fbpx ADB's Work in Tonga | Asian Development Bank

Pacific Subregional Office (SPSO)

The SPSO serves as the focal point of ADB for programming, processing, and administering assistance in the Cook Islands, Fiji, Kiribati, Niue, Samoa, Tonga, and Tuvalu.

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:
$5.89 million

Paid-in capital subscription:
$0.29 million

Tonga faces development challenges typical of many small island economies. These challenges include geographic isolation, limited human and financial resources, a small domestic market, high costs of doing business, and inefficient delivery of services. The economy is narrowly based and depends on inflows of remittances and external assistance to supplement domestic revenue.

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

ADB began working with Tonga in 1972 and has recently been focused on resolving the country’s medium-term development issues. This requires continued implementation of structural reforms to improve productivity, remove bottlenecks to growth, develop disaster resilience, climate-proof infrastructure, and strengthen macroeconomic foundations. In response, over the past 12 years, ADB has doubled its committed grants and concessional loans to Tonga and mobilized $88.1 million in cofinancing.

Since 1972, ADB has committed loans totaling $70.2 million, grants of $207.9 million, and technical assistance worth $23.3 million for Tonga. Cumulative loan and grant disbursements to Tonga from concessional ordinary capital resources, the Asian Development Fund, and other special funds amount to $134.4 million.

ADB assistance to Tonga are provided in the form of grants, concessional loans, technical assistance, other concessional financing, and commercial cofinancing arrangements.

Since 1972, ADB has committed loans totaling $70.2 million, grants of $207.9 million, and technical assistance worth $23.3 million. Cumulative loan and grant disbursements to Tonga amount to $134.4 million.


ADB-Supported Projects and Programs

ADB’s active program in Tonga covers a range of sectors including renewable energy, urban development, climate resilience, disaster recovery, public sector management, transport infrastructure, and health.

The Tonga Renewable Energy Project (with cofinancing from the Government of Australia and the Green Climate Fund) will help expand the country’s renewable energy generation and install battery storage systems. The project supports the Government of Tonga’s renewable energy target of 50% by 2020 and is designed to facilitate 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 such as water supply, waste collection, and resilience to floods and climate change in Tonga’s capital.

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 Cyclone Gita Recovery Project (with parallel cofinancing from the Government of New Zealand) will help reconstruct the Nuku’alofa electricity network damaged by Cyclone Gita in February 2018. The project will climate and disaster-proof the electricity network, so that it is safer, more reliable, and more resilient to natural hazards.

In 2019, ADB signed a $6 million grant agreement with Tonga as part of the second 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 natural disaster.

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 human papillomavirus, pneumococcal virus, and rotavirus. Tonga’s health system will be strengthened to support the introduction of the new vaccines, while also conducting awareness campaigns on the importance of vaccination.

ADB is active in joint policy reform dialogue with the Government of Tonga and other development partners in the country. This process is linked to budget support disbursements through ADB’s policy-based lending modality.

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

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3.00 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2019, ADB mobilized $3.28 billion of long-term cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Financing Partnerships

Financing partnerships enable ADB’s development 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 Finance Program and Supply Chain Finance Program.

ADB began cofinancing operations in Tonga in 1974. Since then, sovereign cofinancing commitments for Tonga have amounted to $123.69 million for ten investment projects and $3.63 million for seven technical assistance projects.

In 2019, Tonga received a total of $43.19 million in grant cofinancing from the Government of Australia, the European Union, the Green Climate Fund, and the World Bank for three investment projects.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

Tonga’s economy is undermined by natural constraints (small, widely dispersed islands that are remote from developed nations), exposure to external shocks (natural and economic), and internal bottlenecks (weak institutional capacity and ongoing emigration). The country’s relatively meagre business environment also limits the availability of local contractors and consultants to implement ADB-financed activities.

Tonga has the second-highest disaster risk in the world and this can hamper development operations. Three tropical cyclones in just 5 years have caused severe damage to the islands of Tongatapu and ‘Eua, the Vava’u island group, and the Haˇapai island group— affecting almost the entire population.

ADB is providing technical assistance to improve Tonga’s climate and disaster resilience, energy efficiency, project implementation, budget management, and urban planning. Through the Pacific Private Sector Development Initiative, ADB is working with the government to reform state-owned enterprises, improve Tonga’s business environment, support small and medium-sized enterprises, and broaden access to finance.

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’s Pacific Approach, 2016–2020, which serves as the country partnership strategy for Tonga, has at its core the promotion of sustainable, inclusive economic growth and social development.

ADB has scaled up its assistance to Tonga as a small island member country in line with government priorities (renewable energy solutions, transport infrastructures, Nuku’alofa city to be more livable, improved health, and information and communication technology). The bank’s operational program for 2020–2022 has a significant focus on infrastructure that will reduce the costs of key services and improve overall productivity, with major investments planned in energy, transport, and water and urban infrastructure. These investments are in line with the Tonga Strategic Development Framework II, 2015–2025 and the government’s National Infrastructure Investment Plan, 2013–2023.

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.

Spotlight on Tonga

News Release

ADB Announces $470,000 Grant to Help Tonga Combat COVID-19

“ADB’s support will help alleviate Tonga’s immediate financial, logistical, and other constraints to meet these immediate response needs and deliver appropriate medical services where required,” said ADB Health Specialist for the Pacific Inez Mikkelsen-Lopez.

News Release

Tourism-Driven Economies in the Pacific to Feel Brunt of COVID-19 Pandemic — ADB

The economies of the Cook Islands, Fiji, Palau, Samoa, and Vanuatu are the Pacific countries likely to feel the brunt of the COVID-19 pandemic, according to a new report by ADB released today.

News Release

Kacific1 Satellite Launch to Bring Affordable Internet to Remote Parts of Asia and Pacific

Kacific Broadband Satellites International Limited (Kacific) has launched the Kacific1 satellite to expand high-speed broadband internet access across Asia and the Pacific. ADB provided $50 million in financing to Kacific for the satellite to deliver internet that will enable better education and health services, improve access to information, and drive more trade and connectivity between countries.

Institutional Document

Pacific Energy Update 2019

This document highlights how ADB technical assistance and energy sector projects are helping to build resilient, low-carbon economies, while increasing access to clean, reliable power in the Pacific.