MANILA, PHILIPPINES - The Asian Development Bank (ADB) is providing program loan assistance of up to $26.8 million to Samoa to help the Pacific Island nation revive its economy in the wake of the global financial crisis and devastating tsunami of September 2009.
Up to $16 million equivalent will be extended for the first phase of the Economic Recovery Support Program, with an additional $10.8 million earmarked for the second phase.
The support is being closely harmonized with that of other development organizations, including the Australian Agency for International Development, New Zealand Agency for International Development, European Union and the World Bank.
Samoa's economy had been growing strongly before the global economic crisis triggered a 5.5% contraction in the fiscal year ending June 2009. The crisis caused a slowdown in remittances and job losses. The tsunami killed more than 140 people and damaged or destroyed entire villages, schools, roads and tourist infrastructure, with losses put at $106 million, or 17%, of annual gross domestic product.
ADB and other development agencies provided immediate post-tsunami financial assistance. The new program will allow the Government of Samoa to expand its capital spending to boost reconstruction in the wake of the calamity. At the same time, it will support policy actions to safeguard the government's fiscal position, and undertake structural and governance improvements in areas such as state-owned enterprises, telecommunications and the power sector to boost the country's longer term growth prospects.
"The program loan will provide broad benefits by helping to counter the negative impact of the tsunami and the global economic crisis, while setting a foundation for higher economic growth in the medium-to-longer term, led by the private sector," said Sungsup Ra, Director of Strategy and Special Operations in ADB's Pacific Department.
The proposed actions are fully aligned with government policy as laid out under its 2008-2012 Strategy for the Development of Samoa.
A feature of the program will be the provision of targeted help for vulnerable groups, such as women and the unemployed, to ensure they are assisted through tough times, and able to take advantage of economic opportunities as the economy recovers. In this regard, the Government's commitment to provide relief for school fees and housing for tsunami-affected families is recognized.
ADB's Regional Director for South Pacific Subregional Office Richard K. Leonard added that "An early return to moderate rates of growth is possible and sustainable if damage from the tsunami is quickly repaired and the enabling environment for the private sector is enhanced. Tourism, agriculture and fishing can provide potentially vibrant sources of employment and growth."
The first loan under the program from ADB's concessional Asian Development Fund will have a term of 24 years, with a grace period of 8 years. Interest is charged at 1% per annum, for the grace period and 1.5% for the rest of the term. The Ministry of Finance is the executing agency for the program, which runs from March 2009 to December 2011.