ADB releases $12.2m grant to help Tonga’s COVID-19 response and economic recovery

A state of emergency was declared in Tonga on 20 March in response to the COVID-19 pandemic and the public health emergency and closure of its borders have put pressure on Tonga’s health systems and the broader economy.

The Asian Development Bank (ADB) today announced the release of a $12.2 million (27.67 million Tonga pa’anga) grant from its Asian Development Fund to help finance the Government of Tonga’s response to the coronavirus disease (COVID-19) pandemic and support the country’s long-term economic recovery.

A state of emergency was declared in Tonga on 20 March in response to the COVID-19 pandemic and the public health emergency and closure of its borders have put pressure on Tonga’s health systems and the broader economy. The government has announced a 60 million pa’anga short-term assistance program—the Economic and Social Stimulus Package—to combat COVID-19.

“This ADB-supported program will help limit the adverse social and economic impacts stemming from the COVID-19 pandemic and builds on previous policy-based operations to strengthen Tonga’s macroeconomic resilience,” said ADB’s Public Management Economist from its Pacific Subregional Office in Fiji James Webb.

ADB’s assistance is policy-based, meaning the funds are released as budget support once policy actions outlined in the program are successfully completed.

Tonga is presently free of COVID-19 cases, but the first reform area of the program will help fund the management and control of the pandemic and help mitigate the immediate impact on the government’s fiscal sustainability. Other policy actions will help build macroeconomic resilience by addressing sources of fiscal risk.

The second reform area supports vulnerable households and guards against the immediate effects of employment and loss of income for those in the private sector. This reform area will also strengthen public service management and expand the labour supply into semi-skilled opportunities. This will lessen the impacts of future economic shocks by diversifying sources of remitted income and increasing the financial capacity of households.

This is ADB's second round of assistance to Tonga to help mitigate the effects of the pandemic. On 16 April, ADB announced a $6 million grant from its Pacific Disaster Resilience Program (Phase 2) to help finance the country’s response to COVID-19.