Opening speech by Masatsugu Asakawa, President, Asian Development Bank at the Meeting of Governors of Pacific Developing Member Countries with ADB Management, 16 September 2020
I. Introduction
Governors,
Alternate Governors
Members of the ADB Board
Ladies and Gentlemen
Welcome and thank you for making time to join this meeting of Governors of Pacific developing member countries with the Management of the Asian Development Bank (ADB).
As you know, this is my first Annual Meeting as ADB President. It is somewhat later in the year than usual, and certainly not what we were planning at the start of 2020. But the fact that we are meeting, even virtually, speaks volumes about the resilience of people, communities, organizations, and countries.
I commend you all on your swift and decisive actions, such as closing borders, to minimize the entry of the coronavirus disease (COVID-19) and a potential catastrophic impact on your populations and health systems. However, these actions have had massive socio-economic impacts—the tourism industry has collapsed, export demand has softened, people have lost jobs, businesses are struggling to stay afloat, and revenues have fallen.
The Pacific has made significant development gains over the past couple of decades, with increases in life expectancy, reduced maternal and child mortality, improved access to education, power, and safe water. But COVID-19 threatens to reverse these gains and exacerbate inequalities in our societies. All the while, demands for public support and stimulus packages are growing.
II. ADB’s response to COVID-19, especially in the Pacific
ADB has responded swiftly to the crisis with a $20 billion package announced in April, which includes $2.2 billion in concessional and grant resources, to help ADB’s developing members counter the severe macroeconomic and health impacts caused by COVID-19. I can proudly share that as of mid September, the ADB had committed about $11.2 billion in financial resources. In addition, we have mobilized about $7.2 billion in cofinancing from our development partners.
Let me briefly outline ADB’s support to the Pacific in response to COVID-19:
First, from the early stages of the pandemic, we have provided grant support for the purchase of much needed personal protective equipment, medical supplies, and quarantine facilities, as well as for the additional costs in controlling borders and building health sector capacity.
Second, with a new quick-disbursing financing modality called COVID-19 Pandemic Response Option (CPRO), we are providing budget support of $60 million in total for three Pacific countries (Palau, Samoa and Solomon Islands). This support will help them finance crisis-related fiscal measures, including targeted social protection programs to the poor and the vulnerable.
Third, we have expanded our support through policy-based operations for two countries (Fiji and Tonga), totaling $112 million. This support will assist the governments in their reforms, including to strengthen macreconomic resilience through strengthening public finance management and sustaining private-sector led growth.
Fourth, ADB has released contingent disaster financing funds in support of budget expenditures for seven countries (Cook Islands, Marshall Islands, Federated States of Micronesia, Palau, Samoa, Solomon Islands, and Tonga) totaling $52 million.
And fifth, ADB is actively engaging with private sector. We have reached out to financial institutions across nine Pacific countries, to discuss potential support, as well as approaching selected agribusiness and infrastructure companies to discuss COVID-19 impacts and requirements for potential ADB financing.
III. Ensuring robust, inclusive and sustainable recovery
While we are responding to this ongoing crisis, ADB is also considering how we can best support you to ensure robust, inclusive, and sustainable recovery in a more tailored and effective manner. ADB is preparing a new Pacific Approach that will outline our strategic objectives in the Pacific through 2025 for guiding our operations in 12 of the 14 Pacific developing member countries. Fiji and Papua New Guinea are being guided by their own country partnership strategies.
Let me share three key issues that I have in mind in this regard.
First, let us further strengthen regional cooperation and integration. While the pandemic has resulted in border closures and restrictions, I strongly believe that globalization will come back, but with different shape. And ADB is ready to support our developing members in the Pacific to seize renewed opportunities through measures such as diversifying global and regional value chains, and strengthening regional health security.
In this regard, making safe and effective vaccines available to all, including the poor and the vulnerable is a key priority. Prior to COVID-19, ADB had initiated support for the rollout of vaccines to reduce the prevalence of pneumonia and diarrhea in children, as well as a vaccine to reduce incidence of cervical cancer in four Pacific countries (Samoa, Tonga, Tuvalu, and Vanuatu). This provides a base for equitable and efficient distribution of the future COVID-19 vaccine. Regional procurement of vaccines, regional hubs for storage of consolidated orders, strengthening of in-country cold chain and vaccine distribution channels, as well as building the capacities of health professionals, and community outreach and awareness programs will be critical to success. ADB stands ready to assist.
Second, ensuring debt sustainability through domestic resource mobilization is of key importance to underpin future growth. COVID-19 has caused across-the-board economic contractions, placed pressure on public finances, and pushed up fiscal deficits. So, in the medium term, ensuring debt sustainability through timely fiscal consolidation should be considered. Governments also have to strengthen their institutions to enhance their ability in domestic resource mobilization and ADB is ready to support you to reform your tax policy and administration to expand the tax base while creating an enabling environment for business.
Third, addressing climate change and ensuring green recovery will continue to be one of the greatest priorities for Pacific island countries. In our recovery measures, we should seek to further our adaptation and mitigation efforts by investing in infrastructure that meets the G20 Principles for Quality Infrastructure Investment.
IV. The Pacific and ADF 13
Let me touch further on the issue of financing. The replenishment of the Asian Development Fund—ADF 13—is occurring this week. This is ADB’s grant financing window—9 of the 14 Pacific DMCs’ grant resources are coming from ADF. In this tighter economic environment, every grant dollar pledged is valuable. So, being able to demonstrate development effectiveness is even more critical to ensure ADB’s continued ability to mobilize and provide grant financing in the future.
Looking forward to the ADF 13 period, 2021–2024, Pacific DMCs will benefit in various ways. These include the introduction of the economic vulnerability premium that enables Small Island Developing States to each receive more grant resources on top of their country performance-based allocations, and the set aside of a thematic pool to provide support for fostering regional cooperation and integration, disaster risk reduction and climate adaptation. ADF 13 will also align with IDA’s Sustainable Development Finance Policy providing incentives, backed with technical assistance, to improve debt management. The finalization of ADF 13 will solidly position ADB as your partner in economic recovery.
V. Conclusion
In closing, the COVID-19 pandemic presents the biggest challenge we have faced individually and collectively in a couple of generations. I hope today’s discussion can look not just at the crisis and our required responses, but also beyond and how we can rebuild to ensure societies that are resilient, sustainable, and climate smart. I trust you will find today’s discussion fruitful.
Thank you.
Speaker
