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Annual Report 2002 : Pacific

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Cook Islands

Economic performance

The Cook Islands’ GDP growth rate slowed from 5.1% in FY2001 to 0.3% in FY2002 (ending 30 June 2002), thereby reducing fiscal revenues. The budget surplus declined from 1.5% in FY2001 to 0.3% of GDP in FY2002. Inflation decelerated from 9.4% in FY2001 to 3.9% in FY2002. The current account surplus stayed at 6.3% as a share of GDP in the same period. Net external debt decreased but was still high at 67% of GDP in FY2002, though much of this is concessional debt. Considering the debt market value calculated in present terms, the debt:GDP ratio was a manageable 44% in 2002.

ADB operations

Operational strategy: ADB’s strategy focuses on building sustainable capacity for sound economic and public sector management, promoting economic growth, and supporting private sector development. The 2002 program emphasized improving infrastructure and the environment and developing the outer islands.

Tourism underpins the country’s economic growth but loan assistance to small businesses is facilitating diversification into fisheries and agriculture. ADB’s strategy also seeks to improve public services by streamlining government planning and execution, and aligning resources with performance objectives.

Policy dialogue: In 2002, policy dialogue focused on continued growth through economic diversification and private sector development, in particular, by limiting the public sector’s call on the available credit in the banking system. ADB also supported better environmental management through capacity building for monitoring and regulating the environment especially in the outer islands. ADB also assisted the Government in establishing debt-level and capacity-to-pay benchmarks.

Loans and technical assistance: No loans or technical assistance were approved in 2002.

Project implementation: Since joining ADB in 1976, the Cook Islands has received 12 loans totaling $26.7 million, of which one was active at the end of 2002. Contract awards totaled $450,000, bringing the cumulative figure to $25.5 million. The contract awards ratio for 2002 was 23.4%—higher than ADB’s average of 22.6%. Disbursements in 2002 totaled $80,000, bringing cumulative disbursements to $22.8 million. The disbursement ratio was 4.1%—lower than the ADB-wide average of 22.2% (see tables 14–23 in the Statistical Annex).

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