Country Operations Business Plan. Nauru October 2016

Transcription

1 Country Operations Business Plan October 2016 Nauru This document is being disclosed to the public in accordance with ADB s Public Communications Policy 2011.

2 CURRENCY EQUIVALENTS (as of 7 September 2016) Currency unit Australian dollar/s (A$) A$1.00 = $ $1.00 = A$ ABBREVIATIONS ADB Asian Development Bank ADF Asian Development Fund COBP country operations business plan ICT information and communication technology NSDS National Sustainable Development Strategy OCR ordinary capital resources PSM public sector management TA technical assistance NOTES In this report, $ refers to US dollars. Vice-President S. Groff, Operations 2 Director General X. Yao, Pacific Department (PARD) Regional Director X. Fan, Pacific Liaison and Coordination Office (PLCO), PARD Team leader Team members R. Rajah, Senior Economics Officer, PARD S. Bhattacharya, Senior Infrastructure Specialist, PARD C. Edmonds, Senior Economist, PARD H. Everett, Senior Country Specialist, PARD R. He, Senior Operations Assistant, PARD P. Indrawansa, Senior Project Officer, PARD A. Maxwell, Principal Energy Specialist, PARD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

3 CONTENTS Page I. CONSISTENCY OF BUSINESS PLAN WITH COUNTRY PARTNERSHIP STRATEGY 1 II. INDICATIVE RESOURCE PARAMETERS 1 III. SUMMARY OF CHANGES TO LENDING AND NONLENDING PROGRAMS 2 APPENDIXES 1. Country Assistance Results Areas 3 2. List of Linked Documents 4 3. Indicative Assistance Pipeline 5 4. Assistance Program for Current Year 7 5. Indicative Knowledge Publications and Events 9

4 I. CONSISTENCY OF BUSINESS PLAN WITH COUNTRY PARTNERSHIP STRATEGY 1. Economic update. Nauru s economy is benefitting from substantial windfall income associated with its asylum seeker and refugee program and record fishing license fee revenue. As a result, national income remains comparable to historical highs. This is despite disruptions to phosphate exports which have resulted in sharp fluctuations in economic growth in recent years. Nauru s strong overall economic and fiscal situation is expected to continue in the coming years. However uncertainty around major revenue sources remains high and ensuring fiscal sustainability is a key concern. Heightened activity on the island and the integration of a sizeable refugee population are also creating significant pressure on the adequacy of existing infrastructure, public services, and available land and housing. The key development challenge remains managing this situation to build a more sustainable economic future. 2. Strategic alignment. The country operations business plan (COBP), continues the strategic direction of the Asian Development Bank (ADB) in Nauru in the areas of transport, energy, and public sector management (PSM). It also begins new support for information and communication technology (ICT) and urban development. These directions are aligned with the Pacific Approach which acts as the country partnership strategy for Nauru. 1 The program pipeline will contribute to the objectives of the Pacific Approach by: (i) reducing costs through infrastructure development; (ii) managing risk by strengthening PSM; and (iii) enabling value creation through improving ICT connectivity. These are also priorities under Nauru s National Sustainable Development Strategy (NSDS), II. INDICATIVE RESOURCE PARAMETERS 3. Nauru, a group A developing member country, is eligible for Asian Development Fund (ADF) grants. 3 The indicative ADF grant resource allocation for is $18.09 million. This includes $2.71 million from disaster risk reduction (DRR) resources. 4 The final allocation will depend on available resources and the outcome of the country performance assessments. Cofinancing and funding from other sources will also be explored, including from regional concessional resources. The 2015 debt distress classification of Nauru was assessed to be at high risk of debt distress. In accordance with the ADF grants framework, the country is to receive 100% of its country allocation in grants in This will be subject to a 20% volume discount on the grant portion of the country allocation. 5 ADB will also provide technical assistance (TA). For improved efficiency this will be delivered through regional TA projects. 4. Nauru s indicative allocation has risen significantly with the introduction of changes under the ADF 12 replenishment to increase the ADF country base allocation from about $3 million to around $6 million per year. Substantial new assistance is thus planned. These changes are reflected in the country assistance results areas (Appendix 1). The program pipeline continues existing plans for a Port Development Project in A subregional undersea cable project is also planned for A policy-based program is planned for 2018 to 1 ADB Pacific Approach, Manila (accessible from the list of linked documents in Appendix 2). 2 Government of Nauru Republic of Nauru: National Sustainable Development Strategy, (as revised 2009). Nauru (accessible from the list of linked documents in Appendix 2). 3 Terminology reflects the combination of ADF lending operations with the OCR balance sheet that will take effect on 1 January For 2016, COL should be understood as ADF lending. 4 The DRR aims to strengthen disaster resilience and encourage investment. This additional financing will support (i) stand-alone DRR projects, (ii) discrete DRR components of other grant and loan projects, and (iii) the incremental cost in strengthening the disaster resilience of infrastructure investments. 5 The proportion of grants for the resource allocations in will be determined by future annual debt distress classifications in accordance with the ADF grants framework.

