Regional: Pacific Economic Management-Response to the Global Crisis (Subproject 1)

Sovereign Project | 43045-022

Summary

The proposed TA is to strengthen the capacity of Pacific DMCs to manage for inclusive economic growth- specifically, to assis Pacific DMCs in using improved economic management processes. This is to be achieved by assistance that offers longer-term benefits by helping develop existing PDMCs systems and processes for economic management and the individual capacity of the region's economic managers. The proposed TA will help address long-standing instituional constriants to change by ecouraging demand for better economic management. Support is to focus on tipocal issues to capitalize on episodes of demand fro improved economic management. Innovative modalities will be pursued, including the use of approach and support for coalitions for change.

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Project Name Pacific Economic Management-Response to the Global Crisis (Subproject 1)
Project Number 43045-022
Country Regional
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7280-REG: Pacific Economic Management-Response to the Global Crisis (Subproject 1)
Technical Assistance Special Fund US$ 2.00 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Sector / Subsector

Public sector management - Economic affairs management

Gender Equity and Mainstreaming Gender equity
Description The proposed TA is to strengthen the capacity of Pacific DMCs to manage for inclusive economic growth- specifically, to assis Pacific DMCs in using improved economic management processes. This is to be achieved by assistance that offers longer-term benefits by helping develop existing PDMCs systems and processes for economic management and the individual capacity of the region's economic managers. The proposed TA will help address long-standing instituional constriants to change by ecouraging demand for better economic management. Support is to focus on tipocal issues to capitalize on episodes of demand fro improved economic management. Innovative modalities will be pursued, including the use of approach and support for coalitions for change.
Project Rationale and Linkage to Country/Regional Strategy

The 14 Pacific developing member countries (DMCs) of the Asian Development Bank (ADB) are either fragile states or exhibit strong characteristics of fragility. Weak economic performance contributes to this fragility, which is linked to shortcomings in policy and institutional environments as highlighted by ADB's country performance assessments. For these DMCs, ADB's long-term strategic framework 2008 2020 (Strategy 2020) posits, due to generally weak policy regimes, their often small size, economic vulnerability, and weak institutions&ADB must seek innovative means to strengthen the effectiveness of country-led models of engagement.

As part of the Pacific Studies Series, the expected impacts of the global financial and economic crisis and a sensible policy response were presented in an October 2008 policy brief released by ADB. The publication received wide coverage in the region, including at the October 2008 Pacific Forum Economic Ministers' Meeting. ADB has subsequently helped coordinate a process among the region's development partners aimed at helping Pacific DMCs respond to the global crisis. Consultation has shown there is strong demand for assistance among the Pacific DMCs most exposed to the adverse impacts of the global crisis.

This proposed regional cluster technical assistance (TA) responds to these challenges by adopting innovative approaches to assist economic management in the Pacific. It will help Pacific DMCs improve economic monitoring and the formulation and implementation of economic policy. Specifically, the first cluster will provide ADB's initial support for a country-led response to the global financial and economic crisis.

