ADB Assists Tuvalu With $2.35m Grant for Fiscal Management
ADB Assists Tuvalu With $2.35 Million Grant To Help Improve Fiscal Management
MANILA, PHILIPPINES (23 November 2012) – The Asian Development Bank (ADB) has approved a $2.35 million grant to help the Government of Tuvalu improve its capacity to manage revenue and public spending, as well as the performance of its public enterprises.
The Strengthened Public Financial Management Program will assist the government to implement its multiyear policy reform matrix. The matrix, which was developed by the government in collaboration with ADB, the Governments of Australia and New Zealand, and the World Bank, will help improve state management of the economy and public finances.
“Tuvalu has no known mineral resources and few exports, so it’s almost entirely dependent on external sources of revenue and public sector spending, which generate around 88% of economic activity,” said Laisasa Tora, ADB country economist for Tuvalu. “Given the government’s dominant role, sound management of public finance is essential to Tuvalu’s economic performance.”
Tuvalu’s economy has recovered slowly from the effects of the 2008 global economic crisis and its growth outlook remains modest. Revenues come mainly from the development partner-financed Tuvalu Trust Fund, fishing license fees, licensing royalties for the commercial use of the country’s top-level internet domain (.tv), and grants.
To help the government maintain an adequate level of funds to finance its public expenditure programs, strong measures are needed to boost revenue and reduce low priority spending. To achieve this, the ADB-assisted program aims to help the government improve its policies and processes for setting multi-year budget targets, boosting revenues, strengthening budgeting, procurement, reporting, debt management and spending controls.
The program also supports the government’s efforts to advance its public enterprise reform plans through the partial privatization of the government-owned Vaiaku Lagi Hotel and the merger of the Tuvalu Philatelic Bureau, the Tuvalu Post Office, and the Tuvalu Travel Office, which are all retail operations.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2011, ADB approvals including co-financing totaled $21.7 billion.