PINA

Most government offices in the Marshall Islands began enforcing a new policy this week of closing by 3pm daily as a way to conserve fuel given uncertainties of fuel supply globally.

The move is to save energy and reduce the strain on the Marshalls Energy Company’s diesel fuel resources with both fuel shortages and skyrocketing prices seen on world markets due to the US and Israel’s attacks on Iran and its retaliation by closing the Strait of Hormuz to global shipping.

The 3pm daily closure directive for all non-essential government services was issued by the government’s Cabinet on 10 April as an Emergency Electricity Savings Policy.

Aside from the government office closure to reduce energy use, the emergency directive is expected to help the private sector through the mandate of government contracts for air conditioning maintenance and repair.

Government offices are expected to remain open during the lunch hour, allowing workers to operate seven hours daily instead of the usual eight.

A key provision about the shutdown of government offices by 3pm daily is that they are required to shut off air conditioners, lights and any other equipment drawing power. The aim is to reduce energy use by 30 percent over the 90 days of the emergency decree.

The 90-day emergency order mandates the Marshalls Energy Company, the government’s power utility company, to provide detailed monthly electricity bills to every government ministry, state-owned enterprise, and subsidised agency that detail each government offices power consumption compared to the 30-day period immediately prior to the emergency declaration.

“Compliance with the 90-Day Emergency Electricity Savings Policy is mandatory,” the declaration said.

“The National Energy Authority will monitor the monthly MEC baseline reports to verify progress toward the 30 percent reduction goal.”

Various exemptions are made to the requirement of shutting down by 3pm daily. All essential services are exempted from the closure order, including public schools, the College of the Marshall Islands and Majuro and Ebeye hospitals.

Secretary of Health Francyne Wase-Jacklick said the ministry is specifically exempted so there will not be disruptions.

“So essential services remain ongoing,” she said. “Outpatient, maternal child health, immunization, public health programs, and rehab services will continue as usual, with only internal adjustments to reduce energy use where possible.”

As a consequence of the 3pm daily closure of all non-essential government/agency/state owned enterprise offices, government workers will be working only 30 hours each week. They will, however, continue to be paid for a full week of work.

The 90-day Emergency Electricity Savings Policy will accomplish two things, Finance Minister David Paul said this week

It is “an opportunity to cut down on energy usage” (while it) ⁠⁠allows people to maintain their purchasing power,” he said.

Paul said the situation with skyrocketing fuel costs has caused “an affordability crisis – so it will be counterproductive if we are trying to address a problem while creating another one.”

This is why workers will still get their full paychecks, he said.

The new 90-day Emergency Electricity Savings Policy is likely to have a positive impact on the private sector.

The new policy directs the Ministry of Public Works, Infrastructure, and Utilities to implement an “immediate transition” to contracting out air conditioning cleaning and repair services to the private sector.

“Air conditioning constitutes the largest draw on the public power grid,” said the new government emergency policy. Performance and quality of air conditioners, therefore, has a big impact on their cost of power to operate.

Public Works “currently lacks the capacity to service all government units,” the policy said.

To resolve this, the ministry is directed to coordinate with the Ministry of Finance to immediately transition maintenance responsibilities and facilitate the contracting of air conditioning cleaning and repair services to the private sector.

Further, the policy directs that “every government ministry, state-owned enterprise, and subsidised agency must allocate funds from their current budgets to hire private contractors for air conditioning repairs, maintenance, and cleaning.

While agencies are directed to transition maintenance to the private sector, they are also encouraged to explore all available avenues – including internal staffing or collaborative partnership with other agencies – to ensure units are serviced.”

A part of the emergency order requires that within the 90-day period of the order, “every agency must compile a complete inventory of their air conditioning units.”

They must also secure a maintenance contract and schedule to ensure filters are cleaned every two-to-four weeks. While physical cleaning of all units may extend beyond this 90-day window, the finalized contracts and schedules must be in place.”

