Tonga: Strengthening Public Financial Management Program
This report assesses the performance and highlight lessons learned from the Strengthening Public Financial Management Program in Tonga. The evaluation will support the ongoing corporate evaluation of the policy-based lending of the Asian Development Bank (ADB).
Both the targeted program outcome and impact were not met. The program’s reform measures were insufficient in achieving fiscal soundness. Greater efforts are still needed to attain a favorable fiscal position and in enhancing private sector participation in the economy. Building a sound fiscal position could involve pursuing far-reaching measures to help stabilize public sector wage bill, enhance revenue generation, and increase the scale of private sector participation. As such, deeper and continued structural reform measures than what had been previously implemented are essential. On the whole, the program is assessed less than successful.
As inputs to future operations in the country, the evaluation suggests that measures to address the public sector wage bill issue need to be closely monitored. Also, ADB could assist the government in assessing options that would be technically feasible and politically justifiable. Special attention should be given to initiatives to stabilize the wage bill, building up fiscal buffer, and expenditure management. Likewise, continued engagement is needed to sustain reform momentum. Capacity building measures need to be given greater impetus in future operations.