ADB's Work in Tonga

Tonga faces many of the challenges typical for small island developing states, including geographical isolation, limited human and financial resources, and the high costs of doing business and providing basic services. The economy has a narrow base and is dependent on inflows of remittances and external assistance, while the country, more broadly, is highly vulnerable to external shocks including disasters triggered by natural hazards.

ADB has been supporting Tonga since 1972 and is currently assisting with health and aged care, transport infrastructure, climate resilience, disaster recovery, renewable energy, urban development, and public sector management.

To date, ADB has committed 111 public sector loans, grants, and technical assistance totaling $313.6 million to Tonga. Cumulative loan and grant disbursements to Tonga amount to $201.2 million. These were financed by concessional ordinary capital resources, the Asian Development Fund, and other special funds. ADB’s ongoing sovereign portfolio in Tonga includes 1 loan and 12 grants worth $116.1 million.

ADB committed a $7.5-million grant in 2019 to customize a national digital health information system and provided $5.5 million in additional financing in 2021 for coronavirus disease (COVID-19) vaccine support, cold chain equipment, and health system surveillance.

ADB’s Pacific Disaster Resilience Program Phase 3 provided a $10-million disaster-contingent financing grant for early recovery and reconstruction activities following the volcanic eruption and tsunami in January 2022. ADB also provided $500,000 in grants in response to the same disaster in 2022, and $1.03 million in the same year in response to COVID-19, both from the Asian Pacific Disaster Response Fund.

To boost resilience to risks from disasters and climate change, ADB committed a $45-million grant in December 2020 to upgrade the Nuku’alofa International Wharf, with implementation commencing in October 2022.

The $7.2-million grant committed in December 2022 for the Nuku’alofa Network Upgrade Project will help restore reliable access to the electricity supply network and make it more resilient to extreme weather and disasters.

The $53.2-million Tonga Renewable Energy Project is currently helping expand renewable energy generation and install battery storage systems. Together with the Outer Island Renewable Energy Project of $28.1 million, the project supports Tonga’s renewable energy targets and facilitates private sector investment.

ADB is active in the joint policy reform dialogue with the government and other development partners. This process is linked to the budget support disbursement of $12.2 million in June 2020 and $5 million in November 2021 delivered through policy-based grants.

The Integrated Urban Resilience Sector Project, supported by a grant of $18.3 million, is improving urban infrastructure and services in Tonga’s capital, Nuku’alofa, with a focus on building disaster and climate change resilience.

Man fishing early morning in Tonga. Photo: Eric Sales/ADB

Operational challenges. In 2021, the World Risk Index ranked Tonga as the third most at-risk among 181 countries facing constant threats of earthquakes, sea level rise, tsunamis, volcanic eruptions, tropical cyclones, and other related climatic hazards. Tonga’s main challenges are to sustain economic recovery beyond the COVID-19 pandemic, the recent volcanic eruption, and the tsunami in January 2022; mitigate potential damages caused by disasters triggered by natural hazards; and create jobs for its youth. Furthermore, Tonga’s relatively limited business environment restricts the ability of ADB and other development partners to source local contractors and consultants to implement development activities.

ADB is providing technical assistance to build the capacity of the Government of Tonga in improving gender outcomes, private sector development, international arbitration, climate and disaster resilience, social protection, water supply and sanitation, domestic transport networks, and public sector management.

Knowledge Work

ADB brings added value beyond its role in project financing. The bank provides advice to the government and supports policy reform including in public finance and administration, climate change and disasters, state-owned enterprise performance, private sector and financial sector development, and gender equality. ADB’s flagship publications, including the Asian Development Outlook and the Pacific Economic Monitor, provide key analytical work to support decision-making.

ADB also participates in joint missions with its development partners, including the International Monetary Fund’s Article IV consultations, which feature robust discussions with the government on strategic priorities and other critical issues that require coordinated support.

ADB also provides capacity development through workshops and seminars to increase access to knowledge and expertise for counterpart officials in Tonga.

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

Future Directions

ADB’s Pacific Approach, 2021–2025 serves as the country partnership strategy for Tonga and is aligned with the country’s Strategic Development Framework II, 2015–2025. ADB’s approach focuses on building resilience against economic shocks, delivering sustainable services, and promoting inclusive and sustainable growth while recovering from the impacts of the COVID-19 pandemic and the recent disasters triggered by natural hazards. The strategy introduces new priority areas, including a more programmatic approach to climate change support; a deeper focus on long-term capacity support; increased flexibility in procurement and contracting; and an emphasis on gender equality.

ADB assistance to Tonga will focus on promoting renewable energy, improving transport, making Nuku’alofa a more livable city, protecting vulnerable groups, building resilience to climate risks, sustaining good fiscal management, and strengthening health systems. Technical assistance will remain an integral part of ADB support to Tonga.

Last updated: 3 May 2023