MANILA, PHILIPPINES - ADB today approved a US$2.83 million loan to help restore basic social services and economic activities in the Cook Islands in the aftermath of the devastating cyclones that hit the country earlier this year.
Between 4 February and 8 March 2005, five cyclones - with four bearing the maximum severity category of 5 - caused considerable damage to public infrastructure, businesses, and private homes in the Cook Islands. Productive activities in the outer islands were also disrupted, with possible long-term economic implications.
A comprehensive assessment estimates the total damage to be $7.9 million - a cost that would place a considerable burden on the Government budget and take away funds from development programs and reserves built for debt repayment.
The project will provide the Government with concessional resources needed to meet the costs of the recovery under a burden-shared recovery program, and thus help the Government manage public finances prudently and adhere to the performance ratios agreed in the 1998 Manila Agreement, which committed the Government to an economic reform program following the restructuring of its foreign debt.
"The burden-shared recovery program will mitigate the otherwise extended negative impacts of the 2005 cyclone damage, particularly on the poor, and enable the country to recover from the emergency with only a temporary setback," says Philip Erquiaga, Director General of ADB's Pacific Department.
The project will cover cleanup, reinstatement of infrastructure, restoration of basic service delivery structures and facilities, and restoration of essential materials and supplies related to roads, ports, power supply, water supply, waste management, and buildings.
As tropical cyclones are part of the maritime environment of the Cook Islands, a $600,000 technical assistance grant accompanies the loan to strengthen the country's disaster management and mitigation.
The total cost of the project is estimated at $7.9 million. ADB's loan will cover 36% of the project cost, while 32% will be covered by households and 15% by the Government. The Governments of Australia and New Zealand will cover 17% of the project cost equivalent to $1.16 million.
ADB's loan comes from its concessional Asian Development Fund. As provided under ADB's Disaster and Emergency Policy, the loan carries a 40-year term including a grace period of 10 years. Interest is charged at a rate of 1% per year and repayment of principal at 2% per year for the first 10 years after the grace period, and 4% per year after.
In 1997, ADB also supported the economic restoration of Manihiki, Pukapuka, and Rakahanga islands in the Cook Islands after a disaster caused by Cyclone Martin.