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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 Tuvalu

ADB Membership

Joined 1993

Shareholding and Voting Power

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

Votes:
39,847 (0.300% of total membership, 0.461% of total regional membership)

Overall capital subscription:
$2.09 million

Paid-in capital subscription:
$0.11 million

The fragile Pacific microstate of Tuvalu is geographically isolated, vulnerable to climatic events, exposed to economic shocks, and lacking in many of the resources needed for sustainable growth and poverty reduction. With limited opportunities for private business, the country relies on its public sector as the main driver of growth.

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’s income derives largely from fishing license fees, trust fund investments, foreign aid, and remittances. Natural disasters such as cyclones, king tides, and droughts increase the volatility of revenue flows and can substantially alter fiscal outcomes. The use of the Australian dollar means the Government of Tuvalu is reliant on fiscal policy as the macroeconomic policy lever for economic growth.

ADB has been supporting Tuvalu since 1993, committing $7.9 million in loans, $42.3 million in grants, and $8.6 million in technical assistance.

Cumulative loan and grant disbursements to Tuvalu amount to $21.3 million. These were financed by concessional ordinary capital resources, and the Asian Development Fund (ADF).

ADB has been supporting Tuvalu since 1993, committing $7.9 million in loans, $42.3 million in grants, and $8.6 million in technical assistance. Cumulative loan and grant disbursements to Tuvalu amount to $21.3 million.


ADB-Supported Projects and Programs

ADB’s Pacific Approach, 2016–2020 serves as the country partnership strategy for Tuvalu. The country operations business plan, 2019–2021 also takes a multicountry approach and supports the three-pronged strategy of helping small island nations reduce costs, manage risks, and create economic value.

In recent years, the bank’s development program in Tuvalu has concentrated on collaborative efforts to improve governance, social development, education and human resources, and macroeconomic growth and stability. From 2008 to 2015, ADB provided a series of grants supporting sound macroeconomic and fiscal management, with improved public enterprise performance. These reforms have helped enhance Tuvalu’s public procurement, private sector participation, long-term macroeconomic stability, and economic self-sufficiency. ADB, in collaboration with other development partners, is working toward a subsequent suite of reforms to sustain and build on these measures, with further policy-based programs planned.

From 2008 to 2015, ADB provided a series of grants supporting sound macroeconomic and fiscal management, with improved public enterprise performance.

As well as providing grants for reform programs, ADB has funded technical assistance to support public financial management, governance, education, and capacity development in Tuvalu. The country has also benefited from regional technical assistance in economic management, audit capacity, aviation safety, private sector development, infrastructure planning, climate change, and country safeguards.

In 2017, the ADB Board of Directors approved the Pacific Disaster Resilience Program, which includes Tuvalu as well as Samoa and Tonga, providing a predictable source of post-disaster financing. Tuvalu set aside $1 million as an ADF grant and leveraged an additional $2 million from the ADF (grant) regional pool. This $3 million will give Tuvalu access to immediate financing for disaster recovery and reconstruction activities.

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

In the transport sector, ADB has committed $11.8 million in grant financing for the Outer Island Maritime Infrastructure Project, which will improve the safety, efficiency, and sustainability of maritime transport between the capital, Funafuti, and the outer islands. The financing includes $3 million mobilized from the Disaster Response Facility, following Tropical Cyclone Pam in March 2015, and $0.5 million from the Global Environment Facility. In 2018, ADB committed additional grant financing of $15.4 million for the construction of a harbor on the northern reef island of Niutao, upgrading facilities to higher standards of climate resilience.

In November 2018, ADB approved the System Strengthening for Effective Coverage of New Vaccines in the Pacific Project, including a grant of $2.5 million for Tuvalu. This regional project is designed to improve overall immunization rates and support greater efficiency of primary health services in Samoa, Tonga, Tuvalu, and Vanuatu.

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 2018 amounted to $3.14 billion for 32 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2018, ADB mobilized $3.17 billion of long-term cofinancing and $3.99 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 $12.7 billion as of 31 December 2018.

Cofinancing

ADB began cofinancing operations in Tuvalu in 2008. Since then, cumulative direct value-added official cofinancing commitments for Tuvalu have amounted to $3.5 million for two investment projects and $0.76 million for three technical assistance projects.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

Political instability and changes in government personnel pose a challenge to ADB operations in Tuvalu, as well as to the implementation of government reforms. Political consensus to drive and manage program reforms, particularly for public enterprises, can prove difficult to maintain.

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. Tuvalu’s macroeconomic management needs strengthening, as does the coherence of its structural policies. ADB technical assistance is supporting institutional strengthening and capacity building at the ministry level, helping ensure that good practices are implemented and can be sustained. Given the limited pool of local expertise, ADB and development partners continue to fill capacity gaps using international sources.

Future Directions

In November 2018, the ADB Board of Directors voted to increase to $13 million the annual base allocation for its small developing member countries for 2019– 2020, and this has boosted the scope for the bank to invest in Tuvalu.

Solar panels installed on a government office building in Tuvalu.

ADB’s program of assistance will focus on improving outer-island port facilities, building disaster resilience, promoting renewable energy sources, and sustaining good fiscal management. Regional approaches to energy efficiency, climate change, and economic infrastructure will also be explored.

This article was originally published in the ADB and Tuvalu: Fact Sheet. Updated yearly, this ADB Fact Sheet provides social and economic indicators on Tuvalu as well as concise information on ADB's operations in the country and contact information.

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