Vanuatu

Total land area spread over 82 islands	12,190km² ^[1]
Exclusive economic zone (EEZ) area	680,000km² ^[1]

Resident population (2008 estimate)	232,908 ^[2]
2015 forecast	277,572 ^[2]
Average annual population growth rate 2008-15	2.7%
Population density (2006)	19/km²
Women in parliament	1 out of 52 members
Human Development Report 2009 - HDI rankings (out of 182)	126^[5]

The political system in Vanuatu is generally described as unstable and fragmentary, with political competition based on patronage rather than competing policy platforms. It has been characterised by fierce infighting within unstable coalitions, with no fewer than 16 changes in government in the 13 years leading up to the 2004 elections. However, since then there has been a degree of stability in that the previous prime minister remained in power for the full term, albeit, with a regularly changing coalition. The pattern post 2009 elections has been similar with the prime minster remaining amidst coalition changes after a series of no confidence votes.

Head of State	President Iolu Abil - elected 3 September 2009. The president is elected for a period of five years by an electoral college comprising members of parliament and the presidents of the six provincial councils.
Head of Government	Following a vote of no confidence on 6 December 2010, Sato Kilman became Prime Minister.
Executive	The prime minister appoints a council of ministers and together they constitute the executive arm of government. The prime minister appoints the council of ministers, whose number may not exceed one quarter of the number of the members of parliament. There are 13 government ministries: - Ministry of Prime Minister - Ministry of Agriculure and Fisheries - Ministry of Education - Ministry of Finance and Economic Development - Ministry of Foreign Affairs - Ministry of Health - Ministry of Infrastructure and Public Utilities - Ministry of Internal Affairs - Ministry of Justice - Ministry of Lands, Geology and Mines - Ministry of Ni Vanuatu Business Development - Ministry of Sports and Youth Development - Ministry of Trade and Business Development and 27 government departments under them.
Civil Services	The capacity of the Vanuatu public sector to deliver quality public services has progressed, but remains limited as witnessed by its low score in table 1. Spending on health and education as a percentage of the overall budget is high by developing country standards, but remains insufficient to meet the needs of the increasing population. Apart from primary schools and first aid posts, most ni-Vanuatu have little contact with the state. The public sector is generally characterised by (i) limited human resource base, (ii) absence of modern human resource management and (iii) having limited reach outside of the major urban centres. The result is low productivity of staff, with high levels of key personnel exposure as a select few officers undertake many of the jobs with the greatest responsibility across the spectrum of the public service. This leads to a level of discontinuity in policy design and implementation, rendering capacity development largely unsustainable. The recruitment of public servants is done via one of three commissions – the Public Service Commission (PSC), the Police Service Commission, the Teaching Services Commission. The Judicial Service Commission looks after officials of the Courts. There is only one department that has its own legislation - the State Law Office - which allows them to recruit and set remuneration levels independently. The total number of permanent civil servants is approximately 4,500 of which approximately two thirds are male and majority tend to be in the 31-40 age bracket. The PSC has the largest number of employees and was established as part of the wide ranging civil service reforms established under the Comprehensive Reform Program (CRP) in 1998. The CRP effectively replaced the former Department for Personnel with an independent commission. However, the board of the all the commissions are political appointments and, unlike other jurisdictions, the commissions in Vanuatu continue to hold the power to recruit and dismiss as this power was not devolved to the line ministries. There have been two attempts to down size the civil service - one in 1994 and one in 1997. The first followed a civil service strike based around claims of corruption. The second was part of the CRP. Neither was particularly effective in terms of reducing overall numbers or increasing skills and conditions. Perhaps the most relevant potential change on the horizon is the proposal to change the current Human Resource Development Unit within the PSC into an Institute for Public Administration.
Local Government	Decentralisation has been a politically charged subject in Vanuatu since the colonial period, representing (together with language and education policy) the principal dispute between anglo and francophone parties. Francophone interests promoted a federal system, to allow francophone areas to retain closer ties with France. In reaction to this, the Vanua’aku Party pursued a centralising agenda as a means of preserving national unity. At independence eleven local government councils were created on a provisional basis, while decentralisation remained a topic of intense political debate. The Decentralisation Act of 1994 created six provincial government councils (more generally known as provinces) with each covering a group of islands. A further two municipal councils were declared in the urban centres of Port Vila (Efate) and Luganville (Santo). In 2009 Lenakel (Tanna) was declared the country's third municipality. Councillors are popularly elected and the provinces are headed by a president and the municipalities by a mayor. Local government staff are appointed by the council, with the exception of the provincial secretary generals and accountants who are appointed by the PSC. The reforms were poorly conceived and executed and the provincial structure is commonly seen as ineffective. Provincial governments are under-resourced and largely unable to deliver services outside the provincial headquarters. There is little coordination between provincial administrations and central government. There are a further 63 area councils under the provincial government and each has only a single employee (area secretary) responsible mainly for tax collection. A Decentralisation Review Committee was established in 2001 to assess local government structures, although its recommendations have not been acted upon. In 2008, the Department of Local Authorities revisited the issue.
Judiciary	The chief justice is appointed by the president after consultation with the prime minister and the leader of the opposition. Up to three other justices are appointed by the president on the advice of the Judicial Service Commission. Two or more members of the Supreme Court may constitute a Court of Appeal. Magistrate courts handle most routine legal matters. The legal system is based on British common law and French civil law. The Constitution also provides for village or island courts presided over by chiefs to deal with questions of customary law.
International Organisations	ACCT, ACP, ADB, C, FAO, G-77, IBRD, ICAO, ICRM, IDA, IFC, IFRCS, ILO, IMF, IMO, IMSO, IOC, ITU, ITUC, MIGA, NAM, OAS (observer), OIF, OPCW, PIF, SPC, UN, UNAMID, UNCTAD, UNESCO, UNIDO, UPU, WHO, WMO, WTO (observer>

