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Why does New Caledonia receive financial grants from France?

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New Caledonia receives financial grants from France primarily to support its budget, with specific allocations directed toward essential public services including health and education. Additionally, these funds are used to maintain military and security forces within the territory.1

These subsidies are a significant component of the economy of New Caledonia, which also relies heavily on the mining of nickel and various service sectors. Because the territory maintains a chronic balance-of-trade deficit, French financial aid plays a crucial role in sustaining its administrative and social infrastructure.21