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Countries and Regions Country Partnership Strategies Document
IV. Country Performance and Lending LevelsA. Proposed Lending Level1. Lending Level46. On the basis of performance in implementing ADB-financed projects, ensuring project sustainability, and implementing policy reforms associated with recent ADB lending and TA operations, the Cook Islands is eligible to borrow $3 million equivalent from ADB's Asian Development Fund (ADF) resources during 2002-2004. 47. ADB's lending to the Cook Islands is very small and relatively infrequent, with lending operations of about $3 million equivalent and $5 million equivalent foreseen during the next five years. Lending of less than $5 million in one year is not readily divisible into ordinary capital resources (OCR) and ADF components. Projects that include a high poverty reduction component will be eligible for full ADF financing. Larger projects, that have components that include private sector participation or which will be operated on commercial lines will incorporate OCR lending components. OCR lending is considered most appropriate for projects in the energy, transport, and water supply sectors. Performance indicators that will trigger access to ADF resources are described in Appendix 4. In view of the nature and scale of ADB's program in the Cook Islands, failure to meet the requirements of the performance indicators will result in deferral of lending. 2. Graduation Policy48. Under the terms of a graduation policy for ADB's Developing Member Countries (1998), the Cook Islands is a Group B1 country and is eligible for ADF borrowing, with limited amounts of borrowing from ADB's OCR. However, the graduation policy states that limited OCR eligibility will be applied only after the external debt position improves. The country's debt position will be assessed in 2001 or early in 2002, and the issue of the Cook Islands' eligibility for OCR lending will be discussed with the Government after the assessment. B. Loan Program49. A loan for outer islands development is proposed for 2003. This will be of the nature of a program loan, with the establishment of an outer islands trust fund as a prime objective. The proposed loan is $3 million equivalent (Appendix 5). The project selection brief is in Appendix 6. C. Technical Assistance and Economic Sector Work Program50. TA grants will be provided for capacity building for economic and public sector management as follows: (i) Improvement of Corporate Management in Government Services, for $200,000 in 2001; and (ii) Improvement of Frontline Services, for $200,000, in 2002. TA will also be utilized flexibly to support the reform program, in the amounts of $200,000 in 2003 and $400,000 in 2004 (Appendix 5). 51. To support capacity building in environmental management and to prepare the policy reforms that will be necessary to ensure the sustainability of water supply and sanitation improvements, TA grants will be provided as follows: (i) Capacity Building in Environmental Monitoring, Regulation, and Community Participation, for $250,000, in 2002; and (ii) Utilities Regulation and Management, for $100,000, in 2004. 52. To support the Government's initiatives in reducing the income disparity between Rarotonga and the outer islands and for empowering island councils, TA grants will be provided: (i) project preparatory TA for the proposed Outer Islands Development loan, for $300,000, in 2001; and (ii) Capacity Building in Island Councils, particularly in maintaining assets, for $250,000, in 2003. The TA concept papers are in Appendix 7. The economic and sector work program is in Appendix 8. D. Summary of Changes53. Changes from the previous country assistance plan are as follows: (i) consideration of the proposed Waste Management Project loan by ADB's Board in 2001; (ii) consideration of the proposed Outer Islands Development Project loan by ADB's Board in 2003; (iii) project preparatory TA for the proposed Outer Islands Development Project for ADB approval in 2001; (iv) advisory TA for Improvement of Corporate Management in Government Services for ADB approval in 2001; (v) advisory TA for Capacity Building in Environmental Monitoring, Regulation, and Community Participation for ADB approval in 2002, replacing advisory TA for Community Participation in Environmental Sanitation; (vi) advisory TA for Utilities Regulation and Management for ADB approval in 2004; and (vii) deferral of a proposed Water Supply and Sanitation Project loan until 2005.
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