The Marshall Islands Just Quietly Implemented the First National Universal Basic Income (UBI)

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The Republic of the Marshall Islands (RMI) just did something most governments still insist is impossible. They passed and funded a nationwide, legally established, permanent universal basic income, and almost no one outside the Pacific and a few crypto news sites is talking about it yet.

It is not a pilot. It is not a time-limited experiment. It is a permanent system baked into the country’s fiscal architecture, with money already approved by their national legislature, and the first payments already scheduled to arrive by December 1st.

They call their new universal basic income program “Enra.”

What Enra actually does

Enra pays every Marshallese citizen living in the country a flat amount of around $800 per person per year, delivered in quarterly payments of about $200. Children are included. This is per person, not per household. There is no means test and no work requirement in the public rules. Enra is individual, universal within the citizen-resident population, unconditional in terms of income or employment, and regular.

That is the core definition of universal basic income. It is small in absolute terms, but structurally it is a real UBI.

People can choose to receive it by paper check, direct deposit into a bank account, or via Lomalo, which is a government-backed digital wallet that can hold a USD-linked stablecoin called USDM1. The purpose of including a digital wallet and transfer via stablecoin as an option is to lower barriers and costs to maximize inclusion.

How big this is relative to their economy

On paper the Marshall Islands may look like a poor country in per-capita GDP terms. Recent estimates put their GDP per capita at roughly $7,500 a year. Enra at roughly $800 per person per year is thus about 10–11 percent of GDP per capita.

Translate that into U.S. terms. U.S. GDP per capita is on the order of $86,000. Ten to eleven percent of that is roughly $9,000 per person per year, or about $750 per month, for every adult and child.

So in relative GDP terms, what the Marshall Islands just did is equivalent to the United States paying everyone a basic income of around $750 per month, no strings attached.

If you look at it as a share of the whole economy, Enra itself is projected at about 8 percent of GDP. A companion program for higher-need communities, called the Extraordinary Needs Distribution (END), adds roughly another 6 percent of GDP. Together they are spending about 14 percent of GDP on universal basic income plus targeted supports.

That is a real investment in the people of the Marshall Islands.

Extra support for people with greater needs

The Marshall Islands did not stop at a uniform UBI. They layered additional help on top of it.

The first layer is the Individual Support Distribution (ISD) “Enra Bwe Jen Lale Rara” or Enra for short, paid per person to all citizens residing in the country.

The second layer is the Extraordinary Needs Distribution (END) funded from a separate account in the same trust fund. This money is legally earmarked for atolls and islands in “extraordinary circumstances” with exceptional hardship, limited land, poor housing, and very weak local economies. It currently funds food, housing repair, and other support through local governments in high-need communities, especially outer islands affected by nuclear testing and isolation.

Policy documents go further and model an Outer Island Basic Income Support that would add a substantial per-person top-up for these communities, layered on top of Enra and funded out of END. That would effectively be a higher basic income for people in the most structurally disadvantaged locations.

On top of those, the same budget that launches Enra also creates:

• A new Social Support Program that pays $100 per month to eligible retirees and disabled people.
• An expanded early-childhood program paying regular stipends to mothers of children aged 0–5, aka a universal child allowance.

In other words, they are building a three-layer system: a universal floor, targeted extra support for structurally disadvantaged places, and classic categorical programs for old age, disability, and early childhood.

How they are paying for all of this

The cost will be about $27 million a year for Enra. None of it is funded by a new domestic tax. It is also not funded by some crypto scheme. It is funded from a U.S.-capitalized sovereign wealth fund created under the Compact of Free Association between the Marshall Islands and the United States.

The fund is formally called the Trust Fund for the People of the Republic of the Marshall Islands. It was created in 2003 when the original 1986 Compact was amended. The logic was simple: U.S. aid under the Compact would end after 2023, so the U.S. would pay money into a trust fund for 20 years, invest it, and then the earnings (and if needed some principal) would provide ongoing revenue after grants stopped, with similar logic to Alaska’s Permanent Fund continuing on after their oil revenue stops.

Under the 2003 terms, the U.S. contributed a baseline $7 million per year plus rising “step-up” amounts. The Marshall Islands itself and Taiwan also put money in. Over two decades that built a substantial asset base.

In 2023 the Compact was renegotiated again. Under the new deal the U.S. promised a large, front-loaded injection into the same trust fund:

• $200 million in 2024
• $200 million in 2025
• $200 million in 2026
• $100 million in 2027

After that there are no further scheduled U.S. contributions. The idea is that, beyond 2027, the fund mostly lives off investment returns.

By mid-2025, total trust-fund assets were around $1.3 billion across several accounts. The Enra and END programs together are authorized to draw about $50 million per year from those assets, or about 3.6% of the value of the fund, which has grown at an annual rate of 6.9% since 2004, making the UBI permanently sustainable as is.

So Enra is effectively a national dividend UBI financed out of a sovereign wealth fund, in a similar setup to Alaska, but capitalized by another country.

Why the United States is paying

To understand why this money exists you have to remember what the Marshall Islands is in the U.S. system.

After World War II, the Marshalls became part of the U.S.-administered Trust Territory of the Pacific Islands, the only UN trusteeship designated as “strategic.” That gave the U.S. wide latitude to close areas for security reasons. It used that status to turn much of the northern Marshalls into the Pacific Proving Grounds for historic nuclear weapons testing, and to build the missile test range at Kwajalein Atoll.

