that the Taiwan government made the first of what are to be annual contributions to the trust fund beginning last year. It injected a total of $2.5 million into the fund in 2006.
Taiwan has been given a seat on the trust fund’s board of directors because of its major contribution to the fund, government officials reported. The board is chaired by the U.S. government, which has four officials on the board, who are joined by two from the Marshall Islands.