ADB's Work in Tuvalu

Tuvalu is a small island developing state comprising nine atolls in the South Pacific. It is geographically isolated and highly vulnerable to climatic and economic shocks. With a small private sector and limited resources to support socioeconomic development, the public sector is its main driver of growth.

The country’s national income derives from fishing license fees, trust fund investments, official development assistance, “dotTV” domain name royalties, and remittances. Disasters triggered by natural hazards increase the country’s economic volatility and can substantially alter fiscal outcomes.

To date, ADB has committed 43 public sector loans, grants, and technical assistance totaling $102 million to Tuvalu. Cumulative loan and grant disbursements to Tuvalu amount to $41.2 million. These were financed by concessional ordinary capital resources, and the Asian Development Fund. ADB’s ongoing sovereign portfolio in Tuvalu includes 11 grants worth $65.7 million.

In 2020, ADB provided $1 million in emergency grant financing from the Asia Pacific Disaster Response Fund and $208,000 in technical assistance grant to help Tuvalu procure medical supplies and equipment to protect the population against COVID-19. ADB is also helping expand coverage of new vaccines in the Pacific, including a grant of $2.5 million for Tuvalu under a regional project. Additional financing of $1.5 million was committed in 2021 to procure and distribute COVID-19 vaccines.

Under the Pacific Disaster Resilience Program, the Government of Tuvalu was able to quickly access $3 million in January 2020 in the aftermath of Tropical Cyclone Tino. Phase 3 of the program will provide a $4 million disaster contingent financing grant for early recovery and reconstruction activities following disasters triggered by natural hazards and health emergencies.

To improve the safety and efficiency of maritime transportation, ADB has committed $48.7 million in grant financing since 2016 for the Outer Island Maritime Infrastructure Project, which included the construction of three boat harbors on three outer islands.

In 2020, ADB committed a $6 million assistance to promote renewable energy under the Pacific Renewable Energy Investment Facility. The project is ADB’s first initiative in Tuvalu’s energy sector and will help transform the power systems in Funafuti and on the outer islands.

In 2020, ADB committed $4 million to ensure timely and cost-effective project outcomes for the ensuing Funafuti Water and Sanitation Project, which aims to increase access to safe water and improve sanitation to reduce the incidence of waterborne diseases in the capital. The ensuing project is planned for 2023.

ADB, together with other development partners, has engaged with the Government of Tuvalu to strengthen public service delivery and improve public financial management. This has triggered disbursement of over $11 million in general budget support from ADB’s policy-based grants.

The Outer Island Maritime Infrastructure Project will help improve the safety, efficiency, and sustainability of maritime transport between Funafuti and the outer islands. Photo: Eric Sales/ADB

Operational Challenges. The performance of ADB’s portfolio in Tuvalu can be hampered by limitations in the country’s policy development, program and project design and implementation, and management capacity.

Improvements to fiscal management—including compliance with public procurement regulations, accounting practices, monitoring and reporting, and management of infrastructure investments—remain key challenges to sound public financial management and operational effectiveness. The government’s Public Financial Management Roadmap for 2020–2024 is guiding government and development partner efforts to address related issues, and to enhance coordination and implementation of critical reforms. Given the limited pool of local expertise, ADB and development partners continue to fill capacity gaps using international sources.

Currently, restrictions associated with COVID-19 have significantly delayed the timely and smooth implementation of projects and other ADB activities in Tuvalu.

Knowledge Work

ADB brings added value beyond its role in project financing. ADB acts as a knowledge broker, engaging in regional issues, including climate change and ocean health. ADB organizes a venue for experts, practitioners, academics, and high-level officials to share their experiences and expertise on themes relevant to both national challenges and the Pacific’s response to COVID-19.

ADB also produces knowledge products on macroeconomic forecasting and public sector management issues, published in the Asian Development Outlook and Pacific Economic Monitor. Recent publications discussed the progress of COVID-19 vaccinations across the Pacific, impacts of pandemic-related school closures on learning outcomes and potential earning capacity, medium-term revenue strategies to build fiscal sustainability, and addressing gaps to support recovery in the tourism sector.

  ADB Projects in Tuvalu Project data sheets for loans, grants, TAs

Future Directions

ADB's Pacific Approach, 2021-2025, serving as the country partnership strategy for Tuvalu, aligns with the country’s National Strategy for Sustainable Development (Te Kete), 2021–2030. The approach focuses on building resilience against economic shocks, delivering sustainable services, and promoting inclusive and sustainable growth while recovering from the impacts of COVID-19.

ADB’s assistance program will focus on improving outer-island port facilities, building disaster resilience, and scaling up access to renewable energy sources. ADB will also prioritize water and sanitation improvement, procurement and distribution of new vaccines including COVID-19 vaccines, and good fiscal management. Regional approaches to enhance energy efficiency, climate change, information and communication technology, and economic infrastructure will also be explored through the partnership.