The International Monetary Fund (IMF) says rising oil and gas prices linked to the Middle East conflict are set to weaken growth, raise inflation and strain economies across Asia and the Pacific, with small island states among the most exposed.

Speaking at a press conference during the Spring Meetings, IMF Asia and Pacific Director Krishna Srinivasan said the region entered 2026 strong but now faces mounting pressure from an energy shock.

“Asia entered 2026 on a solid footing with growth remaining resilient despite the region bearing the brunt of U.S tariffs and heightened uncertainty. However, given the region’s high fossil fuel intensity and reliance on the conflict areas for key commodities, the new energy shock will have a negative impact on the region. The shock is raising inflation, weakening external balances, tightening financial conditions, and narrowing policy space.”

He said growth held up through late 2025, driven by exports and consumption.

“If you look at the chart here, growth across most Asian economies turned out stronger than expected in late 2025. This is in large part thanks to exports and consumption, which held up better than anticipated, supported by accommodative policies and financial conditions.”

Srinivasan said strong demand for technology goods helped offset weaker trade with the United States.

“With regard to exports, much of the recent strength has been driven by robust demand for tech goods… Asia’s exports to the U.S declined, but that to the rest of the world increased.”

But he warned the situation has shifted with rising energy prices.

“In the context of the war in the Middle East, all oil and gas prices have risen sharply, and there’s considerable uncertainty about how persistent the shock will be.”

He said the region is highly exposed due to heavy energy use and import dependence.

“The use of oil and gas amounts to about 4 percent of GDP for the region as a whole… this is nearly double Europe’s share.”

“Altogether, net oil and gas imports amount to about 2.5 percent of GDP for the region, rising to about 8 percent for some economies such as Singapore and Thailand.”

He added that supply chain risks are also growing.

“Disruptions of fertilisers and petrochemical inputs… can create broader supply chain pressures if the conflict persists.”

Despite the shock, Asia is still expected to drive global growth, although momentum is slowing.

“Regional growth is projected to moderate from 5 percent in 2025 to 4.4 percent in 2026 and 4.2 percent in 2027.”

“Inflation is projected to rise from 1.4 percent in 2025 to 2.6 percent in 2026 and to ease 2.4 percent in 2027.”

Srinivasan warned risks are now “firmly to the downside,” especially for vulnerable economies.

“This matters in parts of South Asia, Southeast Asia, and key among the Pacific Island countries.”

He said countries heavily reliant on imported fuel face the greatest risk.

“Economies that depend heavily on imported energy use are especially vulnerable.”

Under worse-case scenarios, the impact could deepen.

“This leads to a cumulative output loss of about 0.8 percent by 2027 for the major Asian economies… In the most severe scenario… cumulative output losses of almost 2 percent by 2027.”

He said policymakers must act carefully to manage the shock.

“The near-term priority is to absorb the shock while preserving space and price signals.”

On monetary policy, he said flexibility is key.

“But monetary policy should remain agile. A prolonged energy shock could weaken currencies and generate more persistent inflation.”

On fiscal policy, he warned against broad subsidies.

“Broad fuel subsidies, tax cuts, and general price caps may smoothen inflation in the short run, but they are costly, distortionary, often regressive, and very hard to unwind.”

Srinivasan said targeted support is the better option.

“Fiscal support should be temporary, with sunset clauses targeted to vulnerable households and viable firms.”

He also stressed the need for long-term reforms to build resilience.

“This shock strengthens the case for structural reform. It does not weaken it.”

He pointed to the need for better skills, stronger safety nets, and energy transition.

“We have been calling across Asia for stronger social safety nets… and last but not least, investment in alternative energy sources, energy efficiency, and power grids.”

Srinivasan said the region must act now to manage immediate risks while preparing for the future.

“So the near-term task is to absorb the shocks while preserving price signals and policy credibility. The medium-term task is to build a more resilient, more balanced, and more inclusive growth mode,” he said.