Key Takeaways
The coronavirus disease (COVID-19) pandemic has affected economies globally, especially so for countries in the Pacific. Border closures and travel restrictions to stem COVID-19 transmission have had a pronounced impact on the Pacific islands whose narrow economic bases are heavily dependent on tourism. The first 12 months of the pandemic saw the region’s growth contract by 5.3%, according to ADB’s Pacific Economic Monitor. However, thanks to the region’s travel bubbles and rising vaccination rates, that growth is set to bounce back by 4.0% in 2022. Another factor has been the key role of development partners, such as ADB and the World Bank.
In 2020, the World Bank Group (WBG) cofinanced with the Asian Development Bank (ADB) nine projects for a total of $1.3 billion, including three COVID-19-related projects. The WBG provided a $5.5 million grant to the Strengthening Macroeconomic Resilience Program for Tonga, which, along with a $12.2 million grant from ADB, aims to strengthen Tonga’s macroeconomic resilience, including the mitigation of COVID-19’s impact by supporting the government’s COVID-19 response.
From January 2014 to December 2020, the WBG provided almost $410 million in loans and grants to support the development of the Pacific. Aside from assistance to ensure Pacific economies can withstand external shocks, the WBG also supported infrastructure to provide better transport, connectivity, water, and sanitation systems in the region.
The Strengthening Macroeconomic Resilience Program supports the reduction of adverse social and economic impacts stemming from the COVID-19 pandemic and builds on previous policy-based operations to strengthen Tonga's macroeconomic resilience. The program will help the government manage and control COVID-19 and its immediate impact on the Tongan economy without jeopardizing debt sustainability, with other policy actions supporting macroeconomic resilience in the future by addressing sources of fiscal risk.
Better transport systems
Recognizing that safe and resilient transport infrastructure is essential for connecting Kiribati's population to economic opportunities and social services, particularly for those living on the outer islands, the WBG provided a $30 million grant to the Kiribati Outer Islands Transport Infrastructure Investment Project. Approximately 55% of Kiribati's total population live on the main island of Tarawa, which includes the capital, South Tarawa, while the remaining population is spread across the outer islands. Through this project, which also received a grant of $12 million from ADB, Kiribati can enjoy safe and resilient maritime transport infrastructure, which is essential for connecting the country’s population to economic and social opportunities, particularly for those living on the outer islands. It is also important for stemming the tide of migration from outer islands.
The WBG also provided a $22 million grant to the Kiribati Road Rehabilitation Project, which, bolstered by $23.4 million in loans and grants from ADB, helped rehabilitate 36 kilometers of highway and construct 9.2 kilometers of feeder roads, 57 kilometers of footpaths for cyclists and walkers, and 36 bus shelters. It also supported the capacity building of local communities in road maintenance for road safety.
Water and sanitation, internet access
The WBG provided a grant of almost $13 million to the South Tarawa Water Supply Project, which will increase South Tarawa's access to safe and climate-resilient water supply. South Tarawa, the capital of Kiribati, is a highly urbanized area. The combination of overcrowding and inadequate water, sanitation, and hygiene is closely linked to waterborne diseases such as diarrhea and dysentery in the capital.
The WBG also supported the Solomon Islands Urban Water Supply and Sanitation Sector Project with a $15 million loan. The project will develop a sustainable, inclusive, and climate-resilient water supply and improve sanitation in the Greater Honiara Area and five other towns in the Solomon Islands.
ADB and the WBG worked with Palau to provide affordable, high-quality internet access through the North Pacific Regional Connectivity Investment Project, which built a submarine cable system linking Palau to the internet cable hub in Guam. The WBG provided a $22.5 million loan to the project, which helped match a loan from ADB of $25 million.
The WBG also provided a $16 million grant to the Samoa Submarine Cable Project, to go with a grant of $25 million from ADB, to build a submarine cable that will link Samoa to Fiji’s international cable network.
Private sector support
The WBG’s collaboration with ADB also recognizes the important role of a healthy, vibrant private sector. The WBG provided almost $80 million in loans to the Fiji Sustained Private Sector-Led Growth Reform Program, which assisted the Fijian government in creating an environment where the private sector was able to develop and better drive national economic growth through investment. It improved the management of public finances, strengthened the performance of state-owned enterprise, opened opportunities for private investment, and enhanced the policy, legislative, and regulatory environment for business operations.
Since 1972, the WBG has been working with ADB to implement sustainable solutions to reduce poverty and build shared prosperity in developing countries in areas such health, education, infrastructure, agriculture, public administration, macroeconomic management, institutional development, governance, financial and private sector development, environmental protection, and natural resource management. As the Pacific region works to rebound from the impacts of the pandemic, that partnership is now more important than ever.
