Tonga: Support for Economic and Strategic Management

Sovereign Project | 42449-012

Summary

The intended impact of the capacity development TA is enhanced resource allocation to foster economic growth and achieve national development priorities. The impact will be monitored through demonstrated improvements in the country performance assessment ratings in macroeconomic management and the quality of budgetary and financial management. The expected TA outcome will be the adoption by the Government of Tonga of improved economic and strategic management processes. The achievement of this outcome will be reflected in improvements in public expenditure and financial accountability ratings.

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Project Name Support for Economic and Strategic Management
Project Number 42449-012
Country Tonga
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7475-TON: Support for Economic and Strategic Management
Japan Special Fund US$ 500,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector Public sector management - Economic affairs management - Public expenditure and fiscal management
Gender Equity and Mainstreaming No gender elements
Description The intended impact of the capacity development TA is enhanced resource allocation to foster economic growth and achieve national development priorities. The impact will be monitored through demonstrated improvements in the country performance assessment ratings in macroeconomic management and the quality of budgetary and financial management. The expected TA outcome will be the adoption by the Government of Tonga of improved economic and strategic management processes. The achievement of this outcome will be reflected in improvements in public expenditure and financial accountability ratings.
Project Rationale and Linkage to Country/Regional Strategy

ADB's Country Partnership Strategy (CPS) 2007-2012 for Tonga supported the implementation of the Government's Strategic Development Plan Eight 2006/07-2008/09 (SDP-8). The CPS has three intervention pillars to address constraints on Tonga's growth: (i) integrated urban infrastructure development; (ii) prudent macroeconomic and fiscal management; and (iii) private sector development. A capacity development technical assistance (TA 4865) to support strategic planning and economic management primarily addressed Goal 2 of SDP 8: ensure macroeconomic stability through strengthening capacity in the areas of development planning, public financial management, macroeconomic forecasting, and fiscal planning and expenditure process. TA was provided in support of state-owned enterprise reform and private sector policy formulation.

The SDP-8 is coming to an end and preparation for a successor strategic planning document is well advanced with the recent endorsement by Cabinet of a new national strategic planning framework. The framework (i) takes a longer term strategic approach to achieving sustainable development (5-10 years) with attention placed on the key determinants of economic and social development, and with a (ii) focus on a limited number of uniquely national or whole of government priorities, with the implementation details will now be contained in the corporate plans of ministries and departments. Seven outcomes seen as fundamental to producing sustained and more equitable economic growth in Tonga are identified in the national strategic planning framework: (i) community development that meets service needs; (ii) private sector growth (through better engagement with the Government, appropriate incentives and streamlining of rules and regulations); (iii) constitutional reform; (iv) improved provision and maintenance of infrastructure; (v) increased performance of technical and vocational education and training to meet the challenges of maintaining and developing services and infrastructure; (vi) improved health of the people by minimizing the impact of non-communicable diseases, and (vii) environmental sustainability and climate change integrated into all planning and execution of programs. The framework is yet to be finalized, a process which will see targets and indicators added. The next level of planning will be ministry and department corporate plans, which are also expected to be linked to the budget process to give a more coherent alignment between national and ministry/department objectives and resource allocation.

The new framework requires a more robust management and monitoring of progress in the achievement of strategic objectives, and it challenges ministries to focus on the quality of their corporate plans. The reactivation of the Expenditure Review Committee (ERC), chaired by the Prime Minister, is giving more strategic direction to the Government's budget, financial management and economic policy making by ensuring alignment with the new strategic planning framework.

The three pillars of the ADB's strategy for Tonga remain valid in light of the outcome objectives highlighted under the new planning framework.

Impact The intended impact of the CDTA is inclusive economic growth. The impact will be monitored through demonstrated improvements in economic management against indicators to be established under the new strategic planning framework.
Project Outcome
Description of Outcome The expected TA outcomes will be improved economic and strategic management processes. The achievement of this outcome will be reflected in the successful implementation of the national strategic planning framework, which will seek to align key development objectives to sector and corporate plans, and annual budget allocations as measured both by the consistency, and achievement, of cascading indicators.
Progress Toward Outcome 14/11/11: Received draft final report in October, 2011
Implementation Progress
Description of Project Outputs

The proposed CDTA will provide support to the Government of Tonga over a period of two years. The following outputs are envisaged: (i) national strategic plan with targets and indicators being monitored and used in decision making, (ii) strategically aligned corporate plans with cascading targets and indicators being used, (iii) GDP and revenue forecasting model being used, (iv) robust and timely economic policy analysis and proposals placed in front of decision makers, (v) strategically aligned and used MTBF, and (vi) improved policy coordination.

