Cook Islands: Supporting Sustainable Economic Recovery Program

Sovereign Project | 55014-001

1. The Supporting Sustainable Economic Recovery Program will help the Cook Islands restore fiscally sustainable growth led by the private sector, which has been adversely affected by the coronavirus disease (COVID-19) pandemic. The program aims to (i) improve fiscal management and sustainability and (ii) strengthen the enabling environment for the private sector. It aligns with Asian Development Bank (ADB) Strategy 2030 operational priorities of strengthening governance and institutional capacity, accelerating progress in gender equality, and fostering regional cooperation and integration. It is consistent with the country operations business plan for 11 small Pacific island countries, 2021 2023 and Pacific Approach, 2021 2025.

Project Details

  • Project Officer
    Webb, James M.
    Pacific Department
    Request for information
  • Country
    Cook Islands
  • Sector
    • Public sector management
Project Name Supporting Sustainable Economic Recovery Program
Project Number 55014-001
Country Cook Islands
Project Status Proposed
Project Type / Modality of Assistance Grant
Loan
Source of Funding / Amount
Loan: Supporting Sustainable Economic Recovery Program
Ordinary capital resources US$ 80.00 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Partnerships
Private sector development
Sector / Subsector

Public sector management / Economic affairs management - Public administration - Public expenditure and fiscal management

Gender Equity and Mainstreaming Effective gender mainstreaming
Description

1. The Supporting Sustainable Economic Recovery Program will help the Cook Islands restore fiscally sustainable growth led by the private sector, which has been adversely affected by the coronavirus disease (COVID-19) pandemic. The program aims to (i) improve fiscal management and sustainability and (ii) strengthen the enabling environment for the private sector. It aligns with Asian Development Bank (ADB) Strategy 2030 operational priorities of strengthening governance and institutional capacity, accelerating progress in gender equality, and fostering regional cooperation and integration. It is consistent with the country operations business plan for 11 small Pacific island countries, 2021 2023 and Pacific Approach, 2021 2025.

2. A policy-based loan of $80 million is proposed to support the government's ongoing reform program to restore longer-term economic growth and fiscal sustainability while meeting urgent development financing needs. A single tranche stand-alone policy-based loan is considered appropriate since the economic recovery is uncertain, and the Cook Islands does not routinely use loans to meet development finance needs because of debt sustainability considerations. An initial drawdown of $40 million in 2021 will meet the Cook Islands' immediate financing needs. Since financing needs will be largely determined by the degree to which a tourism recovery can be sustained, the remaining $40 million will be made available for potential future drawdowns based on pre-defined conditions, through a precautionary financing option (PFO).

Project Rationale and Linkage to Country/Regional Strategy

The Cook Islands' population of about 17,580 (in 2020) is spread across 15 remote South Pacific islands and two million square kilometers of ocean. It is one of the region's

most tourism-dependent countries, with receipts of 61.4% of gross domestic product (GDP) in fiscal year (FY) 2019. The shift towards tourism has led to rapid development, with basic needs poverty falling from 28.4% in 2006 to 8.4% by 2016. Growth is hampered by factors including a small population, narrow economic base, high exposure to disaster and climate risks, weak business climate, capacity constraints, and high public administration and infrastructure costs. The Cook Islands has no access to international or local credit markets, is not a member of the International Monetary Fund (IMF) or World Bank and does not have a central bank to provide emergency liquidity leaving very limited options for support should the nascent recovery unwind.

Impact Working together to build a dynamic, prosperous and inclusive economic future for Cook Islanders, that is in harmony with our culture and environment (Cook Islands Economic Development Strategy 2030).
Outcome Fiscally sustainable private sector-led economic growth in the Cook Islands restored.
Outputs N/A
Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Webb, James M.
Responsible ADB Department Pacific Department
Responsible ADB Division PASP
Executing Agencies
Ministry of Finance & Economic Management
PO box 120
Cook Islands
Timetable
Concept Clearance 11 Sep 2021
Fact Finding 24 Aug 2021 to 27 Aug 2021
MRM 11 Oct 2021
Approval -
Last Review Mission -
Last PDS Update 13 Sep 2021

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.

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Safeguard Documents See also: Safeguards
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Evaluation Documents See also: Independent Evaluation

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Related Publications

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