ADB Focuses on Boosting Economic Growth, Delivering Services, and Promoting Good Governance in the Pacific

MANILA, PHILIPPINES (11 November 2004) - ADB today approved a five-year strategy for the Pacific that will promote new opportunities to boost the incomes of the poor and give them better access to services.

"All of ADB's developing member countries in the Pacific face significant challenges in generating broad-based and sustained economic growth from their mainly small and narrowly focused economies," says Jeremy Hovland, Director General of ADB's Pacific Department.

"While natural constraints are real, the quality of policies and institutions is a vital issue. Even in the smallest and most resource-poor countries there are opportunities to use existing, limited resources more efficiently and effectively. Regional cooperation also has significant potential for mitigating the constraints of capacity and scale encountered in the Pacific."

The new strategy provides a framework for the operations of ADB in 2005-2009 in its 14 developing member countries in the Pacific and for ADB support to Pacific regional cooperation. It has three objectives:

• A more conducive environment for the private sector. Creating an environment in which micro, small, and medium enterprises - domestic and foreign - can develop is crucial to creating jobs for the rapidly increasing numbers of young unemployed Pacific Islanders, and for the future economic and social well-being of the Pacific. This will require the countries of the Pacific to address complex issues, including land tenure and the role of governments. ADB will support this objective through technical assistance, private sector assessments, policy dialogue and by exploring public-private partnership options.

• Enhanced supply and demand for basic social services. ADB envisages taking a key role in improving the delivery of water and sanitation in the Pacific and, in coordination with other donors, will focus on health and education programs linked to the achievement of the Millennium Development Goals.

• The promotion of effective development processes. Encouraging greater participation and ownership in development programs by the people of the Pacific will be central to ensuring that benefits are sustained. Increased discussion of development challenges and cooperation among civil society, private sector groups, and governments will also be an important focus for ADB.

ADB's work in the region will move forward with a mixture of continuity and new approaches. The strategy maintains the strong focus on strengthening governance and effective management of the economy and public resources, but it introduces a more specific context for this work, by focusing on responding to the priorities of the poor.

On the basis of consultations with the poor in eight Pacific countries, these priorities are opportunities to earn cash income and improving access to basic social services.

ADB's most important contribution and primary mode of assistance will be through its knowledge products and services, provided mainly through grant-financed technical assistance, economic, thematic, and sector analytic work, and policy advice. ADB will strengthen its ability to communicate the information generated through this work to a broader audience. New ADB offices in Suva and Sydney will play a vital role. Lending for physical infrastructure will continue, often accompanied by technical assistance on related policy and institutional issues.

The Pacific Strategy highlights important differences among the Pacific developing member countries of the ADB, but also highlights common challenges. The strategy therefore retains a focus on country level operations tailored to local circumstances. In addition regional cooperation is expected to play an increasingly important complementary role in the context of the Pacific Plan, which Pacific Island leaders will launch in 2005.

The Strategy paper notes that this is an important juncture for the Pacific. Economic and development performance for the countries has been mixed over the past decade. Only four of the countries have achieved per capita economic growth at or near 3% since 1995. In four others economic performance has been sharply negative. Despite some success stories, the private sector, in general, has been unable to lead economic growth and create jobs, due to natural constraints being exacerbated by a policy and institutional environment that is highly unfriendly to business.

Poverty is a growing concern in many Pacific countries. Social indicators are also very mixed, with some Pacific countries on track to achieve the Millennium Development Goals, while others are not making significant progress.

The 14 countries covered by the strategy are Cook Islands, Fiji Islands, Kiribati, Marshall Islands, Federated States of Micronesia, Nauru, Papua New Guinea, Palau, Samoa, Solomon Islands, Timor-Leste, Tonga, Tuvalu, and Vanuatu.

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