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ADB Approves $10.82 Million Loan to Promote Recovery in Samoa
APIA, SAMOA – The Asian Development Bank (ADB) is providing a $10.82 million loan to Samoa to support inclusive economic growth. The loan is the second part of the Economic Recovery Support Program, with the first subprogram approved in April 2010.
The program is designed to support the Samoan Government improve fiscal management and implement structural measures that will place the economy on a sustainable medium-term growth path. The loan will contribute to the government’s overall budget financing needs which have increased as a result of the impacts of the global economic crisis and post-tsunami investment in infrastructure and buildings.
The first subprogram supported the government to improve fiscal management and implement structural measures to aid economic recovery, as well as protect the delivery of basic services to the vulnerable. Through the program the government was able to implement its public financial management reform plan; progress state-owned enterprise reform; liberalize the telecommunications sector; assist people directly affected by the 2009 tsunami; and introduce the free primary school scheme.
“The program assists Government in implementing their own priority policies in response to a double economic shock and is closely coordinated with Samoa’s other key development partners,” said Emma Veve, Principal Economist, Pacific Department, ADB.
The key activities of the program’s second phase include addressing post-tsunami reconstruction needs; implementation of the second phase of the public financial management reform progress; legislative changes which will add to the transparency of the foreign investment process and improve access to finance; increased policy-level consideration of the needs of the vulnerable; and enhanced consultation and engagement with stakeholders.
Samoa’s economy had been growing strongly before the global economic crisis triggered a 5.5% contraction in the fiscal year ending June 2009. A devastating tsunami later that year killed more than 140 people and damaged or destroyed entire villages, schools, and roads. The Government reports GDP growth of 3.1% in FY2011 and an expectation of 2.3% in FY2012.
This second loan under the program from ADB’s Special Funds will have a term of 24 years, with a grace period of 8 years. Interest is charged at 1% per annum, for the grace period and 1.5% for the rest of the term. The entire cost of the Samoa Economic Recovery Support Program is $26.8 million which includes phases one and two of the program.