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Tuvalu and ADB

To help the Tuvalu overcome the impacts of the COVID-19 pandemic, ADB’s assistance will focus on improving outer-island port facilities, building disaster resilience, promoting renewable energy sources, and sustaining good fiscal management.

ADB's Work in Tuvalu

ADB Membership

Joined 1993

Shareholding and Voting Power

Number of shares held:
150 (0.001% of total shares)

Votes:
39,264 (0.295% of total membership, 0.453% of total regional membership)

Overall capital subscription:
$2.16 million

Paid-in capital subscription:
$0.12 million

Tuvalu is a small island developing state comprising nine atolls in the South Pacific. It is geographically isolated and highly vulnerable to climatic and economic shocks. With a small private sector and limited resources to support socioeconomic development, the public sector is its main driver of growth.

Tuvalu depends on fishing license fees, trust fund investments, official development assistance, and remittances for foreign currency earnings. Disasters triggered by natural hazards, such as cyclones and king tides, increase the country’s economic volatility and can substantially alter fiscal outcomes.

The international airport in Tuvalu's capital city, Funafuti. The airport has no runway lighting, minimal VHF radio and air navigation equipment that restricts operations to daylight hours.

Tuvalu has been a member of the Asian Development Bank (ADB) since 1993. ADB’s assistance has concentrated on improving macroeconomic growth and stability, advancing renewable energy, upgrading transport assets, expanding health coverage, and building disaster resilience.

Since 1993, ADB has committed loans totaling $7.9 million, grants of $60.8 million, technical assistance worth $10.7 million, and ADBadministered cofinancing of $2.8 million for Tuvalu.

Cumulative loan and grant disbursements to Tuvalu amount to $36.3 million. These were financed by concessional ordinary capital resources and the Asian Development Fund.


ADB-Supported Projects and Programs

In 2020, ADB provided $1 million in emergency grant financing from the Asian Pacific Disaster Response Fund and a $208,000 technical assistance grant to help Tuvalu procure medical supplies and equipment to protect the population against coronavirus disease (COVID-19). The bank is also helping expand coverage of new vaccines in the Pacific, including a grant of $2.5 million for Tuvalu under a regional project, along with planned additional financing to procure and distribute COVID-19 vaccines.

The Pacific Disaster Resilience Program provides Tuvalu with a predictable source of post-disaster financing. The Government of Tuvalu was able to quickly access $3 million in January 2020 in the aftermath of Cyclone Tino. The program, replenished in November 2020, allows for a further $4 million grant to respond to future disasters triggered by natural hazards and to health emergencies.

To improve the safety, efficiency, and sustainability of maritime transport between the capital, Funafuti, and the outer islands, ADB has committed $48.7 million in grant financing since 2016 for the Outer Island Maritime Infrastructure Project. The construction of workboat harbors in Nukulaelae, Niutao, and Nui is under way.

The bank, in March 2020, committed a grant of $6 million for the Increasing Access to Renewable Energy Project under the Pacific Renewable Energy Investment Facility. The project, ADB’s first in Tuvalu’s energy sector, will help transform the power systems in the capital, Funafuti, and on the outer islands.

The Outer Island Maritime Infrastructure Project will help improve the safety, efficiency, and sustainability of maritime transport between Funafuti and the outer islands.

In August 2020, ADB committed a project readiness financing grant of $4 million to ensure timely and cost-effective project outcomes for the ensuing Funafuti Water and Sanitation Project, which aims to increase access to safe water and improve sanitation to reduce the incidence of waterborne disease in the capital.

Since 2008, ADB, in collaboration with other development partners, has engaged with the government to strengthen public service delivery and improve public financial management. Progress made in these areas has triggered over $11 million in general budget support from ADB. The bank has also provided technical assistance to support analytical work, capacity building, and implementation of policy reforms.

In other technical assistance to Tuvalu, ADB has supported improvements to governance, education, and capacity development. The country has also benefited from regional technical assistance in economic management, audit capacity, private sector development, infrastructure planning, climate change, and country safeguards..

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.

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 Tuvalu in 2008. Since then, sovereign cofinancing commitments for Tuvalu have amounted to $14.1 million for three investment projects and $0.76 million for three technical assistance projects.

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

Solar panels installed on a government office building in Tuvalu.

Operational Challenges

The performance of the ADB portfolio in Tuvalu can be hampered by limitations in the country’s policy development, program and project design and implementation, and management capacity. Improvements to fiscal management, including compliance with public procurement regulations, accounting practices, monitoring and reporting, and management of infrastructure investments remain to be the key challenges to sound public financial management and operational effectiveness. The government’s Public Financial Management Roadmap for 2020–2024 is guiding government and development partner efforts to address weaknesses and enhance coordination and implementation of critical reforms. Given the limited pool of local expertise, ADB and development partners continue to fill capacity gaps using international sources.

Future Directions

ADB assistance to Tuvalu focuses on improving outer island port facilities, building disaster resilience, promoting renewable energy sources, extending immunization coverage including COVID-19 related assistance, and sustaining good fiscal management. This operational focus aligns with the vision of Tuvalu’s National Strategy for Sustainable Development (Te Kete), 2021–2030, and the Tuvalu Infrastructure Strategy and Investment Plan 2016–2025.

Well-focused technical assistance, aimed mainly at building capacity and strengthening governance, will remain an integral part of ADB support to Tuvalu. Where appropriate, ADB will include Tuvalu 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 Tuvalu: 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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