5 2 continue support for PSM. A solar power development project and urban development project are also included as standby projects for 2018 and 2019 respectively. Substantial cofinancing will be actively sought. The proposed ADF program for is summarized in Table A3.1 and the TA pipeline for in Table A3.2 (Appendix 3). III. SUMMARY OF CHANGES TO LENDING AND NONLENDING PROGRAMS 5. Port Development Project. Construction of a new port facility remains the centerpiece of the country program. Nauru lacks a natural harbor and its port mooring system is inadequate for meeting growing demand for container traffic while being difficult to manage, prone to damage, and expensive to maintain and repair. The port mooring system remains heavily damaged. This has forced the Nauru Port Authority to make use of tugboats to help stabilize cargo ships, at significant cost and safety concern, resulting in supply shortages and significant disruption to phosphate exports. Resources allocated for the project have been increased from $6.00 million to $9.23 million to support port reform and institutional strengthening and provide support for operations and maintenance. 6. Information and communication technology development. Nauru uses a costly and unreliable satellite-based internet service. A subregional undersea cable project in 2017, in partnership with the governments of Kiribati and the Federated States of Micronesia, provides Nauru with a unique opportunity to enhance internet bandwidth, improve reliability, lower costs, and create new opportunities for e-government and e-business approaches. ADB will allocate $5 million from the country indicative resource allocation and seek an additional $10 million from ADF regional pool concessional resources to support Nauru s participation in the project. TA will also be provided for project preparation and institutional and policy support under regional TA. 7. Solar Power Development Project. Access to grid electricity is virtually 100% however the cost of power generation is high due to reliance on imported diesel for generation and poorly maintained assets. Renewable energy currently provides only 3% of national electricity demand. Increasing solar power generation would deliver significant benefits, including reduced burden on the state budget, due to fuel subsidies for power generation, and household finances as electricity tariffs are reformed to move towards greater cost recovery. ADB will allocate $4 million on a standby basis contingent on the mobilization of significant cofinancing, including from global climate change financing mechanisms. 8. Urban development. Continued population growth, the integration of a sizeable refugee population, and heightened activity on the island are placing significant pressure on limited coastal land and available housing as well as urban services. The majority of the island requires rehabilitation due to extensive phosphate mining but this is yet to occur in any significant way. Institutional and policy issues, including land ownership, are complicating factors. ADB will take a staged approach. ADB will conduct initial diagnostics and implement a TA to strengthen policies and institutions in Public sector management. ADB will continue support for PSM through a successor in 2018 to the Fiscal Sustainability Reform Program, processed in 2016 (Appendix 4). The Fiscal Sustainability Reform Program II program is allocated $5 million and will continue ADB support for fiscal and public finance reform, with a focus on improving policy-based budgeting, introducing a robust fiscal strategy, strengthening the links between planning and budgeting, developing an effective asset management system, continuing revenue mobilization efforts, and improving transparency and accountability. ADB will provide TA to support this agenda under regional TA projects. The The list of knowledge publications and events is in Appendix 5.

6 Appendix 1 3 COUNTRY ASSISTANCE RESULTS AREAS ADB Key Country Development Outcomes that ADB Contributes to 1. Transport Key Areas of Assistance Indicative Resource Allocation in Changes from Last COBP Further development and improved delivery of regional public goods and services, and promotion of greater economic integration Water transport Amount: $9.3 million (ADF) and $14.0 million (cofinancing) Share of COBP envelope: 45.9% Increased ADF resourcing from $6.0 million 2. Information and Communication Technology Improved ICT connectivity and access ICT infrastructure ICT strategy and policy, and capacity development Amount: $15.0 million (ADF) Share of COBP envelope: 29.5% ICT project added to pipeline 3. Energy Improved energy sustainability Reduced greenhouse gas emissions Renewable energy generation solar Amount: $4.0 million (ADF) Share of COBP envelope: 7.9% Energy project added (standby) to pipeline 4. Water and Other Urban Infrastructure and Services Improved access to safe and affordable housing and urban services Improved enabling environment for private investment and enterprise development Urban policy, institutional, and capacity development Urban housing Amount: $3.5 million (ADF) Share of COBP envelope: 6.9% Urban development project added (standby) to pipeline 5. Public Sector Management Improved public sector effectiveness Economic affairs management Public expenditure and fiscal management Amount: $5.0 million (ADF) Share of COBP envelope: 9.8% Policy-based program added to pipeline ADB = Asian Development Bank, ADF = Asian Development Fund, COBP = country operations business plan, ICT = information and communication technology. Source: Asian Development Bank estimates.

