Tonga: World Bank Support for Resilient, Inclusive Growth Continues

April 27, 2017

Second of three operations underway to strengthen inclusive growth

WASHINGTON D.C., April 27, 2017 – The World Bank’s Board of Executive Directors today approved US$5 million for the second of three operations that, through targeted policy reforms, support the efforts of the Kingdom of Tonga to improve the management of public finances, boost government accountability and encourage a more dynamic and inclusive economy.

“The government of Tonga is promoting the importance of effective and transparent policy reforms, vital in fostering an inclusive and resilient economy in which all Tongans can participate and benefit, through job opportunities, healthier lifestyles and better government services,” said Hon. Tevita Lavemaau, Tonga’s Minister for Finance and National Planning. “The recent series of policy reforms also reflect the government's commitment to improve its service delivery and is aligned with our Strategic Development Framework 2015-2025 – a medium-term vision guided by civil society, the private sector and government, which envisages a more progressive Tonga supporting a higher quality of life for all.”

The policy reforms supported by the Second Inclusive Growth Development Policy Operation aim to deliver more competitive and transparent public procurement, introduce and monitor budget targets to help ensure fiscal sustainability, improve the management of government spending on wages, and prepare a new regulatory framework for the energy sector. Simplified and more transparent procedures will be designed to attract foreign investment and encourage private sector participation in public enterprises, while healthy living will be incentivized through targeted tax measures on certain foods, alcohol and tobacco.

“The World Bank has been a long-term supporter of policy reform in Tonga for the past six years, and the government’s hard work is evident in the results: above average economic growth, healthier public finances, and commitment to good governance,” said Michel Kerf, Country Director for the World Bank in Timor-Leste, Papua New Guinea, and the Pacific Islands. “This next stage of our support represents the continuation of a strong and productive policy partnership to boost shared prosperity.”

The operation will consist of a US$3.35 million credit and US$1.65 million grant from the International Development Association (IDA), the World Bank’s fund for the most in-need countries.

Several development partners are expected to provide budgetary support to Tonga in the coming year as part of a coordinated policy framework, including the government of Australia, through the Department of Foreign Affairs and Trade; the government of New Zealand, through the Ministry of Foreign Affairs and Trade; the Asian Development Bank; and the European Union.

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