Impact Strengthened capacity of assisted Pacific DMCs to manage for inclusive economic growth.
Project Outcome
Description of Outcome Assisted Pacific DMCs use improved economic management processes
Progress Toward Outcome The TA pursued improvements in economic management processes by capitalizing on the demand from Pacific DMCs for better economic management. Subproject 1 focused on a response to the global economic crisis. The subproject provided for ADB's contribution to a joint effort by development partners to help Pacific DMCs lessen the effects of the global crisis through improved economic monitoring, policy analysis, and dialogue. Assistance was to be provided to Pacific DMCs that demonstrated an appreciation of the need to take action to improve economic management. The main contribution of the TA was provided via the provision of highly experienced lead advisers to offer guidance and support to Pacific DMC decision makers and senior economic advisers. They applied key lessons learned from the Pacific and other regions toward successful economic reform. This support was provided through: (i) the preparation of policy briefs on specific topics requested by the authorities; (ii) contributions to published policy documents, such as budget statements and monetary policy statements; (iii) comments and suggestions on policy submissions prepared internally; (iv) the conduct of workshops and internal presentations to key staff members; (v) support for on-the-job learning opportunities, to transfer needed skills to enhance prospects of sustainability. In order to enhance the prospects of sustainability, Subproject 1 also focused support on central banks in close cooperation with other donors, including PFTAC. Where central banks are not present , the focus of support was on the economic areas of treasuries and ministries of finance. The TA contributed to structured and targeted regional dialogue of heads of treasuries and ministries of finance and central banks, principally through support for three regional events. A publication, the Pacific Economic Monitor, was produced jointly by ADB staff and the PEM TA. Economic monitoring undertaken by the PEM TA was drawn on by ADB staff in undertaking their country reporting for the Monitor. The PEM TA team have also authored/co-authored assessments released in the Monitor. The Monitor helped to underpin the analytical content of economic policy dialogue, and was widely disseminated to raise public awareness of key public policy issues. The TA also assisted in strengthening existing monitoring systems in central banks and ministries of finance. The TA has made good progress in incorporating higher-quality economic analysis and policy advice into decision-making in the COO, SOL, TIM and TON. Less progress has been made in the FIJ . Progress cannot be assessed of support to KIR, NAU, RMI and VAN, as support to these Pacific DMCs is in the early stages. In terms of supporting at least one coalition of change of key stakeholders, good progress has been made through support for the central banks in SOL, TON and VAN, with a view to assisting the integration of the central banks in a joint approach to fiscal and monetary management. Less progress has been achieved in COO, KIR, NAU and the RMI which lack a central banking institution as a potential basis for coalition of change. The TA made good progress in terms of facilitating internally generated public discussion of economic management proposals. This was achieved through public discussion of: monetary policy in TON (via the monetary policy statements of the Reserve Bank of Tonga); national planning in SOL; tax reform in TIM; and social welfare reform in the COO. In the COO, support was provided for a simplified public debt model that could be released publicly by the Ministry of Finance and Economic Management to assist dialogue on public debt. The TA also supported discussion of a wide-range of economic reforms in the FIJ, although this was not in the public domain. Media coverage (print, radio and television) of key economic management issues was enhanced, primarily through the establishment of the Pacific Economic Monitor.
Implementation Progress
Description of Project Outputs

Expanded set of economic indicators, including lead indicators where feasible

Economic review assessments undertaken on topical economic issues

High-quality advice available for the open and transparent formulation of economic management

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

Output 1. The TA helped the central banks of SOL, TON and VAN undertake internal enhancements to their monitoring systems. While these enhancements will assist monetary management, they did not lead to public reporting of an expanded set of indicators. The TA was responsible for the development and subsequent public reporting via ADB's Pacific Economic Monitor and Pacdatabase of an expanded set of economic indicators. The TA's work largely met the potential improvements in the use of out-of-country data. This alleviated the need for separate preparation and reporting of these expanded indicators by Pacific DMCs. The TA identified an unanticipated demand from Pacific DMCs for more sophisticated economic management tools than enhanced economic monitoring. In response, the TA expanded the scope of tools supported under this output. A Fiscal Management Model was prepared for the COO as tool for managing for fiscal stability. A second application of the model, to TON, has commenced. The PEM TA research team assisted ADB staff develop a test version of a generic macroeconomic forecasting framework (the PacModel). The team developed the capacity to undertake debt sustainability analysis according to the IMF/WB's framework for low income countries. Debt sustainability analyses were prepared under the supervision of ADB staff for the ministries of finance in COO and TIM.

