Nauru: Public Financial Management Reform Program

Sovereign Project | 45032-001

Summary

The proposed program will support the Government's efforts to improve its fiscal performance and the enabling environment for the private sector and facilitate the funding of essential services over the medium- to long-term as phosphate reserves are exhausted.

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Project Name Public Financial Management Reform Program
Project Number 45032-001
Country Nauru
Project Status Closed
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 0300-NAU: Public Financial Management Reform Program
Asian Development Fund US$ 4.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector Public sector management - Public expenditure and fiscal management
Gender Equity and Mainstreaming Effective gender mainstreaming
Description The proposed program will support the Government's efforts to improve its fiscal performance and the enabling environment for the private sector and facilitate the funding of essential services over the medium- to long-term as phosphate reserves are exhausted.
Project Rationale and Linkage to Country/Regional Strategy

The decline in phosphate exports since the late 1990s has meant that there has been no real growth in the Nauruan economy for over a decade. Primary phosphate reserves are estimated to be enough for 1-2 years of production, and deeper, secondary reserves might last 20 years. An intergenerational trust fund (ITF) is being established with ADB assistance so that income from phosphate mining can be saved for when the reserves are exhausted. Full exploitation of the phosphate resource, however, requires considerable investment to refurbish the necessary infrastructure. Improved governance, especially of the SOEs that dominate the economy, is also needed to encourage the public and private investment required. The Government has requested that the program grant be used as seed funding for the ITF.

The Nauru government's current PFM strategies are based on a desire to avoid a repeat of the prior practices in the 1980s and much of the 1990s that severely undermined the government's fiscal position and the Nauruan economy. While some progress has been made since 2004 in improving the quality of PFM compared with that prevailing previously, there are a considerable number of outstanding issues to be addressed to achieve a more satisfactory overall standard. A major improvement is also required in the financial performance and governance of Nauru's major SOEs. The NUA received a fuel subsidy of approximately A$6 million in FY2010 and blackouts/brownouts were common in early 2011. The poor dividend performance of RonPhos, the phosphate export company, has also been a strain on government finances.

Impact Support the government's longer-term development objectives of accelerated, sustained, and inclusive economic growth
Project Outcome
Description of Outcome Sustainable social protection to the population.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Improved public financial management

Support for the vulnerable

Improved corporate governance of state-owned enterprises

Status of Implementation Progress (Outputs, Activities, and Issues) The second tranche was released 3Q 2014, has seven conditions in three output areas: (i) stronger public financial management, (ii) more rigorous corporate governance and economic performance of selected SOEs, and (iii) a comprehensive legal and policy framework for equitable access to social services.
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
Responsible ADB Officer Milovan Lucich
Responsible ADB Department Pacific Department
Responsible ADB Division Pacific Liaison and Coordination Office in Sydney, Australia
Executing Agencies
Ministry of FinanceGovernment Building
Nauru
Timetable
Concept Clearance 30 Jan 2012
Fact Finding 01 Feb 2012 to 08 Feb 2012
MRM 14 Jun 2012
Approval 09 Aug 2012
Last Review Mission -
Last PDS Update 26 Nov 2014

Grant 0300-NAU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
09 Aug 2012 14 Sep 2012 27 Sep 2012 30 Sep 2014 - 21 Nov 2014
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 4.00 Cumulative Contract Awards
ADB 4.00 09 Aug 2012 4.00 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 09 Aug 2012 4.00 0.00 100%
Title Document Type Document Date
Public Financial Management Reform Program (Second Tranche) Progress Reports on Tranche Releases Jun 2014
Grant Agreement (Special Operations) for Public Financial Management Reform Program Grant Agreement Sep 2012
Public Financial Management Reform Program Reports and Recommendations of the President Jul 2012
Public Financial Management Reform Program Concept Papers Jan 2012

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation

No documents found.


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