Regions and Countries

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p. 6 of 18 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance: Sound Development Management E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Tonga : I. Country Performance Assessment

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E. Implementation Assessment

1. The Portfolio

19. The ADB has approved 14 loans totaling $47.8 million from ADF to Tonga since it joined the ADB in 1972. The most recent loan, to the power sector, was approved in December 1996 but was cancelled by the ADB in 1998 due to failure to become effective. Since 1972, a total of $10.8 million of technical assistance grants was provided for 43 projects. Of the 14 loans, project completion reports have been prepared for 11 projects, eight of which have been post-evaluated (Appendix 2, page 1). The current portfolio of projects under implementation consists of three loans in fisheries, agriculture, and transportation sectors (Appendix 2, page 2). Five capacity-building technical assistance (TA) projects are associated to these three loans. Most of the projects are completed or nearing completion. The performance under most projects is considered satisfactory.

20. The Fisheries Development Project⁵ yielded limited developmental impact mainly because of poor management on the part of Sea Star Fishing Co Ltd. (SSFCL). Furthermore, the key covenant regarding privatization of the Government shares has yet to be complied with. The EA has recently contracted out its fishing operations to a private sector contractor, but further efforts are needed if the company is to recover from its earlier financial losses. The Government has yet to commit to a time-bound action plan to gradually divest its interests in the firm.

21. The Outer Islands Agriculture Development Project⁶ is progressing generally well, but the key issues of Government counterpart funding, cost overruns, compliance with key operational covenants, restructuring MAF, and support to Tonga Trade remain high on the agenda.

22. The Transport Infrastructure Project⁷ is in its final stage of implementation, and the overall progress is considered satisfactory.

23. Recently, the Tonga Electric Power Board (TEPB) raised a number of issues regarding the outcome of the Power Development Project.⁸ TEPB has raised the view that the project failed to meet its developmental objectives due to poor performance of equipment procured under the loan and has threatened to take this matter to arbitration. The project was approved in February 1991 and the loan was closed on 30 September 1996. A second loan was approved in December 1996 for a Second Power Development Project,⁹ but the loan was subsequently cancelled in October 1998, due to failure to become effective. ADB is currently working with the Government and TEPB to resolve this matter.

2. Issues In Project Implementation

24. Implementation of a number of ADB projects in Tonga in the past has been constrained by the insufficient availability of counterpart funds and weak project management. Problems related to loan effectiveness have also been experienced under two projects. In addition, delays in the procurement of goods and services have been experienced due to lack of familiarity with the ADB’s procurement procedures, as well as burdensome and excessive coordination and approval procedures within both the Government and the ADB (e.g. Fisheries Development Project). Compliance with loan covenants, in particular with those related to financial statements, is another issue affecting all projects currently under implementation.

25. To improve project implementation and to assess the impact on the ground, project performance management systems, based on measurable success indicators, are gradually being introduced for all projects in Tonga. To avoid problems delaying loan effectiveness in future, (as experienced under the Fisheries Development Project and the Second Power Development Project), confirmation will be sought from the Government that all pipeline projects are firmly anchored in its national development plans and are given high priority with respect to counterpart funding and staffing.

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