The government has recently embarked on a number of initiatives aimed at improving both the delivery and reach of services, and the regulatory environment. A monitoring and evaluation unit has been established within the Department of Strategic Policy Planning and Aid Coordination in the Ministry of Prime Minister. Efforts are underway to improve working relationships across government, streamline reporting systems and improve communications (including an e-government project and roll out of the Financial Management Information System in the provinces). A review of the Public Service Act (1998) and the Public Service Staff Manual is also underway. The telecommunications sector has been opened up to competition, leading to dramatic increase in access to affordable services, and the regulatory function has been defined under the Telecommunications and Radiocommunications Regulation Act (2009). Similarly, the Utilities Regulatory Act (2007) provides for an independent authority to oversee the monitoring of existing water and electricity contracts. Existing reforms efforts need to be deepened. This includes the Public Service Commission playing its independent role under the Constitution, reviewing and reforming state owned enterprises, and providing for a free flow of information on government programs and services to members of parliament, citizens, civil society and development partners to increase accountability of leaders and government institutions. The overarching strategic planning tools are the Priorities and Action Agenda (PAA) and the Planning Long Acting Short (PLAS) policy statements. Each ministry has corporate or strategic plans, which should be reflected in the annual plans and budget submissions. However, the national budget remains the best indicator of the government's actual priorities. The information in the budget documents is comprehensive and the in-year budget reporting excellent by Pacific standards. There is limited reporting on state owned enterprises and fiscal risks. Whilst the overall credibility of the budget is well regarded, at the category level there are variations due to the extensive use of virements (the transfer of a surplus from one account to cover a deficit in another). The Finance Management Information System (FMIS) is probably the most comprehensive and well implemented in the region. It is possible to produce a range of management reports in real time. The budget is released based on cash flow submissions, and payroll is controlled by a system of financial visas that limit overspending. Procurement is fully devolved with amounts above 5 million vatu (approximately AUD$57,500) going through a tender board. There is no effective recording of expenditure arrears or liabilities although there have been improvements in the quantification of these in regard to having a whole of government balance sheet. However, accounting reports are excellent, with accounts reconciled and collated on a daily basis and reports produced in real time. The Public Finance and Economic Management Act was updated in 2009 and many of the new revisions further strengthen an already strong public financial system. The changes include creating a new treasury division to encompasses the former budget and planning units.