From 1946 to 1958 the U.S. detonated 67 nuclear devices in the Marshalls, at yields that in some cases dwarfed Hiroshima. Fallout and displacement affected entire atolls. Later, Kwajalein became a critical site for ballistic-missile tests and space tracking. It still is.

In 1979 the Marshall Islands became self-governing. In 1982 it negotiated the first Compact of Free Association with the United States, which entered into force in 1986. Under the Compact, the RMI is fully sovereign, but the U.S. retains full authority over defense and security and exclusive base rights, in exchange for aid and other benefits. The Compact also wrapped nuclear claims and compensation into a contained legal regime, something Marshallese leaders have repeatedly argued was inadequate.

So the trust fund that now pays UBI is the financial descendant of a very simple bargain: the U.S. used these islands for nuclear testing and continues to use them for missile testing, and strategic presence, and in exchange it pays. Some of that payment was structured as a long-term trust fund. The Marshall Islands has now chosen to use a slice of that trust-fund income to pay everyone a permanent universal basic income.

That choice is political, not automatic. The trust fund did not dictate UBI. Marshallese lawmakers decided late last year in a resolution introduced by a member of their legislature David Paul (now the Finance Minister) to make UBI the way some of that national wealth regularly reaches and benefits everyone.

Why Taiwan is in the picture

Taiwan also contributes to the trust fund, though on a much smaller scale than the United States. Its total commitment is on the order of $40 million spread over 20 years.

The reason is not mysterious. The Marshall Islands is one of the few countries that still recognizes Taiwan as sovereign. Beijing has been actively courting Pacific island nations with money and infrastructure deals to switch recognition. Taiwan responds with its own aid packages, budget support, agricultural missions, and, in this case, trust-fund contributions.

So the RMI UBI fund is indirectly and partially financed by the geopolitical struggle between Beijing and Taipei over diplomatic recognition, layered on top of the much older strategic relationship between the Marshall Islands and Washington, DC.

The VAT that does not exist yet

Right now the Marshall Islands does not have a value-added tax on consumption. It has a mix of gross-revenue taxes, wage taxes, import duties, and excise taxes. International advisors like the IMF and PFTAC have been pushing for a shift to a broad-based VAT plus a modern profit tax, with legislation already moving and implementation potentially in 2026.

None of Enra’s current funding comes from a VAT, because there is no VAT yet. All of the UBI and END money is coming from the Compact Trust Fund and related U.S. transfers.

The IMF has explicitly said that, once a VAT is in place though, some of its revenue could be “recycled” back to households as cash transfers to offset regressivity. If the Marshall Islands chooses to do that, VAT money could make the UBI amount larger, index it to inflation, or fund more generous top-ups for high-need communities. A VAT-boosted UBI would also echo Andrew Yang’s “Freedom Dividend” proposal.

At this point that is potential, not policy. Enra today is a fixed nominal amount written in legislation and funded from the trust fund. There is no automatic inflation indexing. Any increase over time will require deliberate political decisions and new budget authorizations.

The digital piece and the IMF’s opposition

The part of this story that caught the eye of crypto media is USDM1, the digital instrument that the Lomalo wallet can hold. The government has framed USDM1 as a kind of “digital sovereign bond” backed by U.S. Treasury assets, with yields used to support public spending. It is important here to separate payment rails from funding.

Enra is funded by the trust fund drawdowns. USDM1 is not the underlying source of the money. It is a way of delivering money, and just one option among several, to “ensure that no community is left behind,” as described by their finance minister.

The IMF has nonetheless raised red flags. From its perspective, a small island state with limited regulatory capacity issuing an innovative digital asset to global investors, and running UBI and other transfers partly through that system, introduces financial-stability and money-laundering risks. It has recommended dialing back the digital ambitions and replacing UBI with a traditional targeted scheme.

So you have a small country using a U.S.-capitalized sovereign fund to implement UBI, while the lender of last resort is telling it to target more and innovate less.

Why almost nobody has heard about this (yet)

At the moment, coverage of all this consists of:

• Local and regional outlets like the Marshall Islands Journal and Marianas Business Journal, which have followed Enra and END as part of normal domestic politics and budgeting.
• A handful of crypto and markets sites, which noticed the Lomalo app and the stablecoin and framed it as “Marshall Islands launches UBI on a digital wallet.”
• Dry IMF and trust-fund committee documents, which talk about “Individual Support Distributions” and “Extraordinary Needs Distributions” in the language of GDP, fiscal risks, and amortization schedules.

Major U.S. newspapers, wire services, and TV news have effectively ignored it so far. Even most UBI enthusiasts have not heard of it yet.

What this means for the global UBI debate

The Marshall Islands is small. Its history is specific. Its funding source is unusual. It is easy for large countries to wave this away as an outlier.

What matters is the structure.

A sovereign state has now:

• Legislated a permanent, nationwide, unconditional, individual, regular cash payment to all citizens residing in the country, successfully meeting the Basic Income Earth Network definition of a UBI.
• Committed around 8 percent of GDP to that UBI and around 6 percent of GDP to an additional distribution for higher-need communities.
• Funded it from a sovereign wealth fund built out of external rents, instead of pretending that money does not exist.

It has also acknowledged that outer islands facing long-term structural disadvantages need more than a flat, uniform benefit and is building layered cash-transfer architecture on top of the universal floor.

For larger economies this is not a plug-and-play blueprint. It is, however, a clean proof of concept.

A government can decide that a share of national wealth that currently accumulates in funds, accounts, and defense-linked transfers should be paid out as a universal basic income. It can do this at scale relative to its GDP. It can include children. It can layer extra support where it is needed most.

The Marshall Islands just did that.

So, who’s next?

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