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World Bank Approves First Country Assistance Strategy for Tuvalu

December 13, 2011

Building Resilience for World Bank’s Smallest Member

WASHINGTON, December 13, 2011 – The World Bank's Board of Directors today approved its first ever Country Assistance Strategy (CAS) for Tuvalu, the World Bank’s smallest and one of its newest members. It also approved a $US 62 million grant to improve international air travel in the Pacific Islands, and help connect the people of Tuvalu, Tonga and Kiribati to the world.
Located between Australia and Hawaii, the island nation of Tuvalu faces unique development challenges. It is one of the world’s smallest and most isolated countries. Comprised of nine islands, Tuvalu has a total land area of just 26km spread over thousands of kilometers of ocean, with a population of around 10,500 people. As the world’s second lowest-lying country, it is already experiencing the impact of climate change and rising sea level such as flooding. There are also regular and sometimes severe droughts.
Tuvalu is vulnerable to external shocks such as the recent food and fuel crises and is suffering the ongoing effects of the global financial crisis, which lowered the value of its Trust Fund – a major source of income. Other important revenue sources are also subject to volatilities and include foreign aid, fishing licenses and leasing out the country’s ‘.tv’ internet domain name.
Tuvalu’s CAS aims to assist the country in reducing isolation, strengthening the economy and building economic resilience. Supported by the Government of Australia through the Pacific Region Infrastructure Facility (PRIF), the first grant to Tuvalu will focus on rehabilitating airport infrastructure as part of the Pacific Regional Aviation Program. Safer and more efficient air travel will help connect the people of Tuvalu to greater regional and global opportunities such as jobs, services and markets.
“Like many of the smaller Pacific Island economies there are unique challenges in ensuring sustainable development in Tuvalu, arising from extreme remoteness and economic isolation, a tiny and dispersed population and very real capacity constraints,” said Ferid Belhaj, World Bank Country Director for the Pacific Islands. “The new Strategy is flexible so as to meet these needs and will work closely with partners to accelerate progress towards the Millennium Development Goals, creating a bigger and brighter future for the Bank’s smallest member.”
Planned development activities also include budget support to help strengthen the economy following the global slowdown, support to a regional fisheries’ strategy, and assistance for climate change. In order to expand job opportunities, the World Bank will also help Tuvaluans take better advantage of regional seasonal work programs through education, trainings and improved air transport.
Aid coordination is a priority for Tuvalu. In a recent statement at the Busan Forum on Aid Effectiveness, the Government of Tuvalu requested increased donor alignment to avoid overwhelming limited government capacity. A World Bank team is currently participating in a consultation with the Government and Tuvalu’s seven principal donor partners to outline how donors can best support Tuvalu’s national development priorities.
Tuvalu will receive grants from the World Bank through the International Development Association (IDA), the Bank’s fund for the poorest countries. Total gross IDA funds that will be available for Tuvalu are estimated to be US$ 14.4 million over three years from 2012-2015. The Pacific Aviation Investment Program is being supported by IDA at a total program cost of US $62 million in the first phase, covering Tonga, Tuvalu and Kiribati, as well as the Government of Australia through the Pacific Region Infrastructure Facility (PRIF) (US$ 3.19 million).

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