th exploiting, except for high-grade phosphate. The
potential for a tourist industry exists, but the remote location, a
lack of adequate facilities, and limited air connections hinder
development. In November 2002, the country experienced a further
reduction in future revenues from the Compact of Free Association -
the agreement with the US in which Micronesia received $1.3 billion
in financial and technical assistance over a 15-year period until
2001. The country's medium-term economic outlook appears fragile due
not only to the reduction in US assistance but also to the slow
growth of the private sector. Geographical isolation and a poorly
developed infrastructure remain major impediments to long-term
growth.

Midway Islands
The economy is based on providing support services
for the national wildlife refuge activities located on the islands.
All food and manufactured goods must be imported.

Moldova
Moldova remains the poorest country in Europe despite recent
progress from its small economic base. It enjoys a favorable climate
and good farmland but has no major mineral deposits. As a result,
the economy depends heavily on agriculture, featuring fruits,
vegetables, wine, and tobacco. Moldova must import almost all of its
energy supplies from Russia. Energy shortages contributed to sharp
production declines after the breakup of the Soviet Union in 1991.
As part of an ambitious reform effort, Moldova introduced a
convertible currency, freed prices, stopped issuing preferential
credits to state enterprises, backed steady land privatization,
removed export controls, and freed interest rates. The government
entered into agreements with the World Bank and the IMF to promote
growth and reduce poverty. The economy returned to positive growth,
of 2.1% in 2000, 6.1% in 2001, 7.2% in 2002, and 6.3% in 2003.
Further reforms will come slowly because of strong political forces
backing government controls. The economy remains vulnerable to
higher fuel prices, poor agricultural weather, and the skepticism of
foreign investors.

Monaco
Monaco, bordering France on the Mediterranean coast, is a
popular resort, attracting tourists to its casino and pleasant
climate. In 2001, a major construction project extended the pier
used by cruise ships in the main harbor. The principality has
successfully sought to diversify into services and small,
high-value-added,