7 4 Appendix 2 1. Pacific Approach, LIST OF LINKED DOCUMENTS 2. Republic of Nauru: National Sustainable Development Strategy, (as revised 2009)

8 Appendix 3 5 Poverty Targeting INDICATIVE ASSISTANCE PIPELINE Table A3.1: Lending Products, Strategic Agendas and Drivers of Change Project/Program Name Sector 2017 Firm Port Development Project TRA GI IEG/RCI/ PSD Division Year of PPTA/ PDA Total OCR Cost ($ million) ADB ADF COL Grants Total Gov t Cofinance PLCO Subregional Undersea ICT GI IEG/RCI/ PAUS Cable Project GCD/ PSD Total Firm Fiscal Sustainability Reform Program II Solar Power Development Project PSM GI IEG/GCD PLCO none TBD ENE GI ESG/IEG/ PSD PATE TBD TBD Total TBD TBD 2019 Standby Urban Development WUS GI ESG PAUS/ TBD TBD Project PLCO Total TBD TBD ADB = Asian Development Bank; ADF = Asian Development Fund; COL = concessional OCR lending; ENE = energy, ESG = environmentally sustainable growth; GCD = governance and capacity development; GI = general intervention; Gov t = government; ICT = information and communication technology; IEG = inclusive economic growth; OCR = ordinary capital resources; PATE = Transport, Energy and Natural Resources Division, PAUS = Urban, Social Development and Public Management Division; PDA = project design advance; PLCO = Pacific Liaison and Coordination Office; PPTA = project preparatory technical assistance; PSD = Private Sector Development; PSM = public sector management; RCI = regional integration; TBD = to be determined; TRA = transport; WUS = water and other urban infrastructure and services. Source: Asian Development Bank.

9 6 Appendix 3 Table A3.2: Nonlending Products and Services, Sources of Funding ADB Others Assistance Name Sector Division Assistance Type Source Amount ($ 000) Source Amount ($ 000) Total ($ 000) 2017 Standby Preparing the Solar Power Development ENE PATE PPTA TASF 1, ,000 Project Total 1, , Standby Preparing the Urban Development Project WUS PAUS/PLCO PPTA TASF Total Total ADB = Asian Development Bank; ENE = energy, ETSW = economic, thematic, and sector work; PATE = Transport, Energy and Natural Resources Division, PAUS = Urban, Social Development and Public Management Division; PLCO = Pacific Liaison and Coordination Office; PPTA = project preparatory technical assistance; TASF = Technical Assistance Special Fund; WUS = water and other urban infrastructure and services. Source: Asian Development Bank.

10 Appendix 4 7 ASSISTANCE PROGRAM FOR CURRENT YEAR Poverty Targeting Table A4.1: Lending Products, 2016 Strategic Agendas and Drivers of Change Year of PPTA/ PDA Cost ($ million) ADB ADF Loans Grants Total Cofinance Project/Program Name Sector Division Total OCR Gov t Firm Fiscal Sustainability PSM GI IEG/GCD PAUS/ Reform Program PLCO Total ADB = Asian Development Bank; ADF = Asian Development Fund; GCD = governance and capacity development; GI = general intervention; Gov t = government; IEG = inclusive economic growth; OCR = ordinary capital resources; PAUS = Urban, Social Development and Public Management Division; PDA = project design advance; PLCO = Pacific Liaison and Coordination Office; PPTA = project preparatory technical assistance; PSM = public sector management. Source: Asian Development Bank.

11 8 Appendix 4 Table A4.2: Nonlending Products and Services, 2016 Sources of Funding ADB Others Assistance Name Sector Division Assistance Type Source Amount ($ 000) Source Amount ($ 000) Total ($ 000) Firm Strengthening Financial Inclusion and Financial Sector Development FIN PLCO CDTA FSDPSF Total ADB = Asian Development Bank, CDTA = capacity development technical assistance, FIN = finance, FSDPF = Financial Sector Development Partnership Special Fund, PLCO = Pacific Liaison and Coordination Office. Source: Asian Development Bank.

