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. 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.

ADB has concentrated its development program in Tuvalu on efforts to improve macroeconomic growth and stability, investment in renewable energy, transport infrastructure, health coverage, and disaster recovery.

To date, ADB has committed 44 public sector loans, grants, and technical assistance totaling $133.6 million to Tuvalu. Cumulative loan and grant disbursements to Tuvalu amount to $54.06 million. These were financed by concessional ordinary capital resources, and the Asian Development Fund, and other special funds. ADB’s ongoing sovereign portfolio in Tuvalu includes 11 grants worth $95.4 million.

In 2020, ADB provided a $1-million grant from the Asia Pacific Disaster Response Fund and a $208,000 technical assistance grant to help Tuvalu procure medical supplies and equipment in addressing the coronavirus disease (COVID-19) pandemic. 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. An additional grant of $1.5 million in 2021 helped procure and distribute COVID-19 vaccines in Tuvalu.

Under the Pacific Disaster Resilience Program, Tuvalu was able to quickly access $3 million in January 2020 in the aftermath of Tropical Cyclone Tino. Another $4 million under Phase 3 of the program was disbursed in November 2022, due to extreme drought conditions in the country.

To improve maritime transportation, ADB has committed $48.7 million in grant financing since 2016 for the Outer Island Maritime Infrastructure Project to construct three boat harbors on three outer islands. In 2022, ADB committed $30 million to improve domestic shipping and connectivity by replacing an aging interisland vessel with a more reliable, resilient, and carbon-efficient one.

In 2020, ADB committed $6 million in assistance to promote renewable energy under the Pacific Renewable Energy Investment Facility to help transform the power systems in Funafuti and on the outer islands.

ADB also committed $4 million to prepare the Funafuti Wastewater and Sanitation Project. The ensuing project planned for 2024 will increase access to safe water and improve sanitation to reduce the incidence of waterborne diseases in the capital.

The bank has also provided general budget support to Tuvalu totaling $7.6 million, disbursed in 2008, 2012, and 2015.

ADB’s Pacific Private Sector Development Initiative, cofinanced by the governments of Australia and New Zealand, has been active in Tuvalu since 2008. This regional technical assistance works to improve the business enabling environment in the Pacific region.

ADB also supports Tuvalu through the Pacific Region Infrastructure Facility, which is a multi-partner coordination and technical assistance facility established in 2008 to help improve the quality and coverage of infrastructure in the Pacific.

Residents of Tuvalu enjoy the sea. 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 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. Restrictions associated with COVID-19 delayed the timely implementation of projects and other ADB activities in Tuvalu. Borders were reopened in December 2022 and international travel has now resumed.

Knowledge Work

ADB brings added value beyond its role in project financing. It acts as a knowledge broker, engaging in regional issues, including climate change and ocean health. The bank 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 the COVID-19 pandemic.

ADB also produces knowledge products on macroeconomic forecasting and public sector management issues, including 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 serves as the country partnership strategy for 12 small Pacific island countries, including Tuvalu. The country operations business plan, 2021–2023 also takes a multicounty approach to identify commonalities and opportunities for operational efficiencies. It supports the three-pronged strategy of helping small island nations reduce costs, manage risks, and create economic value.

ADB’s program of assistance to Tuvalu will focus on improving outer-island port facilities, building disaster resilience, promoting renewable energy sources, and sustaining good fiscal management. Regional approaches to energy efficiency, climate change adaptation, and economic infrastructure will also be explored.

Last updated: 4 May 2023