Montserrat is set to graduate from receiving Official Development Assistance (ODA) from the United Kingdom in 2026, shifting the way the island secures financial support for its development. The change means that rather than receiving guaranteed aid, Montserrat will need to apply for funding on a case-by-case basis, competing with UK local councils and other Overseas Territories for financial resources.
The announcement was confirmed during the 2025 Budget Support Mission (BSM) press conference, with Premier Reuben T. Meade calling it an “accounting issue.” Montserrat’s reclassification as a high-income territory means it no longer qualifies for automatic budgetary support under international aid rules. However, UK Foreign, Commonwealth & Development Office (FCDO) Deputy Director Adam Pile, who headed the BSM, assured that the UK remains committed to supporting Montserrat beyond the ODA graduation.
Montserrat’s High-Income Classification – A Technicality, Not an Economic Reality
Montserrat’s reclassification as a high-income country is based on Gross National Income (GNI) per capita, the primary metric used by the World Bank to determine economic classifications. However, GNI per capita does not fully reflect Montserrat’s economic reality.
Unlike larger economies with diverse private sectors, Montserrat has a small and limited private sector, and a large percentage of the population is employed by the civil service. The island’s economy has remained heavily dependent on UK aid, with ODA funding both capital projects and recurrent expenditures, including government salaries and essential services.
While Montserrat’s GNI per capita has increased, the economy remains highly vulnerable, lacking significant private sector investment and facing constraints in revenue generation. Without ODA, the government will need to rethink how it funds services and infrastructure, ensuring that essential projects are not stalled due to the loss of direct financial aid.
Montserrat Joins Other Overseas Territories in ODA Graduation
Montserrat is not the first UK Overseas Territory (OT) to transition out of ODA eligibility. The British Virgin Islands, Turks and Caicos Islands, and Anguilla have previously graduated after being classified as high-income economies.
The UK has pledged continued support for its Overseas Territories even after they graduate from ODA. In the 2024 UK and Overseas Territories Joint Ministerial Council communiqué, the UK reaffirmed its commitment to assisting territories through alternative funding mechanisms and technical support, acknowledging the unique challenges that come with this transition.
What Does Graduation from ODA Mean?
Montserrat’s removal from the list of ODA recipients means that direct financial aid from the UK will no longer be guaranteed. Instead, the island will have to:
- Apply for funding through UK Treasury processes, similar to how UK councils and other territories receive support.
- Provide strong data-driven justifications for all financial requests.
- Tap into alternative funding sources, including international grants and regional development programmes.
According to the OECD’s Development Assistance Committee (DAC) report, Montserrat’s graduation was deferred until October 2025, pending the submission of reliable Gross National Income (GNI) per capita data. If Montserrat remains a high-income country by that time, the graduation will take effect in 2026.
Government’s View on the Transition
Premier Reuben T. Meade acknowledged that the ODA graduation is largely a matter of accounting, stating that it is up to the UK Treasury and FCDO to manage the transition. “We haven’t yet graduated,” he said. “We will graduate next year. So we’re still getting official overseas aid at the moment, but that will change.”
Adam Pile reassured that Montserrat’s ODA graduation does not mean the UK will withdraw financial support entirely. “Ministers in the UK have been very clear that whilst Montserrat is graduating from eligibility to receive official development aid, that doesn’t mean we’re going to let Montserrat fall off a funding cliff,” he said. “You have a commitment from our ministers in the UK, and you’ve got a new government in the UK who are very excited about working with Montserrat and the other Overseas Territories. But they’ve been very clear that we will continue the funding for Montserrat. So in all honesty, it’s an accounting problem for me and my team in government.”
While this commitment suggests continued financial support, the structure of that support is expected to change. Instead of automatic ODA funding, Montserrat will need to apply for funds through UK Treasury processes, similar to how UK councils and other Overseas Territories receive financial assistance. This will require detailed project proposals and a strong justification for funding allocations.
A Shift Towards Technical Assistance
Governor Sarah Tucker explained that while Montserrat may no longer receive direct aid, the UK will continue to provide technical support and expertise in key areas such as healthcare, education, and policing.
“We use Adam and his team really as the Cabinet Office for us to reach back across other government departments,” Tucker said. “And we’ve seen an increase in that over the last few years.”
She noted that technical assistance has already been applied to sectors like water and sewage management, safeguarding, and healthcare. In particular, Montserrat has benefited from support in public health partnerships with the UK Health Security Agency and policing assistance from UK law enforcement agencies.
The education sector may also see increased UK involvement, with discussions underway to establish partnerships with UK local authorities for teacher recruitment and training.
Developing Grant Writing and Advocacy Skills
As Montserrat transitions away from ODA, Governor Tucker emphasised the importance of building expertise in grant writing to access new sources of funding. “It’s not just about funding, it’s about capability,” she said.
To compete for funding, Montserrat will need to develop strong business cases, demonstrate impact, and align proposals with donor priorities. The government has acknowledged that investment in training public servants in grant writing and negotiation will be necessary to secure long-term funding.
Future Economic Strategies
As part of Montserrat’s push for greater financial independence, the government has indicated plans to:
- Encourage private sector growth by involving local businesses in capital projects.
- Expand trade and investment opportunities by attracting UK and regional investors. (The February investment event has been postponed to later in the year, Premier Meade stated.)
- Increase collaboration with regional organisations such as CARICOM and the OECS to access development funding.
However, with a small tax base and limited sources of local revenue, Montserrat will need to develop a clear strategy for fiscal sustainability. The reliance on ODA for day-to-day government operations underscores the challenge ahead—how will the government replace this critical funding stream without placing an excessive burden on the local population?