Regions and Countries

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p. 9 of 18 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies A. Natural Resources and Rural Development B. Infrastructure C. Governance Dimensions of Asian Development Bank Operations D. Gender Dimensions of Asian Development Bank Operations E. Private Sector Operations 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 - Tuvalu : III. Sector Strategies

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B. Infrastructure

1. Physical Infrastructure

22. The National Development Strategy 1995-1998 proposed a new Government policy to selectively seek concessional external loans for such major investment projects. However, the Government prudently will secure loans only for projects that would generate revenue. The Government also has taken an extremely conservative policy in the use of TTF earnings to the extent that the fund contributors regard the Government as a great saver but a poor spender.

23. While the ADB has attempted (without success) on two occasions to provide loans for physical infrastructure projects in Tuvalu, the country's size and isolation are making it very difficult to identify viable development investments. The only type of project loans viable in such an extreme environment can be policy based lending and/or project loans which support foreign currency earnings. Bilateral donors in the past have funded physical infrastructure projects. These donors have now largely shifted emphasis to social investments such as education, health, and other projects for HRD and gender and development (GAD).

24. The Government priority is placed on the development of the infrastructure in the outer islands. The IDP, through the Falekaupule Trust Fund, supports in a sustainable way high priority community-based projects focused on investment in economic infrastructure (roads, sea walls, boat lendings, etc.) especially in support of private sector development and improved local and export marketing; facilities and support services for income generating activities (community piggeries,handicraft show-rooms, etc.); and their maintenance and improvement.

2. Social Infrastructure

25. The IDP, through the Falekaupule Trust Fund, also supports in a sustainable way high priority community-based projects focused on investment in social infrastructures (water supply, sanitation, electrification, pre-schools, etc.) and their maintenance and improvement. The proposed assistance to TMS (education) aims, in the longer run, to increase the financial resource availability in the islands. In fact, the remittances from seamen trained at the TMS are by far the most important source of cash income in the islands. It is important that the TMS is upgraded to meet International Maritime Organization standards. Without the standards, Tuvalu seamen could be placed at risk of non getting jobs and revenue flows to the islands could suffer.

3. Finance

26. The National Bank of Tuvalu (NBT) holds more than A$12 million in saving accounts. The NBT invests most of its assets offshore, due to the shortage of domestic investment opportunities that can meet risk/return profile comparable to the offshore investments. It is envisioned that implementation of policy condition under the IDP will create a more conducive environment to increase share of financial sector assets to be invested domestically.

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