ADB approves new loan and grant for Tonga budget support [1]
Wednesday, May 31, 2017 - 17:39
The Asian Development Bank has approved a $2.75 million loan and a $2.25 million grant to help Tonga strengthen it’s long-term economic growth prospects, while supporting and developing its capacity to respond to external economic shocks.
The loan and grant assistance will fund the second of three subprograms of the ADB supported Macroeconomic Resilience Program for Tonga.
The program from 2016 to 2018 builds on previous policy based support from ADB and other development partners.
Ananya Basu, Principle Economist from ADB’s Pacific Department said the Tongan government is undertaking important policy reforms to strengthen public financial management, promote healthy lifestyles and improve the performance of state owned enterprises.
“The ADB program will help further improve Tonga’s fiscal position and business environment.”
Policy actions supported by subprogram two includes the development of fiscal targets to help the government’s medium term planning, strengthening of tax revenue mobilization and the introduction of a new public service salary structure in line with fiscal targets.
In addition, to business environment reforms focus on public enterprise governance improvements and foreign investment legislation to make it easier to invest in Tonga.
ADB assistance is policy based, meaning the funds are released as budget support once policy actions outlined in the program are successfully completed.
It is part of a coordinated effort between various development partners, with parallel financing being provided by the EU, World Bank and the Governments of Australia and New Zealand.