Output 2. The TA has undertaken a wide range of economic assessments for economic agencies in the COO, FIJ, SOL, TON, TIM, TUV and VAN. Assessments have addressed key issues for economic management and generally have been provided on a timely basis. They have covered monetary, fiscal and debt policy and management, tax and industry policy, and support for the most vulnerable members of the community. Elements of TA assessments have been released publicly via monetary policy statements in TON and budget papers in the FIJ and public discussion papers in COO and TON. Region-wide assessments have been provided to regional conferences covering social safety nets and the actions needed to expand the region's economic base. The TA has also prepared additional country and regional-level assessments that have been released through the Pacific Economic Monitor. The Monitor is produced jointly by ADB staff and the PEM TA. Economic monitoring undertaken by the PEM TA was drawn on by ADB staff in undertaking their country reporting for the Monitor. Members of the PEM TA have also authored or co-authored assessments released in the Monitor. There has been active media (print, radio and television) coverage of the Pacific Economic Monitor.

Output 3. In the COO, the TA supported a 2010 public review of the welfare system initiated by the Government as a response to the (social and fiscal) impact of the global economic crisis. In SOL, the TA facilitated a Government-led workshop for senior policy makers and donor partners on the preparation of a replacement of the Medium Term Development Strategy 2008 2010.The framework was submitted for consideration by the new government to be appointed following mid-year general elections. At the request of the TIM MoF, the PEM TA supported a dialogue event on tax policy for members of Parliamentary committees. This event was followed by presentations on tax and investment policy to a Government Investment Conference. In June 2009, the ADB (through the PEM TA) and the PFTAC hosted a special regional meeting of economic agencies on the global economic crisis. In February 2010, the UN agencies, region agencies and the ADB (through the PEM TA) hosted a regional conference in Vanuatu on the human face' of the global economic crisis. Attended by close to 200 representatives of government, civil society, academia and development partners (http://vanuatu2010.un.org.fj/).

In October 2010, the TA Team Leader and a Lead Adviser provided a keynote presentation to the 2010 FEMM in Niue, titled Expanding the Economic Base'.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services

Consultants will be engaged under subproject 1 on an intermittent basis of 3 9 months. Areas of expertise will include economic management and the closely related fields of public policy, including economic statistics. A range of experience levels and skills will be engaged to allow support to be tailored to the needs of each Pacific DMC. In addition to the team leader, up to 5 lead advisers, 5 advisers, and 15 economic analysts will be engaged. Expected results include improved economic monitoring frameworks, policy analysis and advice, and the transfer of capacity to participating agencies in the Pacific DMCs. An outline of the terms of reference is provided in Appendix 3.

Consultants will be selected and engaged by ADB in accordance with its Guidelines on the Use of Consultants (2007, as amended from time to time). TA consultants will be engaged on an individual basis in order to facilitate a rapid and flexible response to the global crisis, the topical issues to be explored by follow-on subprojects, and the engagement of specialists in economic management who are highly regarded in the region.

Disbursements under the TA will be made in accordance with ADB's Technical Assistance Disbursement Handbook, as amended from time to time. The TA is estimated to start in June 2009 and be completed in June 2011.

The main outputs will be disseminated widely at regional conferences, at other fora, and in the regional press to keep the public informed of key public policy issues and to help mobilize public support for improved economic management. The Pacific economic monitor will provide a key conduit for communicating economic and policy analysis prepared under the proposed TA. Outcome evaluation will be undertaken with the assistance of the steering committee.

Responsible ADB Officer Cecile L.H.F. Gregory
Responsible ADB Department Pacific Department
Responsible ADB Division Office of the Director General, PARD
Executing Agencies
Asian Development Bank Sungsup Rasungsupra@adb.orgPacific Department, Asian Development Bank
Timetable
Concept Clearance 06 Mar 2009
Fact Finding 14 Jan 2008 to 27 Jan 2008
MRM -
Approval 13 May 2009
Last Review Mission -
PDS Creation Date 17 Jul 2009
Last PDS Update 02 Sep 2011

TA 7280-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
13 May 2009 - 13 May 2009 30 Jun 2011 31 May 2012 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
2,000,000.00 0.00 300,000.00 0.00 0.00 0.00 2,300,000.00 13 May 2009 1,695,402.64

Safeguard Documents

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Evaluation Documents

See also: Independent Evaluation

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