Pacific

ADB provides a range of services to its 14 Pacific developing member countries, with lending and grant operations supplemented by extensive technical assistance, analytical work, and policy advice. ADB’s key result areas of stronger sustainable job growth, improved service delivery, and strengthened development processes were identified in ADB’s Pacific Strategy for 2005–2009: Responding to the Priorities of the Poor.

ADB approved a supplementary loan of $53.0 million for the Papua New Guinea Road Maintenance and Upgrading (Sector) Project (Table 18, Figure 5). It also approved two Asian Development Fund (ADF) grants: $15.0 million for the HIV/AIDS Prevention and Control in Rural Development Enclaves Project in Papua New Guinea and $350,000 for the Solomon Islands Road Improvement (Sector) Project. Cumulative lending for the region amounted to $1.7 billion (Table 17). ADB also raised $24.4 million in cofinancing from Australia and New Zealand for the 2 ADF-supported projects and approved 21 technical assistance grants of $22.9 million for the Pacific countries. Of these, 5 were for project preparatory technical assistance at $2.6 million, 12 for advisory technical assistance at $8.5 million, and 4 for regional technical assistance at $11.8 million. While the number of project preparatory and advisory technical assistance grants approved was lower than the annual average of 24 in 2001–2005, the total value was $0.8 million higher.

ADB published two reports on the socioeconomic and poverty implications of HIV/AIDS in the Pacific. The reports concluded that, except for Papua New Guinea, the HIV/AIDS epidemic in the Pacific generally affects groups with high-risk behaviors. Papua New Guinea is particularly vulnerable and will require strong political commitment of the Government and development partners to combat HIV/AIDS. ADB approved the HIV/AIDS Prevention and Control in Rural Development Enclaves Project, which involves the public and private sectors and major development partners in Papua New Guinea.

Engaging the Private Sector

Throughout the Pacific, ADB has strengthened its role in promoting private sector development. Two regional technical assistance projects are driving this approach: Improving Delivery of Infrastructure Services, approved in 2005; and Private Sector Development Initiative, approved in 2006.

By approving the second of these projects, ADB strengthened its long-term commitment to the region. This initiative will be implemented in cooperation with the Government of Australia. The $8.7 million technical assistance grant is promoting long-term economic growth by creating an enabling environment, including greater transparency, for private sector development in the Pacific. It is focusing on reforming state-owned enterprises, improving access to finance, and strengthening the business environment through legal and regulatory reforms. ADB will conduct diagnostic studies; provide technical expertise in priority reform areas; strengthen capacities in relevant government agencies and organizations; support regional initiatives; and disseminate information on good practices, reform opportunities, and results.

The Improving Delivery of Infrastructure Services Project made progress. A regional workshop was held in Sydney, Australia, in August 2006 for government officials and private sector representatives from 11 Pacific countries who are directly involved in infrastructure financing and planning. Participants discussed service delivery and efficiency, sustainable finance, and the role of the private sector. The workshop was a success, with outputs being used as a platform for the next phase of strategic action in the region.

Promoting Regional Cooperation and Integration

ADB supports Pacific regional cooperation and integration as a mechanism to meet national priorities, including poverty reduction. The Pacific strategy (2005–2009) provides the framework for ADB operations in the 14 Pacific developing member countries and for support for regional cooperation. Priority areas for ADB facilitation of regional cooperation in the Pacific are to be further identified in the regional cooperation strategy (2007–2011) due for completion in 2007.

ADB regional assistance in 2006 supported the Pacific’s own development strategy, the Pacific Plan endorsed by leaders of 16 Forum island countries in October 2005, and followed on from earlier ADB support for analytical input to the plan. Key priorities in the plan are supported by ADB’s private sector development initiative and through ADB support for regional statistical development. Two other regional technical assistance projects were approved—one that focuses on improving governance and accountability in Pacific developing member countries and one that aims to strengthen regional cooperation among them. A study on options to improve cooperation across the land border between Papua New Guinea and Indonesia was initiated. ADB continued its support to ongoing regional cooperation initiatives, including the Pacific Aviation Safety Office, Pacific Financial Technical Assistance Centre, and the regional HIV/AIDS strategy.

Pacific Aviation Safety Office

To promote regional cooperation and create shared capacity, ADB has helped eight Pacific countries—Cook Islands, Fiji Islands, Kiribati, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu—establish the Pacific Aviation Safety Office. The project, approved in 2005, is financed through a sovereign public sector regional loan to an intergovernmental organization and supported by guarantees by the participating countries. It is an example of how innovative intergovernmental finance can enable regional technical cooperation to improve service quality, reduce costs, and achieve financial sustainability. The project is now being implemented through an associated technical assistance grant for legal and regulatory harmonization, and is expected to conclude in 2010.

Managing the Environment

Pacific countries are highly dependent economically and culturally on their natural environment. However, the health and productivity of natural systems are coming under increasing pressures. A broad consensus has been reached over the past decade on the most significant environmental problems facing the Pacific. Eight priority concerns consistently emerge: threats to freshwater resources, degradation of the marine and coastal environment, degradation of land and forest, urbanization and waste management issues, depletion of biological diversity, energy-related environmental concerns, adaptation to climate change, and weak environmental governance.

ADB has helped selected Pacific developing member countries prepare country environmental analyses, which provide inputs to country strategies and programs and updates, and medium-term development strategies, particularly in meeting the eight key environmental challenges. Country environmental analyses have been completed in 2006 in two countries—Kiribati and Samoa. The studies identify priority areas in policy, institutional, and legislative mechanisms, as well as in programs or projects that will help mainstream environmental concerns into economic development planning. Country environmental analysis recommendations have been incorporated into the country strategy and program (2006–2010) of Papua New Guinea and the strategy and program update (2007–2011) of the Marshall Islands.

ADB pays attention to compliance with its environmental safeguard policy, rigorously reviewing projects during processing and implementation. In one case in 2006, the review of a proposed Papua New Guinea gas project generated specific recommendations for protecting the unique tropical rainforests with high biodiversity and for ensuring compliance with ADB’s forest policy.

Improving Governance and Preventing Corruption

Following ADB’s approval in July 2006 of the second governance and anticorruption action plan, the Pacific Department began preparing for its implementation. Discussions were held with the Government of Samoa, which agreed to participate in the first phase of the plan in 2007. This will involve preparing risk assessment and management plans for three themes (public financial management, procurement, and anticorruption measures) in key operational sectors.

ADB approved in December 2006 a regional technical assistance of $1.6 million for Strengthening Governance and Accountability in Pacific Island Countries. Cofinanced by Australia, this project has two components. The primary component is to strengthen public auditing capacity in Pacific island countries. The secondary component will strengthen the governance and anticorruption orientation of ADB’s country partnership strategies in the Pacific region.

Portfolio Management

Actual performance achieved against projected targets in contract awards ($41.5 million) and disbursements ($49.0 million) has been more than 100% (Table 16). Papua New Guinea contributed 56% of contract awards and 60% of disbursements, and Fiji Islands, 22% and 20%. Six loans and seven technical assistance projects have been delegated to the resident missions. The number of active technical assistance projects has been substantially reduced from an average of 115 during the past 3 years to 87 in 2006. Technical assistance savings of about $2.4 million were realized in 2006. Project-readiness criteria have been made mandatory for all projects being processed. Project administration unit meetings were held separately with resident missions.