MANILA, PHILIPPINES (22 April 2020) — The Government of Palau will draw down on a $15 million policy-based loan from the Asian Development Bank’s (ADB) Disaster Resilience Program to help finance the country’s response to the novel coronavirus disease (COVID-19) pandemic.
A state of unavoidable public health emergency was declared on 17 March in Palau and the public health emergency and closure of its borders have put pressure on the country’s health system and economy. Palau is among the most tourism-driven economies in the Pacific, with tourism comprising about 40% of gross domestic product annually. With the pandemic restricting international travel, arrivals fell by 43% year-on-year in February and by 70% in March, putting severe pressure on businesses operating in tourism-linked sectors, such as hotels and restaurants, transportation, and retail trade.
“The COVID-19 pandemic threatens lives and livelihoods,” said ADB Director General for the Pacific Leah Gutierrez. “Palau’s first disaster contingent financing loan will allow the Government of Palau to respond more quickly and flexibly to their emerging needs at this uncertain time.”
The Asian Development Outlook 2020 report forecast Palau’s growth to contract further from -3.0% in 2019 to -4.5% in 2020, largely due to the impact of the pandemic on tourism. Palau’s economy is expected to recover as travel restrictions are gradually lifted, with growth projected to rebound to 1.2% in 2021.
Palau’s policy-based loan complements ADB’s $20 billion package—announced on 13 April—to support member economies as they cope with the pandemic. ADB is engaged in discussions with all its developing member countries, including those in the Pacific, on how best to utilize this support.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
