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Tonga and ADB

ADB’s program in Tonga includes COVID-19 assistance and improvements to health systems, transport infrastructure, climate resilience, disaster recovery, renewable energy generation, and urban development.

ADB's Work in Tonga

ADB Membership

Joined 1972

Shareholding and Voting Power

Number of shares held:
426 (0.004% of total shares)

Votes:
39,540 (0.297% of total membership, 0.457% of total regional membership)

Overall capital subscription:
$6.14 million

Paid-in capital subscription:
$0.30 million

Tonga is a small island economy with the challenges of geographic isolation, limited human and financial resources, a small domestic market, and high costs of doing business. The country relies significantly on official development assistance and remittances, increasing its vulnerability to external shocks.

The Asian Development Bank (ADB) has been supporting Tonga since 1972, with a focus on overcoming medium-term development issues. ADB’s assistance has helped implement structural reforms to improve productivity, enhance disaster and climate resilience, and strengthen macroeconomic foundations. Over the past year, the bank has also supported the Government of Tonga’s response to the coronavirus disease (COVID-19) crisis.

Since 1972, ADB has committed loans totaling $70.2 million, grants of $154.2 million, technical assistance worth $22.2 million, and ADB-administered cofinancing of $84.4 million for Tonga.

The Hahake Coastal Protection consists of hard and soft infrastructure interventions to protect the coastline and manage coastal erosion in selected sites on the 8 km of the Hahake (Eastern Tongatapu) coastline

Cumulative loan and grant disbursements to Tonga amount to $164.7 million. These were financed by concessional ordinary capital resources, the Asian Development Fund, and other special funds.


ADB-Supported Projects and Programs

ADB’s current program in Tonga covers a range of development needs including COVID-19 assistance and improvements to health systems, transport infrastructure, climate resilience, disaster recovery, renewable energy generation, and urban development.

In 2020, ADB provided grants totaling $1.7 million from the Asia Pacific Disaster Response Fund in response to COVID-19 and Tropical Cyclone Harold. The bank is also active in the joint policy reform dialogue with the Government of Tonga and other development partners. This process is linked to the budget support disbursement of $12.2 million, made in June 2020, which supported the government’s response to COVID-19 through an ADB policy-based grant.

The Introducing eGovernance through Digital Health Project will improve Tonga’s national health information systems and develop population registries as part of a civil registration and vital statistics system. Other assistance in the health sector includes the Regional Vaccine Project, which is introducing new vaccines for the human papillomavirus, pneumococcal virus, and rotavirus. Tonga’s health system will also be strengthened to support a safe and effective COVID-19 vaccination program, including awareness campaigns on the importance of being vaccinated against the coronavirus.

To boost resilience to disaster risks and climate change, in December 2020, ADB approved a $45 million grant to upgrade the Queen Salote International Wharf in Nuku’alofa’s Port to improve operations.

The bank also committed a $10 million grant for Tonga as part of the third phase of its regional program on disaster resilience in the Pacific. The grant will provide a source of contingent financing for timely response, early recovery, and reconstruction activities in the event of a disaster, with a new extension to include national health emergencies.

A new solar power supply financed by ADB's Asian Development Fund, Australia, and donors in Europe is boosting the private sector and ushering in a clean energy revolution in Tonga.

The Tonga Renewable Energy Project (with cofinancing from the Government of Australia and the Green Climate Fund) helps to expand the country’s renewable energy generation and finance the installation of new battery storage systems. The project supports the Government of Tonga’s renewable energy targets and facilitates investment by private, independent power producers.

Building on the success of the Nuku’alofa Urban Development Sector Project (with cofinancing from the Government of Australia), the Integrated Urban Sector Resilience Project will further improve urban infrastructure and services such as water supply, waste collection, and resilience to floods and climate change in Tonga’s capital.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments in loans and equity investments from ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020.

Cyclone Gita Recovery Project will climate and disaster-proof the electricity network

Financing Partnerships

Financing partnerships enable ADB’s financing partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade and Supply Chain Finance Program and Microfinance Program.

ADB began cofinancing operations in Tonga in 1974. Since then, sovereign cofinancing commitments for Tonga have amounted to $142.3 million for 11 investment projects and $3.63 million for seven technical assistance projects.

In 2020, Tonga received a total of $18.61 million grant cofinancing from the Government of Australia, the Government of New Zealand, and the World Bank for two investment projects.

A summary of cofinanced projects is available at Tonga: Cofinancing.

Operational Challenges

In 2018, the Global Climate Risks Index ranked Tonga as the second most at-risk country worldwide. The country’s main challenges are to sustain economic recovery beyond the COVID-19 pandemic, mitigate potential damages caused by natural hazards, and create jobs for the young population. Tonga’s relatively limited business environment also restricts the sourcing of local contractors and consultants to implement ADB-financed activities.

ADB is providing technical assistance to build the government’s capacity to improve gender outcomes, private sector development, international arbitration, climate and disaster resilience, social protection, water supply and sanitation, domestic transport networks, and public sector management.

ADB’s grants will help Fiji, Tonga, and Vanuatu restore vital infrastructure, as well as humanitarian assistance such as medicine, food, and water.

Future Directions

ADB assistance to Tonga focuses on promoting renewable energy solutions, improving transport assets, making Nuku’alofa a more livable city, protecting the vulnerable in the community, building resilience to climate risks, sustaining good fiscal management, and strengthening health systems, extending immunization coverage, and COVID-19 related assistance. This operational focus aligns with Tonga’s Strategic Development Framework II, 2015–2025 and the government’s National Infrastructure Investment Plan, 2013–2023.

Well-focused technical assistance, aimed mainly at building capacity and strengthening governance, will remain an integral part of ADB support to Tonga. Where appropriate, ADB will include Tonga in new regional technical assistance activities in line with the regional operations business plan for the Pacific, 2021–2023. Regional approaches to energy efficiency, climate change, and economic infrastructure will be explored. Support for infrastructure planning will be provided by the ADB-administered Pacific Region Infrastructure Facility and support for improving business environments provided through the ADB-administered Private Sector Development Initiative.

This article was originally published in the ADB and Tonga: Fact Sheet. Updated yearly, this ADB Fact Sheet provides concise information on ADB's operations in the country and contact information.

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