12 Appendix 5 9 INDICATIVE KNOWLEDGE PUBLICATIONS AND EVENTS Table A5.1: Knowledge Publications and Events for 2017 Title of Publication or Event Subject a Type b Group or Thematic Group c Department or Sector Knowledge Publications (8) Pacific Economic Monitor (July 2017) Economics Publication or Pacific Energy Update 2017 Energy Publication or ADO 2017-Small Pacific Economies Economics Publication or Pacific Liaison and Coordination Office 2017 ADB administration and governance Publication or Document: Awareness raising brochure or leaflet Pacific Transport Update 2017 Transport Publication or Asian Development Bank and Nauru: Fact Sheet ADB administration and governance Publication or Pacific Economic Monitor (December 2017) Economics Publication or Technical Assistance d PARD RETA 8565 PARD PARD PARD PARD Nauru Intergenerational Trust Fund Policy Brief Finance Economics Publication or Document: Policy brief PARD DER PARD RETA 8565 ADB = Asian Development Bank, PARD = Pacific Department, RETA = Regional Technical Assistance. Note: Publications may include databases, multimedia, and other forms of documentation. Events may include event organization and training or capacity development. The table includes additional knowledge publications and events delivered outside the list of indicative knowledge publications and events included in the 2016 country operations business plan. a Agriculture and natural resources; capacity development; climate change; economics; education; energy; environment; finance; gender; governance and public sector management; health; information and communication technology; industry and trade; poverty; private sector; regional cooperation and integration; social development and protection; transport; urban development; water. b Publication or document; database; multimedia; event organization; training or capacity development.

13 10 Appendix 5 c ADBI; BOD; BPMS; CRPN; CTL; CWRD; DER; EARD; ERCD; ERO; IED; JRO; NARO; OAG; OAI; OAS; OCO; OCRP; OGC; OIST; OOMP; OPPP; OPR; ORM; OSFMD; OSPF; PARD; PSOD; SARD; SDCC; SEC; SERD; SPD; TD; VPAC; VPFR; VPKM; VPO1; VPO2; VPPC; Climate Change and Disaster Risk Management; Education; Energy; Environment; Finance; Gender Equity; Governance; Health; Operations; Public Private Partnership; Regional Cooperation and Integration; Rural Development and Food Security (Agriculture); Social Development; Transport; Urban; Water. d TA numbers under which this publication or event is delivered. Source: Asian Development Bank.

14 Appendix 5 11 Table A5.2: Additional Knowledge Publications and Events Delivered in 2016 Title of Publication or Event Subject a Type b Group or Thematic Group c Department or Sector Knowledge Publications (6) Pacific Economic Monitor (July 2016) Economics Agriculture and natural resources Pacific Liaison and Coordination Office Brochure ADB administration and governance Publication or Publication or Document: Awareness raising brochure or leaflet ADO 2016-Small Pacific Economies Economics Publication or Pacific Energy Update 2016 Energy Publication or Document: Awareness raising brochure or leaflet Pacific Economic Monitor (December 2016) Economics Publication or Asian Development Bank and Nauru: Fact Sheet 2015 Economics ADB administration and governance Publication or Document: Awareness raising brochure or leaflet Technical Assistance d PARD RETA 8565 PARD PARD PARD PARD RETA 8565 DER PARD ADB = Asian Development Bank, PARD = Pacific Department, RETA = Regional technical assistance. Note: Publications may include databases, multimedia, and other forms of documentation. Events may include event organization and training or capacity development. a Agriculture and natural resources; capacity development; climate change; economics; education; energy; environment; finance; gender; governance and public sector management; health; information and communication technology; industry and trade; poverty; private sector; regional cooperation and integration; social development and protection; transport; urban development; water. b Publication or document; database; multimedia; event organization; training or capacity development.

15 12 Appendix 5 c ADBI; BOD; BPMS; CRPN; CTL; CWRD; DER; EARD; ERCD; ERO; IED; JRO; NARO; OAG; OAI; OAS; OCO; OCRP; OGC; OIST; OOMP; OPPP; OPR; ORM; OSFMD; OSPF; PARD; PSOD; SARD; SDCC; SEC; SERD; SPD; TD; VPAC; VPFR; VPKM; VPO1; VPO2; VPPC; Climate Change and Disaster Risk Management; Education; Energy; Environment; Finance; Gender Equity; Governance; Health; Operations; Public Private Partnership; Regional Cooperation and Integration; Rural Development and Food Security (Agriculture); Social Development; Transport; Urban; Water. d TA numbers under which this publication or event is delivered. Source: Asian Development Bank.