WASHINGTON, November 18, 2013 – The World Bank’s Board of Executive Directors today approved US$5 million for the First Economic Support Development Policy Operation to help the Kingdom of Tonga overcome recent economic shocks, support job creation, and build economic resilience.
The First Economic Support Development Policy Operation is one of two planned operations designed to support the government’s effort to promote a longer lasting recovery by improving the mobilization and use of public resources and by addressing constraints to private sector development which is needed to create jobs in the longer term. It will support measures to reduce costs for local businesses by streamlining licensing procedures and will promote improvements in public financial management.
“This operation will support the Government of Tonga to create the conditions for stronger growth and improved economic resilience, both of which are important to ensure that Tonga can continue to improve the quality of life for all citizens,” said Franz Drees-Gross, Country Director for the World Bank in Timor-Leste, Papua New Guinea, and the Pacific Islands.
Tonga’s small size and remoteness pose unique economic challenges and make the country of 104,000 people extremely vulnerable to external shocks. The Global Financial Crisis hit the country hard, with a substantial decline in remittances and tourism revenue negatively affecting households. Despite many gains, the country has faced a slow and difficult recovery.
“We are focused on building a stronger economy that is more resilient to external shocks from the global economy, economic impacts of natural disasters, and the challenges of small island economy,” said Hon. Lisiate ‘Aloveita’ Akolo, Tonga’s Minister for Finance and National Planning. “This operation supports government-led reforms that will build business confidence in the economy and improve how we mobilize and utilize public resources to best serve the people of Tonga.”
The operation is funded through a US$2.5 million grant and a US$2.5 million highly concessional credit from the International Development Association (IDA), the World Bank’s fund for the poorest countries. The operation builds on gains achieved by previous budget support operations in 2011 and 2012.