1 Country Operations Business Plan October 2016 Fiji 2017 2019 This document is being disclosed to the public in accordance with ADB's Public Communications Policy 2011.
CURRENCY EQUIVALENTS (as of 29 September 2016) Currency unit Fiji dollar/s (F$) F$1.00 = $0.4889 $1.00 = F$2.045 ABBREVIATIONS ADB COBP CPS GDP OCR PDA PPP TA Asian Development Bank country operations business plan country partnership strategy gross domestic product ordinary capital resources project design advance public private partnership technical assistance NOTES In this report, "$" refers to US dollars. Vice-President S. Groff, Operations 2 Director General X. Yao, Pacific Department (PARD) Regional Director R. Jauncey, Pacific Subregional Office, PARD Team leader Team members C. Currie, Senior Country Economist, PARD T. Faletau, Safeguards Officer, PARD D. Fay, Unit Head, Project Administration, PARD S. Lee, Principal Social Development Specialist (Gender and Development), PARD D. Ling, Transport Specialist, PARD M. Lototele, Senior Economics Officer, PARD M. Hazelman, Associate Project Analyst, PARD S. B. Olsson, Country Coordination Officer, PARD R. Rabanal, Senior Economics Officer, PARD P. Safran, Principal Operations Coordination Specialist (Fragile Situations), PARD L. Sovea, Senior Programs Assistant, PARD M. C. Tinio, Associate Economics and Statistics Analyst, PARD L. Tora, Country Economist, PARD J. M. Trainor, Energy Specialist, PARD H. Uusimaa, Climate Change Specialist, PARD J. Wolff, Economist (Public Finance), PARD A. Woodruff, Urban Development 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.
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. List of Indicative Knowledge Publication and Events 8
I. CONSISTENCY OF BUSINESS PLAN WITH COUNTRY PARTNERSHIP STRATEGY 1 1. Country partnership strategy. The country operations business plan 2017 2019 for Fiji is the second under the Fiji country partnership strategy (CPS) 2014 2018. The strategy was developed in close consultation with the government and other stakeholders, and is aligned with the government s Green Growth Strategy 2015; the Pacific Approach 2016 2020 endorsed by the Board in August 2016; and ADB s Midterm Review of Strategy 2020. The CPS and COBP 2017 2019 focus on three interlinked priorities: (i) raising Fiji s longer-term growth potential, (ii) building resilience and reducing vulnerability, and (iii) reducing poverty through more inclusive growth and better service delivery. The country assistance results areas are in Appendix 1. A list of linked documents is in Appendix 2. 2. Recent economic, social, and political developments. Fiji has had five consecutive years of economic growth and is on target for a sixth in 2016, 2 making this the longest period of sustained growth since independence in 1970. investment in Fiji has exceeded the government s target of 25% of gross domestic product (GDP) since 2014, largely driven by higher public expenditure to address infrastructure gaps, particularly in transport. Private investment is buoyant, totaling almost 20% of GDP in 2015, as investor confidence has grown. Fiji s bilateral and multilateral development partners are also supporting substantial investment in social and economic infrastructure. Poverty is estimated to have declined from 33.1% to 28.1% between 2008 and 2013. The political situation remains stable. 3. However, Fiji is vulnerable to natural disasters, which affect sustained economic growth and poverty reduction. In February 2016, Tropical Cyclone Winston created $1.36 billion in damage and losses, an amount equivalent to 31% of GDP. The scale of the disaster has led the government to refocus its 2017 2019 expenditure program toward recovery and rehabilitation. The first budget for Fiji s new fiscal year, which begins on 1 August, forecasts a deficit of $468 million, equivalent to 4.9% of GDP. 4. Portfolio performance. ADB has engaged with Fiji since the country became a member in 1970, committing $469.9 million in loans, $4.0 in grants and $32.2 million in technical assistance (TA). The investment portfolio currently consists of a $100 million transport sector investment, approved in December 2014, and a $2.6 million project design advance (PDA) approved in December 2015 for an urban water supply and wastewater management project for Board consideration in December 2016. Other previous investments closed successfully at the end of 2014, including the third Fiji road upgrade project, the Suva Nausori water supply and sewerage project, and an emergency recovery project following devastating floods in early 2009. ADB investments in Fiji have generally achieved key objectives, despite some delays and cost overruns. II. INDICATIVE RESOURCE PARAMETERS 5. Resource envelope, 2017 2019. Fiji, a Group C developing member country, is eligible for regular ordinary capital resources (OCR) lending. 3 The indicative resource allocation available during 2017 2019 for sovereign operations is $200 million. Cofinancing and funding 1 ADB. 2014 Country Partnership Strategy: Fiji 2014 2018. Manila (accessible from the list of linked documents in Appendix 2). 2 Gross domestic product (GDP) growth for 2016 is estimated at 2.4%. 3 Terminology reflects combination of Asian Development Fund (ADF) lending operations with the ordinary capital resources (OCR) balance sheet that will take effect on 1 January 2017.