Vanuatu policy development and implementation framework

Vision

An educated, healthy and wealthy Vanuatu

Medium Term Expenditure Framework
Strategic Priorities	Good governance, growth, jobs, health, education, infrastructure
Sector Strategies	Fiscal Strategy: Budget Policy Statement and Government Investment Program (GIP)
Ministry Corporate Plans	Annual Budget: Recurrent Development and Aid donor funded programs
Ministries and departments, constitutional bodies, statutory bodies
Development outcomes

There is a major gap between the state institutions, concentrated in the urban areas, and the informal and traditional institutions that govern village life. This is regarded as being one of the key elements to the limited development success at the village level. The state has limited capacity as a provider of services, or to play an active role in rural development. This reflects not just the high costs of service delivery associated with Vanuatu's geography, but also the lack of any effective institutional structures at the regional level. In the absence of the state, traditional and informal institutions, including chiefs, churches and a range of modern NGO’s and community organisations, continue to provide basic governance functions and services at the village level. By most accounts, they are fairly robust and enjoy a high degree of popular legitimacy. However, changing expectations among the rural population, greater mobility and the spread of the formal economy are placing increasing strains on local and traditional institutions.

GNI per person 2007 (Atlas method)	US$1,840 ^[2]
GDP current (2009 estimate)	US$554m ^[3]
GDP per capita (2009 estimate)	NZ$2,301 ^[3]

Labour market‚ Formal sector (2000)

Number of employees	14,272 ^[4]
% of workforce	18% ^[4]
% Female	33% ^[4]
% Public sector	31% ^[4]
% Private sector	69% ^[4]

Growth in real GDP in Vanuatu has been relatively strong in recent years, with the past five years seeing increases in real incomes per capita for the first time in nearly a decade. Much of the improved economic performance comes off the back of long period of reform that began in the mid to late nineties. During the Comprehensive Reform Program (CRP) the government reduced import duties, removed a tax on turnover and replaced these lost revenues with a Value Added Tax (VAT). Later changes included the introduction of an excise tax in 2003 and increases to this in 2009. Financial reforms that began around 2001, focussing mainly around fiscal stability and budgetary control, led to the recent macroeconomic stability and rapid economic growth over the past five years. During this period there was also greater regulatory control placed on the offshore industry, and more recently the introduction of regulators for the newly liberalised telecoms industry and the energy sector. The strong fiscal controls have meant that over the past five years Vanuatu has managed to achieve a virtuous circle of economic growth combined with budget surpluses, reduced stock of debt (both domestic and external), large increases in the Reserve Bank reserves and net foreign assets, declining interest rates and also low levels of inflation. However, the major medium term risk appears to come from the various state owned enterprises, which range from a commodities marketing board to the national airline. Reform in this area has been slower than in the rest of the economy.

The media in Vanuatu sees the Press being independently owned with a state governed and owned corporation in broadcasting.

Telephone	Telecom Vanuatu Limited (TVL) is the leading provider of landlines, internet and mobile services throughout Vanuatu. Digicel is the competing telecommunications network with Telsat also offering internet services.
Internet	17,000 users as of November 08 ^[7]. 53,60 Facebook users as of March 2011 (2.45% of population) ^[8].
Newspapers	There are three independent newspapers- Daily Post (daily) Vanuatu Independent (weekly) and Vanuatu Times (weekly).
Television	Vanuatu Broadcasting and Television Corporation (VBTC) (state TV and radio broadcaster).
Radio	VBTC and BBC World and Radio Australia broadcast locally on FM radio.

Vanuatu has no official military although the Vanuatu Mobile Force (VMF) do perform some of the functions normally associated with an army. The VMF also includes the Police Maritime Wing. The VMF was established following the secessionist campaigns in Santo immediately following independence when the PNG defence force were called on to restore law and order. Since then there has been no real need for military intervention in Vanuatu. There have been sporadic tensions between the hierarchy of the regular police force and the VMF leading to a standoff in 2003. There is limited or no police presence in the outer islands where security is maintained by the network of chiefs, churches and community organisations. Vanuatu continues to be an active part of overseas UN peacekeeping missions and has had officers posted to the Solomon Islands, East Timor, Kosovo and Sudan.

The level of donor commitments to Vanuatu are relatively high, which reflects the country’s sound performance in terms of financial management. Australia remains the largest bilateral donor (the AusAID program for 2010-11 is AUD$66.4 million up from AUD$56.3 million in 2009-10) followed by New Zealand, the European Union and China. Australia’s development assistance program in Vanuatu is guided by the Vanuatu–Australia Partnership for Development (May 2009) and the Australia-Vanuatu Joint Development Cooperation Strategy 2005–2010, and supports the Vanuatu Government’s Priorities and Action Agenda 2006–2015, including: support for improving economic governance through strengthened budget processes, improved public financial management systems, improved management of government business enterprises and enhanced collection and management of statistics.