Overview:
Palau will remain on the OECD’s Official Development Assistance recipients list longer than expected, with its graduation review pushed from 2026 to 2027. The delay means Palau will continue to qualify for development aid as the OECD reassesses its graduation criteria for high-income countries.
By: Bernadette Carreon
The Pacific island nation of Palau will remain on the Organization for Economic Co-operation and Development’s (OECD) list of Official Development Assistance (ODA) recipients for longer than initially anticipated.
According to the OECD website, it has delayed its scheduled review of which countries should graduate from the aid list, pushing it from 2026 to 2027.
“The DAC revises the list every three years. Countries that have exceeded the high-income threshold for three consecutive years at the time of the review graduate from the list. The last review took place in 2023. The next one was planned for 2026, but as the DAC is reviewing the graduation criteria, the 2026 Triennial Review of the DAC list has been postponed to 2027.”
This delay means Palau will continue to be eligible for development aid while the OECD reviews its rules for when countries should stop receiving assistance.
According to World Bank classifications for the 2024-2025 assessment period, “ three countries—Bulgaria, Palau, and Russia—moved from the upper-middle-income to the high-income category. “
Under DAC rules, countries must remain classified as high-income by the World Bank for three consecutive years to graduate from the ODA recipients list. Palau’s recent economic performance demonstrates sustained progress toward this threshold.
Palau’s economy has shown to have improved following the COVID-19 pandemic’s impact on its tourism sector, which contributes approximately 40% to GDP.
The country’s post-pandemic recovery saw GDP return to previous levels with real growth of 0.4%, while nominal Gross National Income increased by 10.0%.
With a GDP of $255.59 million in 2022 and a per capita income of around $13,764, Palau showed economic development despite the challenges faced by small island developing states, according to World Bank and US Department of State data.
Palau’ previously graduated from the ODA list in 2021 but was reinstated in 2022 after falling below the high-income threshold.
The OECD has postponed its regular review of the aid recipients list from 2026 to 2027.
The organization is taking time to examine and update its rules for determining when countries are ready to stop receiving aid. The last review was in 2023, and the next will now be in 2027.
This postponement affects not only Palau but also other countries approaching graduation. Guyana and Panama, which exceeded the high-income threshold in 2022, will be proposed for graduation in the 2027 review if they maintain high-income status through 2026.