By Judith Ugwumadu | 22 November 2013
The World Bank approved a $5m loan to help Tonga promote improvements in public financial management and support measures to reduce costs for local businesses by streamlining licensing procedures.
The loan is part of Tonga’s First economic support development policy operation and is one of two planned programmes designed to support the government’s effort to promote a longer lasting recovery by improving the mobilisation and use of public resources.
The bank said that the programme would also address constraints to private sector developments which are needed to create jobs in the longer term.
Franz Drees-Gross, country director for the World Bank in Timor-Leste, Papua New Guinea, and the Pacific Islands, said: ‘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.’
Tonga’s small size and remoteness posed unique economic challenges and made the country of 104,000 people ‘extremely vulnerable to external shocks’, he added.
According to the bank, Tonga was one of the country’s worst hit by the global financial crisis. Despite many gains, the World Bank said the country has faced a slow and difficult recovery.
Lisiate 'Aloveita' Akolo, Tonga’s minister for finance and national planning, added: ‘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 a small island economy.
‘This operation supports government-led reforms that will build business confidence in the economy and improve how we mobilise and utilise public resources to best serve the people of Tonga.’
The operation is funded through a $2.5m grant and a $2.5m credit from the International Development Association, an international financial institution which offers concessional loans and grants to the world’s poorest developing countries.
