World Bank approves US$19 million to support Tonga’s ongoing recovery from Covid-19

The World Bank’s Board of Executive Directors has approved US$19 million in support for Tonga’s ongoing recovery following the impacts of Covid-19.

Tonga is now in an economic recovery phase following the onset of the Covid-19 pandemic – which has severely impacted Tonga’s tourism and construction sectors – as well as the Category 4 Tropical Cyclone Harold, which caused damages and losses of more than 12 percent of Tonga’s total Gross Domestic Product (GDP).

The Tonga Second Resilience Development Policy Operation with a Catastrophe-Deferred Drawdown Option, which builds on earlier support that focused on reducing the economic fallout of the two major shocks, will strengthen Tonga’s fiscal, climate and social resilience, including through support to Tonga’s debt management – through the approval of the country’s Medium-Term Debt Strategy, 2021 – 2025.

This funding will also help to reduce Tonga’s vulnerability to climate change and natural hazards, through support for an updated Disaster Risk Management legislation and disaster risk financing policy. These reforms will help drive a shift from reactive emergency management to more proactive, integrated approaches to mitigating disaster and climate risks.

In addition, the new funding supports several initiatives to drive recovery from the health and social impacts of the pandemic.

These include support for Tonga’s vaccine rollout, and reforms to improve the recruitment and training of Tongan workers taking part in regional labour mobility programs; helping improve access to international employment opportunities.

Furthermore, this support will also help to drive the adoption and implementation of a new sexual harassment policy in the public sector, with the aim of reducing Tonga’s high rates of gender-based violence and sexual harassment.

“While we have been fortunate to be one of the few countries that has been largely spared the health impacts of Covid-19; the Kingdom of Tonga has not been spared the pandemic’s economic impacts,” said Tevita Lavemaau, Tonga’s Minister of Finance. 

“This support from the World Bank represents an important new step in protecting the futures for many Tongans and helps us put in place important foundations for a stronger, more resilient recovery from this, and future shocks.”

This support is funded through the International Development Association (IDA), the World Bank’s fund for the world’s poorest countries, also includes a US$8 million Catastrophe-Deferred Drawdown Option (Cat-DDO), which will allow Tonga to quickly access urgent funding in the event of a catastrophic event or disaster. As one of the countries in the world most exposed to climate change and natural disasters, the Cat-DDO will strengthen the Government of Tonga’s financial resilience to disasters.

“Last year, we worked in partnership with the Government of Tonga to deliver support that helped thousands of Tongan families keep their jobs and put food on the table for their loved ones, despite the impact of two major economic shocks,” said Stephen Ndegwa, World Bank Country Director for Papua New Guinea and the Pacific Islands. “We are pleased to be building on this support through this additional operation; support focused on a sustainable recovery that builds long-term social and economic resilience for all Tongans.”