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

Overall capital subscription:
$2.07 million

Paid-in capital subscription:
$0.11 million

Tuvalu has been a member of ADB since 1993.

This fragile Pacific microstate 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 and king tides 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.

Since 1993, ADB has committed loans totaling $7.9 million, grants of $52.3 million, and technical assistance worth $8.6 million for Tuvalu. Cumulative loan and grant disbursements to Tuvalu from concessional ordinary capital resources and the Asian Development Fund amount to $29.1 million.

ADB has been supporting Tuvalu since 1993, committing $7.9 million in loans, $52.3 million in grants, and $8.6 million in technical assistance. Cumulative loan and grant disbursements to Tuvalu amount to $29.1 million.


ADB-Supported Projects and Programs

In recent years, ADB’s development program in Tuvalu has concentrated on collaborative efforts to improve macroeconomic growth and stability, investment in renewable energy, transport infrastructure, health coverage, and disaster recovery.

Through technical assistance and policy-based grants in 2012 and 2015, ADB has closely engaged with the government and development partners in supporting policy reforms designed to enhance Tuvalu’s public procurement, private sector participation, long-term macroeconomic stability, and economic self-sufficiency.

In October 2019, ADB committed a $4 million policy-based grant to improve the management of Tuvalu’s public finances and national infrastructure. The bank, in collaboration with other development partners, is working toward future reforms to sustain and build on these measures, and will continue to engage with the government through policy dialogue, technical assistance, and policy-based programs.

In November 2019, ADB 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, from manual, diesel-based generators to modern, automated operations producing a high level of renewable energy. Over its lifetime, the project is expected to displace 6.7 million liters of diesel fuel and avoid 17,800 tons of carbon dioxide-equivalent emissions.

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

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 Funafuti and the outer islands, commencing with construction of a harbor in Nukulaelae. The financing includes $3 million mobilized from the Disaster Response Facility, following Tropical Cyclone Pam in March 2015, and $500,000 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 2018, ADB committed financing to strengthen effective coverage of new vaccines in the Pacific, 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.

In 2018, ADB committed the Pacific Disaster Resilience Program to provide a predictable source of postdisaster financing to small island countries. Tuvalu set aside $1 million as an Asian Development Fund grant and leveraged an additional $2 million from the Asian Development Fund (grant) regional pool. On 29 January 2020, ADB provided $3 million in postdisaster financing to Tuvalu after a state of emergency was declared on 24 January 2020. This immediate financing will help support Tuvalu’s disaster recovery and reconstruction activities.

ADB has funded technical assistance to support governance, education, and capacity development in Tuvalu. 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 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 Tuvalu in 2008. Since then, sovereign cofinancing commitments for Tuvalu have amounted to $14.10 million for three investment projects and $0.76 million for three technical assistance projects.

In 2019, Tuvalu received $10.60 million in grant cofinancing from the governments of Australia and New Zealand, the European Union, and the World Bank for the Improved Fiscal and Infrastructure Management Program.

Projects Cofinanced, 1 January 2014–31 December 2018

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 key challenges to sound public financial management and operational effectiveness. The government’s Public Financial Management Roadmap for 2018-2021 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’s Pacific Approach, 2016–2020 serves as the country partnership strategy for 11 small Pacific island countries, including Tuvalu. The country operations business plan, 2020–2022 also takes a multicountry approach to identify commonalities and opportunities for operational efficiencies. It supports the three-pronged strategy of helping small island nations reduce costs, manage risks, and create economic value.

Solar panels installed on a government office building in Tuvalu.

ADB’s program of assistance to Tuvalu 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 concise information on ADB's operations in the country and contact information.

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