Key activities for the first two outputs include (i) assisting the Government to formulate realistic performance targets and monitoring indicators, (ii) establishing monitoring and reporting processes, and (iii) capacity development in the formulation of ministry corporate plans to improve their quality and allow timely and effective implementation and monitoring of national development priorities given the shift from traditional developments plans to the new strategic planning framework.

For output 3, key activities will include (i) evaluation and customization of a GDP and revenue forecasting model, (ii) establishment of the model in Policy and Planning Division, NRBT and Statistics Department, (iii) development of supporting manuals, and (iv) conduct of relevant training and capacity building.

For output 4, activities will include (i) research on topical issues, in particular domestic and global trends and developments that are likely to impact on the Tongan economy, (ii) preparation of relevant and timely policy papers to advise the formulation of appropriate policy responses to mitigate impacts of domestic and external shocks.

For output 5, the activities include (i) developing a strategically aligned MTBF, and (ii) establishment of a process for update and use of the MTBF.

For output 6, the activities include (i) provision of advice to the Prime Minister, (ii) provision of support to ERC, and (iii) liaison with ministries and departments.

Status of Implementation Progress (Outputs, Activities, and Issues)

14/11/11: Project outputs in assisting Government with assisting and establishing monitoring and reporting process towards the activities has been acheived. The TA is on-tract for Dec 2011 closure.

01/09/2011: MTBFF specialist is currently working with the government on forecasting and modeling tools to achieve the performance target of the monitoring indicators of the ministries framework.

Geographical Location National
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design

The following outputs are envisaged: (i) regular monitoring and reporting on progress of the NSPF, (ii) use of a GDP and revenue forecasting model, (iii) presentation to decision makers of robust and timely economic policy analysis and proposals, (iv) an MTBF that is strategically aligned and used, and (v) improved policy coordination.

Key activities for output 1 include (i) establishing a monitoring and reporting process for the NSPF, and (ii) capacity development in the monitoring of corporate plan progress and the alignment of corporate plans with resource allocations. For output 2, key activities will include (i) evaluating and customizing a GDP and revenue-forecasting model; (ii) establishing the model in the Policy and Planning Division, the NRBT, and Statistics Department; (iii) developing supporting manuals; and (iv) conducting relevant training and capacity building. For output 3, activities will include (i) research on topical issues, in particular domestic and global trends and developments that are likely to impact on the Tongan economy; and (ii) preparation of relevant and timely policy papers to advise on the formulation of appropriate policy responses to mitigate the impacts of domestic and external shocks. For output 4, the activities include (i) developing a strategically aligned MTBF, and (ii) establishing a process for updating and using the MTBF. For output 5, the activities include (i) providing advice to the Prime Minister, (ii) providing support to ERC, and (iii) liaising between the ERC and ministries and departments.

As part of its constitutional reforms, Tonga expects to hold its first democratic elections at the end of 2010. A potential risk is that a new government, with limited parliamentary and ministerial experience, may emphasize different development priorities, raising uncertainties with respect to project implementation. One mitigating factor is the strengthening of the role of the chief executive officers and senior management officials in providing relevant advice to incoming political leaders, and having the capacity to ensure implementation continuity. Corporate planning activities undertaken to implement the NSPF will strengthen the capacity of chief executive officers, and will be complemented by ongoing public service reforms. ADB should continue to engage a wide range of key stakeholders in programming discussions and project and TA processing to ensure that a minimum level of awareness is maintained, and allow for continued support during post-election implementation.

