Regions and Countries

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p. 46 of 47 BACK | NEXT Developing Asia and the Pacific The global economy Newly industrialized economies Central Asian republics, Azerbaijan and Mongolia People’s Republic of China Southeast Asia South Asia The Pacific Cook Islands Fiji Islands Kiribati Marshall Islands Federated States of Micronesia Nauru Papua New Guinea Samoa Solomon Islands Tonga Tuvalu Vanuatu

Tuvalu

Economic performance

Growth in 2000 is estimated to be 3 percent, led by construction. In 2000, the inflation rate increased to 5 percent, largely because of increased airfares. The lease of Tuvalu’s Internet domain address resulted in revenue of A$24.9 million, consisting of a windfall payment of A$19.3 million and three quarterly payments totaling A$5.6 million. For the first three quarters of 2000, a nominal return of 17 percent, or 10 percent real return, on the Tuvalu Trust Fund was achieved. Revenues from fishing license fees remained stable in 2000 at over A$9.0 million. Overall Tuvalu’s external position is sound because of these sources of revenues.

Domestic policies: Total government revenue at A$44 million was almost double the budget estimate for 2000 as a result of the windfall “dot” television revenue. Total government expenditure was A$22 million, including special development expenditure of A$8.2 million in 2000. The main development issues are devolving administrative responsibilities to the communities of the outer islands and improving infrastructure and services for the outer islands. A Falekaupule Trust Fund for island development was invested with professional fund managers in Australia in February 2000, with an initial capital base of A$11.2 million. The Government is renovating and expanding the system of water catchment and storage, and embarking on a program of providing electricity to the outer islands. Issues such as the structure of electricity tariffs and authority to manage the supply of electricity in the outer islands need to be resolved. Improved health, education, and telecommunications in the outer islands are also areas of concern.

ADB operations

Operational strategy: ADB’s operational strategy for Tuvalu aims to promote sustainable economic and social development by promoting human development; reforming the public sector, including corporatizing government businesses; enhancing private sector development; and improving the economic and social conditions of the outer islands. Assisting the Government in developing the potential for labor export is also an important task.

Policy dialogue: Policy dialogue with the Government continued on economic and financial management, public sector reform, and developing the outer islands.

Project implementation: Since joining ADB in 1993, Tuvalu has received one loan. No contract awards or disbursements were made during the year. Cumulative contract awards to Tuvalu totaled $2.8 million and cumulative disbursements, $2.8 million.

The ongoing loan—Island Development Program—was classified as satisfactory in terms of implementation progress and achieving its development objectives. Economic and social covenants for the loan were being implemented. The main development constraints include isolation, small and weak institutional capacity, and limited absorptive capacity.

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