Countries and Regions

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p. 4 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 Levels

Country Strategy and Program Update 2004-2006: Vanuatu

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IV. Portfolio Management Issues

A. Portfolio Performance

31. ADB had granted, by 31 December 2002, nine loans and 51 TAs totaling $51.25 million and $12.75 million, respectively, since approval of the first TA for smallholder agriculture development in June 1982. The most recent loan, for cyclone emergency rehabilitation approved in April 1999 for $2.00 million, was successfully completed in December 2000. The only active loan as of 31 December 2002 was the Urban Infrastructure Project. Of the nine loans, five have been for infrastructure rehabilitation, two for development finance, and one each for agriculture extension and the CRP. The outstanding balance on ADB loans represents the majority of Vanuatu's external debt. Of the 51 TAs (including 11 project preparatory TAs), over 40% have been for institutional support and capacity building. Three project preparatory TAs have not led to subsequent loans.

32. Vanuatu's loan portfolio performance has improved in recent years, but still lags behind the ADB-wide average in terms of implementation delays and compliance with loan covenants. Impediments include over ambitious project output targets, inadequate counterpart support and institutional weaknesses, and limited private sector capacity, particularly outside the urban centers of Port Vila and Luganville. While attempts have been made to address these constraints, with varying success, the infrastructure projects appear to have fared much better, probably because the targets and accomplishments are more clearly defined, and the sense of urgency is perceived as greater, as demonstrated in the cyclone rehabilitation project. More attention is needed to implementation of loan covenants, however, and this requires better coordinated action between the executing agency and the central agencies. Portfolio indicators for loans are shown in Appendix 2, Tables A2.7-A2.10.

33. As of 31 December 2002, 11 TAs were active of which 5 were ongoing and 6 completed, but not financially closed. All but two of the active TAs have required extended completion dates averaging over 30 months. Delays are attributed to late fielding of consultants, variations in consultant assignments leading to additional inputs, absence or delay in provision of counterpart resources, and generally a lack of urgency in keeping to agreed project schedules. Despite the implementation delays, all completed TAs have been rated as successful.

B. Performance Monitoring and Evaluation

34. While many executing agencies lack the necessary skills for effective monitoring of project implementation, these have largely been provided by project management consultants and in-house advisors. The presence of a regional mission has also contributed significantly, allowing prompt intervention in problem solving through regular hands-on involvement. Provision has also been made through loans and TAs for training of counterpart staff both in ADB policies and procedures and in sector-related developments.

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