Asian Development Bank ADB reviews Pacific economies

Published on Radio Australia, Oct. 27, 2009.
(Presenter: Sean Dorney, Australia Network’s Pacific Correspondent – Speaker: Lawrence Greenwood, Vice President of the Asian Development Bank ADB)

The Vice President of the Asian Development Bank, Lawrence Greenwood, says Fiji is the economy in the Pacific the ADB spends most time worrying about. Mr Greenwood has been visiting Australia, and he was in Brisbane during the Pacific Islands Forum Trade Ministers Meeting …

… GREENWOOD: Yeah, the major hit has been, though, in terms of the current impact this really has more to do with the loss of revenues from remittances and tourism and also for some countries like Papua New Guinea, commodities. For most of them it’s those two – remittances and tourism – that have been hit the hardest because that affects their budgets today. The trust funds is more of a medium term issue. Their value has gone down but most of these countries have limits on what they can draw from the Trust Funds in any case and so they’re continuing to draw that. There’s enough liquidity.  

They can still draw those down. So that’s more of a medium term concern about how they’re going to be able to continue to sustain growth through the future particularly if they rely on – such as Tuvalu: they rely on fisheries revenues and things that are essentially decreasing over time. The Solomons and their timber is, of course, a good example as well. So it’s, ah, the immediate issue is how to make up this budget gaps that have appeared now and also in some cases foreign exchange reserve gaps that have appeared because of the fall in revenues from tourism and remittances.

DORNEY: Are there any immediate answers to any of those problems?

GREENWOOD: Yes, the immediate answer is budget support. And this is what we’re working on in terms of four or five Pacific Island countries – again in very close coordination with Australia and New Zealand and other donors. And it is these budget support programs that are built around reforms of their budget processes and other reforms such as state enterprise reform. So it’s not just simply free money, a kind of, you know, ‘Get out of jail free’ card in Monopoly. These are together with important reforms. The countries also see them as very much needed and so that’s what this is about. But it’s very important to fill those budget gaps because otherwise they’re going to reduce their spending on health, education, needed infrastructure. All these expenditures are very much important for their moving forward and reducing poverty in the region.

DORNEY: So in terms of reducing those budget gaps there are ways they can draw on money is there?

GREENWOOD: Yes, so the idea is that donors get together and will provide some additional financing to get them through this period. For example, we just approved a budget package for the Cook Islands to help them through this period. We’re also working on similar budget support programs for Tonga, Samoa and Solomons …
(full interview text).

Links:

Asia Must Promote Employment, Support Those Without Decent Jobs, ADB Says, by ADB, Sept. 30. 2009.

The Impact of the Global Economic Slowdown on Poverty and Sustainable Development in Asia and the Pacific, by ADB, Sept. 28-30. 2009.

ADB on wikipedia;

The Philippines is Better Off Than Other Countries in Asia, Oct. 28, 2009.

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