There is a need for continuing coordination through regular dialogue and information sharing with other key development partners regarding economic and public sector reforms (Supplementary Appendix A), and with ADB's regional TA for Pacific Economic Management (footnote 4). ADB recently established a joint country focal office with the World Bank Group in Tonga, and a Tongan national has been selected as the country focal officer. This will strengthen collaboration between ADB and the World Bank, and also provide an on-the-ground presence for both institutions for ease of coordination with the government and other development partners.

During Project Implementation

MFNP will be the executing agency for the capacity development TA and will ensure that TA activities are closely coordinated with the implementing agencies .e.g., the Budget and Policy and Planning divisions, PMO (for forecasting and policy coordination), NRBT (for economic analysis, management and forecasting), Statistics Department (for forecasting), and line ministries (for corporate planning) as well as other key stakeholders. The ERC will be the steering committee for the capacity development TA, while the recently revived Macroeconomic Technical Committee will oversee the implementation of support from various development partners, and monitor progress by the implementing agencies. The Macroeconomic Coordinating Committee will be chaired by the secretary for finance and includes representatives from the key central agencies such as the PMO, NRBT, and Statistics Department. The Macroeconomic Technical Committee will also act as the conduit between the ERC (which provides policy direction), the Project and Aid Coordinating Committee (which conducts investment project appraisals), and line ministries.

The TA will be implemented over a period of 2 years, from January 2010 to December 2011. ADB will engage international, regional, and national consultants with expertise in planning, economic policy, economic modeling and budget analysis through a firm using the quality-and cost-based selection method, after seeking simplified technical proposals. An individual consultant will be selected in addition to a firm. The consultants will be engaged according to ADB's Guidelines on the Use of Consultants (2007, as amended from time to time). The TA will require about 35 person-months of consulting services comprising about 15 person-months of international, 8 person-months of international or regional, and 12 person-months of regional or national consultant services to carry out the activities as defined in the terms of reference (Appendix 3). The experts will be supplemented by ADB's regional TA resources, including the ADB/World Bank Group country focal officer and experts under ADB's TA for Pacific Economic Management, as required. The proceeds of the capacity development TA will be disbursed in line with ADB's Technical Assistance Disbursement Handbook.

The team leader will produce a concise inception report outlining the work program and milestones for the duration of the capacity development TA, and a final report summarizing the achievements, issues, lessons learned, and next steps. Throughout the capacity development TA, the team leader will submit (by e-mail) brief monthly progress reports summarizing TA activities, progress, issues, and constraints. Team members will produce inputs (reports) on their respective activities for the team leader's progress and final reports. The team leader's final report will be submitted in draft form at least 5 weeks prior to the end of the assignment, and the final report within 2 weeks of receipt of comments by the government and ADB.

Business Opportunities
Consulting Services

A team of international, regional and national consultants is required in planning, economic policy formulation, and economic modeling.

1. Planning and Economic Policy Specialist and Team Leader (international or regional)- services is required for 8 person-months.

2. Economic Modeling Specialist (international) - services is required for 3 person-months.

3. Economic and Strategy Adviser (international) - services is required for 12 person-months

4. Budget Adviser (regional or natinoal) - services is required for 12 person-months.

Responsible ADB Officer Laisiasa Tora
Responsible ADB Department Pacific Department
Responsible ADB Division Pacific Subregional Office in Suva, Fiji
Executing Agencies
Ministry of Finance and National PlanningMraeke@finance.gov.toMinistry of Finance & National Planning P O Box 87 Nuku
Timetable
Concept Clearance 16 Jul 2009
Fact Finding 08 Jun 2009 to 12 Jun 2009
MRM -
Approval 18 Dec 2009
Last Review Mission -
PDS Creation Date 22 Jul 2009
Last PDS Update 14 Nov 2011

TA 7475-TON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
18 Dec 2009 08 Jan 2010 08 Jan 2010 31 Dec 2011 31 Dec 2012 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
500,000.00 0.00 125,000.00 0.00 0.00 0.00 625,000.00 18 Dec 2009 482,613.72
Title Document Type Document Date
Support for Economic and Strategic Management TA Completion Reports Oct 2013
Support for Economic and Strategic Management Technical Assistance Reports Dec 2009

Safeguard Documents

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Evaluation Documents

See also: Independent Evaluation

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