ADB Support To Tonga Continues

ADB Support To Tonga Continues In Response To Economic Reform

NUKU’ALOFA, TONGA (7 June 2011) – .The Asian Development Bank (ADB) is providing the Government of Tonga with the second $5 million tranche of its Economic Support Program in response to wide-ranging economic reform in the country.

ADB launched the Economic Support Program at the height of the global financial crisis to provide the Government of Tonga with additional financial resources to protect spending on high priority public services, particularly those targeting vulnerable groups, and to continue structural reforms designed to increase economic growth in Tonga.

The Tongan government has improved financial accountability in the island nation in several ways. A recently completed Public Expenditure and Financial Accountability Assessment reviewed the condition of Tonga’s public expenditure, procurement and financial accountability systems. The review showed that about two-thirds of Tonga’s public financial management system (including public expenditure, procurement and financial accountability systems) is performing at an average level or better than international best practice.

The government has also improved macroeconomic and revenue forecasting, while making credible and viable plans to meet all financial ratio targets set in its FY2011 budget. It has also staffed an internal audit unit and prepared an operations manual for Treasury. All these measures should make it easier for the government to see how the economy is performing, assess its spending and manage its revenue accordingly.

“It is pleasing to see how the Government of Tonga has taken ownership of economic and fiscal management initiatives,” said Adrian Ruthenberg, Regional Director of ADB’s South Pacific Sub-Regional Office, which includes Tonga among its country responsibilities.

Tonga has continued to work to overcome structural impediments to growth, despite the onset of the global crisis in 2009 and the other pressures this placed on government operations. In 2010, for example, the government passed a Public Enterprise Amendment Bill to strengthen the way public enterprises are run. The Legislative Assembly also passed the Personal Property Securities Act which aims to promote business and consumer access to credit. The country also launched a Companies Registry, making it easier and quicker to register a new company.

Under the ADB program, the government has also put in place reforms to protect vulnerable groups. The cabinet has approved a social protection issues paper which identifies vulnerable groups and outlines options for enhanced social protection policies. There have also been reviews of health and education expenditure.

ADB’s Economic Support Program complements work being undertaken by other development partners in Tonga, including the Australian Agency for International development (AusAID), and the New Zealand Aid Programme.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2010, it approved a total of $13.8 billion in financing operations through loans, grants, guarantees, equity investments, and technical assistance projects. ADB also mobilized cofinancing amounting to $3.7 billion.

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