Pacific Economic Monitor - July 2018 | Asian Development Bank

Pacific Economic Monitor - July 2018

Publication | July 2018
Pacific Economic Monitor - July 2018

This issue highlights the economic prospects of the Pacific developing member countries (Pacific DMCs) and stresses the importance of improving the quality and access to basic and sustainable utilities in the Pacific DMCs.

  View on the Data Library  

Access to electricity is low in the Pacific, particularly in the more remote and less developed parts of the subregion. Factors contributing to this include dependence on costly fossil fuels for power generation, inadequate investment in infrastructure, and electricity services that may be beyond the means of poorer rural households.

To help address these challenges, most Pacific governments are taking steps to shift toward renewable energy and ultimately meet ambitious targets under international climate change commitments. Further, they have made strategic investments in more effi cient transmission networks, and better collection and payment systems.

Such measures must be complemented by improvements in the performance of state-owned utilities, who are typically responsible for providing electricity services in Pacific economies, including further promotion of private sector participation and clarifying policies behind tariff-setting to ensure financial self-sustainability and minimize the need for government support.

Highlights

  • Steady global economic growth expected amid continuing risks. Although protectionist policies, which have resulted in growing trade tensions, and geopolitical strains underpin a more cautious outlook, global growth is projected to maintain its recent momentum. The Pacific’s major economic partners—Australia, New Zealand, and the United States—are performing well, but growth in the subregion is seen to slow this year in part due to the impacts of recent disasters in Papua New Guinea and Tonga.
  • Low access to basic services in the Pacific. For example, access to electricity remains well-below the global average, particularly in more remote outer island communities. Most Pacific governments are stepping up renewable energy investments to help reduce electricity costs and progress toward ambitious international climate change commitments.
  • Reform and capacity building for sustainable utilities. Investments in basic services must be complemented by policy and regulatory reforms as well as capacity development to help support a shift toward more commercially oriented utilities. Most importantly, such a shift will require tariff s that reflect the full cost of service delivery, including asset depreciation, but with more transparent and progressive community service obligations addressing equity considerations.

Policy Briefs

Access to basic utilities is both a human right and fundamental to upholding human rights. However, the big differences in the degrees of access across sectors and among Pacific economies highlight the hindrances faced by utilities in improving the quality and reach of their services. These include weak institutional capacity and financial management, and lack of planning, coordination, and policy support.

Building a more efficient and financially self-sufficient utilities sector requires change on all levels of implementation. These can range from developing human resources, to promoting commercially oriented utilities, to developing a holistic and programmatic approach to sector management, to ensuring that the necessary legal, policy, and regulatory support is in place to improve performance and extend services to a greater share of the population.

  • Improving access to utilities in the Pacific
  • Sustainable energy in the Pacific—back to basics
  • Institutional reform to improve water services in Timor-Leste

About the Pacific Economic Monitor

The Pacific Economic Monitor provides an update of developments in Pacific economies and explores topical policy issues. This bi-annual publication is produced by ADB with contributions from development partners and knowledge organizations engaged in economic analysis of the Pacific.

Contents 

  • Highlights
  • The Economic Setting
  • Country Economic Issues
  • Policy Briefs
    • Improving access to utilities in the Pacific
    • Sustainable energy in the Pacific—back to basics
    • Institutional reform to improve water services in Timor-Leste
  • Economic Indicators