ADB is helping Tonga preserve key social sector spending programs that have come under pressure as a result of the global economic crisis. The project will provide budgetary support to the government to maintain spending on basic social services, such as health and education, and continue reforms designed to make the economy more competitive, sustainable, and private sector-driven.
|Project Name||Economic Support Program|
|Project Type / Modality of Assistance||Grant
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Governance and capacity development
Private sector development
|Sector / Subsector||
Public sector management / Economic affairs management - Public expenditure and fiscal management - Social protection initiatives
|Gender Equity and Mainstreaming|
To maintain fiscal responsibility in the short term, while ensuring social sector expenditure is protected, the government will need to reduce planned expenditure, and continue critical reforms to address underlying structural constraints. If these constraints are not removed, sound fiscal management and increased economic resilience will not be achievable. Possible government responses comprise fiscal, structural, and social policy measures, supported by prudent monetary policy.
The government will need budget support to (i) protect essential social expenditure for segments of society most adversely affected by the crisis, and (ii) advance structural reforms to improve medium-term competitiveness and productivity.
|Project Rationale and Linkage to Country/Regional Strategy||Just as Tonga's economy began to recover from recent domestic shocks the civil service strike in 2005 and civil disturbances in 2006 and the impact of global economic developments such as high oil and food prices in 2008, the prospects for economic growth have come under increasing pressure as a result of the global economic crisis. Recent recorded declines in remittances, a significant slump in trade tax receipts, weak export demand, declining tourism revenues, and weakening of credit flow within domestic banking, show that Tonga is now clearly feeling the impact of the crisis, somewhat sooner and to a greater extent than initially expected. The government revised projected revenue for FY2010 down by 18.6%, to T$140.1 million from T$172.2 million. Government is forecasting a fiscal deficit of 10.3% of gross domestic product (GDP). As a result of this expected decline in revenue, as well as recent poor agriculture and tourism data, the government revised its GDP growth forecast for FY2010 down to 0.4% (from 1.7%).|
|Impact||The impact will have a higher and more inclusive economic growth path.|
|Description of Outcome||The main outcome will be a timely and effective response to the Global Economic Crisis.|
|Progress Toward Outcome|
|Description of Project Outputs||
The program intends to provide quick-disburing budget support to allow the Government to effectively respond to the economic, fiscal and social impacts of the Global Economic Crisis (GEC).
Maintenance of fiscal responsibility.
Structural and governance improvements.
Support the vulnerable through targeted actions.
Communication and ownership of economic and fiscal management initiatives.
|Status of Implementation Progress (Outputs, Activities, and Issues)|
|Summary of Environmental and Social Aspects|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design|
|During Project Implementation|
|Responsible ADB Officer||Tora, Laisiasa Natakubu|
|Responsible ADB Department||Pacific Department|
|Responsible ADB Division||Pacific Subregional Office in Suva, Fiji|
Ministry of Finance and National Planning
Mr. Aisake Eke
Ministry of Finance & Economic Planning P O Box 87 Nuku Prime Minister's Office
Kingdom of Tonga
|Concept Clearance||23 Jun 2009|
|Fact Finding||25 May 2009 to 02 Jun 2009|
|MRM||29 Jul 2009|
|Approval||03 Dec 2009|
|Last Review Mission||-|
|PDS Creation Date||06 Aug 2009|
|Last PDS Update||27 Oct 2010|
|Approval||Signing Date||Effectivity Date||Closing|
|03 Dec 2009||21 Dec 2009||26 Feb 2010||31 Dec 2010||30 Jun 2011||30 Jun 2011|
|Financing Plan||Grant Utilization|
|Total (Amount in US$ million)||Date||ADB||Others||Net Percentage|
|Project Cost||10.00||Cumulative Contract Awards|
|ADB||10.00||03 Dec 2009||10.00||0.00||100%|
|Cofinancing||0.00||03 Dec 2009||10.00||0.00||100%|
|Status of Covenants|
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.
The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.
In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
|Title||Document Type||Document Date|
|Economic Support Program||Project/Program Completion Reports||Oct 2012|
|Economic Support Program||Progress Reports on Tranche Releases||May 2011|
|Grant Agreement (Special Operations) for Economic Support Program between Kingdom of Tonga and Asian Development Bank dated 21 December 2009||Grant Agreement||Dec 2009|
|Economic Support Program||Reports and Recommendations of the President||Nov 2009|
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
None currently available.
The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.
Requests for information may also be directed to the InfoUnit.