Countries and Regions

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p. 5 of 5 BACK | NEXT I. Country Strategy II. Current Development Trends and Issues III. Implementation of the Country Strategy and Program IV. Portfolio Management Issues V. Country Performance and Lending Level

Country Strategy and Program Update 2003-2005: Kiribati

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V. Country Performance and Lending Levels

A. Lending Level Proposed

32. Consistent with ADB’s policy on performance-based allocations for Asian Development Fund (ADF) funding, the level of ADF funds allocated to Kiribati is linked to the country’s performance with respect to policy, institutional reforms, and portfolio management. The proposed base case 3-year rolling allocation is fixed at $7.4 million for 2003–2005. The actual allocation will depend upon performance against agreed upon triggers with respect to three lending scenarios. During the 2002 Country Programming Mission, it was observed that, in 2001, fiscal discipline was maintained and some progress was achieved in portfolio management. Thus, it was agreed to maintain the same lending level as in the 2001 CSPU. For the future, ADB and the Government agreed to monitor the following triggers: (i) maintenance of fiscal discipline and output budgeting format (macroeconomic), (ii) reduced subsidies to the state-owned enterprises and increased resource allocation to basic health and education (structural reform), (iii) protection of Tarawa’s water lens and completing NDS update (sectorspecific issues), and (iv) progress in implementing ongoing loan projects and TAs (portfolio management). The lending levels, based on an evaluation of performance with the corresponding performance-based allocation triggers, are given in Appendix 2, Table A2.8. The proposed assistance pipeline for lending products is in Appendix 2, Table A2.9. The project concept paper is in Appendix 3.

B. Nonlending Program

33. Substantive economic and sector work was carried out in Kiribati under the FEM TA. Additional sector work is being carried out under the project preparatory TA for the OIDP. Major economic work, including the preparation of the 2002 Pacific economic report and the sector/thematic roadmaps, will take place under the TA for poverty reduction strategies.

34. The total amount of TA proposed for 2003-2005 is about US$2.15 million, or an average of US$0.72 million per year. This program may be modified based on performance as the operational cycle unfolds. The proposed assistance pipeline for nonlending products and services is in Appendix 2, Table A2.10. The TA concept papers are in Appendix 4.

C. Summary of Changes to Lending and Nonlending Program

35. There are few changes in the program from the previous Kiribati country assistance plan for 2002–2004. The strategy, which has been focused on the key issues in the NDS with regard to improving the quality of life of the people throughout the country, remains basically the same. In the new strategy, however, there is a more overt recognition of the link between the NDS and poverty reduction. The proposed loan and TA activities have therefore not been changed significantly. The only changes are the addition of TA for caricature development, national water resource assessment and management, and outer islands ICT network³⁶ in accordance with the Government’s requests, and the ADB social development strategy for Kiribati.

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