By Mary Lyn Fonua

Tonga’s very low economic growth rate means that employment, particularly for young people, cannot be realised, and new investment is needed in order to create new opportunities, the World Bank Vice President for East Asia and Pacific, Axel van Trotsenburg said in Nuku‘alofa yesterday, February 26.

His small delegation spent two days in Tonga as part of a regional visit to present a new initiative called “Pacific Possible” - a report that will analyse key development opportunities with significant potential for long-term impact. Increased tourism, ocean resources development, knowledge economy and labour mobility are four of the six focus areas.

He said that the World Bank Group is interested in scaling up its activities in the Pacific countries. Despite the fact that their income level is higher than what is allowed for under the World Bank's fund for the poorest, he said that an exception has been made to make them accessible for grant financing and credit financing with a grant element of up to 70%.

Challenges

After visiting the cyclone relief efforts in Ha‘apai and talking to key people in Tongatapu, including the Prime Minister, the Reserve Bank and the Tonga Chamber of Commerce and Industry, he said that the World Bank was ready to deepen its support for Tonga.

“This was a very good visit. Clearly you see the needs and also the challenges to provide support not only to the main island but also to the small islands that are very difficult challenges,” he said.

“At the same time, I hope that the country can realise not only its own advantage but also the regional dimension in its partnership with multilateral and bilateral areas to see how we can actually develop new areas, which can give a push that ultimately translates into higher growth rates and more jobs.”

This means not only action for the government but also for the private sector.

“We would welcome both to see how they can compliment each other, so you can increase investments overall and in that way increase new opportunities. I think new opportunities can be realised. We were talking about the ICT revolution, how that could change private sector businesses. We could talk about expansion of the tourism industry, so there are things that one can look at.”

Growth needs business confidence and it depends on good opportunities, he said.

“So you need to basically see how the different menu of criteria that are being considered by the private sector are falling into place. In that context we can actually provide governments with comparative analysis where countries have been succeeding or where countries have struggled. It's not like having a one size fits all approach,”

While in Tonga he said he talked in general, and not specifically, about Tonga's current moderate level of debt distress.

“We would advise countries in their debt management to be very open, transparent, and they should publish all the things, so that people can debate how this particular aspect evolves over time in a country,” he said.

Debt relief

In the past Mr van Trotsenburg in the World Bank has, together with the IMF, developed the largest debt relief for the world's poorest countries, the Africa Debt Initiative, and worked on countries that have serious debt problems. “I have managed this debts program which was massive, where we provided debts relief close to 30 billion dollars,” he said.

“I think that the World Bank is there to support developing countries in their aspirations to reduce or eliminate poverty and also boosting the income of particularly the lower and middling classes to provide new job opportunities. There is still a huge agenda out there,” he said.

“The question is how can you increase the ambition that growth rates could be higher, so that it provides more employment opportunities here?”

Mr van Trotsenburg acknowledged that there are very clear disadvantages to Pacific Islands because of geography and vulnerabilities that are coming from climate change.

“So there is also a responsibility of the international community to respond and as well as to be supportive. I think the Bank is trying to do its share. There is certainly from our side an interest to continue to scale up our activities in the Pacific and what we hope is that Tonga can also benefit with this.

“We have had a good relationship with Tonga and what we believe is that there is a lot more scope in this partnership. I think where countries are trying, the international community should stand by them,” he said.