MANILA, PHILIPPINES (6 June 2024) — The Asian Development Bank (ADB) and the Government of Nauru have signed a $5 million policy-based grant agreement to help assist Nauru introduce a gender-responsive fiscal sustainability approach aimed at reducing debt, improving debt management practices, raising revenue, supporting state-owned enterprises (SOEs), and helping the country’s most vulnerable citizens.
ADB Executive Director Rachel Thompson, on behalf of the Government of Nauru, and ADB Director General for the Pacific Leah Gutierrez signed the agreements at ADB Headquarters in Manila.
The program, comprising two subprograms, is proposed to be financed through two policy-based grants that are $5 million each from the Asian Development Fund (ADF), which provides grants to ADB’s poorest and most vulnerable countries. ADF is replenished every 4 years by the ADF’s donor countries.
“By reducing debt, improving debt management practices, raising revenue, supporting better operating SOEs, and helping Nauru’s most vulnerable people in a more balanced manner, the program will provide a platform for sustainable and inclusive growth,” said Ms. Gutierrez. “This is critical given Nauru’s narrow economy and limited opportunities to attract investment.”
The ADB-supported Improving Fiscal Sustainability Program will help the government strengthen gender-responsive fiscal sustainability by implementing policy and institutional reforms to enhance fiscal and debt management; strengthen the governance of the SOEs; and ensure fiscally responsible support for vulnerable groups, especially women.
Subprogram 1 supports the government’s debt action plan to reduce debt levels to sustainable levels and modernize its debt management arrangements. The International Monetary Fund now classifies Nauru’s debt as sustainable. In addition, subprogram 1 supported the government’s review of its public financial management system and digitizing its customs processing procedures to improve efficiency and accountability in customs revenue collection. To support the implementation of the Public Enterprises Act, subprogram 1 strengthens the government’s oversight of its SOEs. Subprogram 1 supported the government in adopting a social protection strategy and implementation roadmap to ensure vulnerable groups get the support they need in a fiscally responsible manner. Finally, subprogram 1 supported policy reforms that provide a basis to meet the challenges of climate change and their international commitments. An essential feature of the program is ensuring that gender considerations are prominent and critical across all reform areas.
The ADB-supported program builds on previous ADB policy-based operations and public sector management engagements in Nauru, while supporting ADB’s Strategy 2030 of strengthening governance and institutional capacity. ADB is a primary partner in policy dialogue and coordinates with other development partners on policy reforms, particularly the Government of Australia, and the Government of New Zealand who is providing a parallel $670,000 grant.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