2 from other sources, including OCR funds set aside for regional cooperation and integration, will be explored. 6. The indicative 2017 2019 lending pipeline contains $236.1 million in firm and tentative investments. The indicative lending assistance pipeline is in Appendix 3, Table A3.1. It includes: (i) a multitranche (two-tranche) financing facility (MFF) for the urban water supply and wastewater management project (an ADB loan of $111.1 million in 2019 in addition to commitments of $42.1 million to be approved in 2016, as well as cofinancing from the European Investment Bank, the Green Climate Fund, and the government); (ii) 3 years of a proposed 4-year programmatic policy-based loan series to sustain privatesector-led growth, starting in 2017 with $25 million of ADB financing per year as well as cofinancing from the World Bank and other bilateral partners; and (iii) a potential new transport (ports) infrastructure investment of up to $50 million in 2019 to continue to improve access to markets. A ports master plan is underway. Future investments will be supported by project preparatory technical assistance proposed for 2018 and by cofinancing from development partners. 7. Technical Assistance. Indicative technical assistance of up to $1.8 million will develop sector plans, prepare investments, and build capacity for broader policy and institutional reform. Fiji will continue to benefit from regional TA in line with the regional operations business plan, 2016 2018. 4 Priorities include building capacity for economic and financial management, providing economic policy advice; mitigating climate change impacts; and fostering private sector development. 5 The indicative nonlending assistance pipeline for 2017 2019 is in Appendix 3, Table A3.2. III. SUMMARY OF CHANGES TO LENDING AND NONLENDING PROGRAMS 8. The lending pipeline for 2017 2019 includes a change in lending modality for the urban water supply and wastewater management project from a project loan to a multitranche financing facility with tranches in 2016 and 2019. (approved by the Vice-President Operations 2 on 6 September 2016). The government requested the change, which will help maintain prudent debt-to-gdp ratios. The transport infrastructure project in 2018 has been delayed to 2019 and is confirmed as a ports project with supporting PPTA in 2018). The electricity project proposed for 2019 has been delayed as the government is considering options for more private investment in the power sector. The 2016 assistance program is in Appendix 4 and the list of indicative knowledge publications and events is in Appendix 5. 4 ADB. 2015. Pacific: Regional Operations Business Plan 2016 2018. Manila. 5 ADB. 2013. Private Sector Development Initiative, Phase 3 Manila. ADB. 2011. Pacific Economic Management Enhanced Economic Management (Subproject 2). Manila. ADB 2014 Pacific Business Investment Facility. Manila.
COUNTRY ASSISTANCE RESULTS AREAS ADB Key Country Development Outcomes that ADB Contributes to 1. Transport Safer and more efficient movement of passengers and cargo Key Areas of Assistance National, provincial, and rural roads Maritime berthing infrastructure Indicative Resource Allocation in 2017 2019 Amount: $50 million (standby) Changes from Last COBP No change Maritime safety: Land and maritime transport policies and reforms 2. Water and Other Urban Infrastructure and Services Increased access to reliable and adequate supplies of safe water in urban centers and to sanitary and environmentally safe sewerage waste systems and treatment facilities Water and sewerage regulation Urban water supply and wastewater management project Capacity development technical assistance for strengthening water and sewerage sector regulation 3. Public sector management (Other Area) Stronger fiscal discipline and improved delivery of public services Stronger resource mobilization and private-sector-led growth Four year medium-term policy matrix to improve revenue and expenditure management and debt management beginning 2017 2020. (i) Improve the financial performance of SOEs/ reduce fiscal strain, (ii) improve infrastructure service delivery, and (iii) facilitate private investment (led by PSDI). Amount $111.1 million (OCR) and $49.2 million (cofinancing) Share of COBP envelope: 60% Amount $75 million (OCR) and $75 million (cofinancing) Share of COBP envelope: 40% Multi-tranche financing facility with first tranche approved in 2016 and second in 2019 A programmatic policy based loan proposed for 2017 to 2019 (previously $25 million in 2016 2018) ADB = Asian Development Bank, COBP = country operations business plan, OCR = ordinary capital resources, PSDI = Private Sector Development Initiative, SOE = state-owned enterprise Appendix 1 3
4 Appendix 2 LIST OF LINKED DOCUMENTS http://www.adb.org/documents/cobp/?id=fij-2017 1. Country Partnership Strategy: Fiji, 2014 2018 2. ADB s Pacific Approach, 2016 2020 3. Road Map for Democracy and Sustainable Socio-economic Development, 2010 2014 4. Fiji: 2015 Article IV Consultation Staff Report. International Monetary Fund Country Report No. 16/54: Debt Sustainability Analysis 5. Mainstreaming Climate Change in ADB Operations, Climate Change Implementation Plan for the Pacific (2009 2015)
INDICATIVE ASSISTANCE PIPELINE Table A3.1: Lending Products, 2017 2019 Project/Program Name 2017 Firm Sustaining private-sector-led growth reform program (I) Sector PSM Poverty Targeting GI Strategic Agendas and Drivers of Change Division GCD/IEG/ PAR/PSD SPSO Year of PPTA/ PDA 5 5 OCR COL Cost ($ million) ADB ADF Grants Gov t Cofinance a 2018 Firm Sustaining private-sector-led growth reform program (2) PSM GI GCD/IEG/ PAR/PSD SPSO 5 5 b 2019 Firm Urban water supply and wastewater management project (Tranche 2) WUS GI ESG/GCD /GEM/IEG PAUS 2016 229.7 111.1 111.1 69.4 c 49.2 d Sustaining private-sector-led growth reform program (3) PSM GI GCD/IEG/ PAR/PSD SPSO 5 279.7 136.1 136.1 69.4 e 74.2 2019 Standby Ports infrastructure f TRA GI ESG/GCD PATE 5 5 5 tbd /GEM/IEG 5 5 5 5 ADB = Asian Development Bank; ADF = Asian Development Fund; COL = concessional OCR lending, ENE = energy; ESG = environmentally sustainable growth; GCD = governance and capacity development; GEM = gender equity and mainstreaming; GI = general intervention; Gov t = government; IEG = inclusive economic growth; OCR = ordinary capital resources; PAR = partnerships; PAUS = Urban, Social Development and Public Management Division; PDA = project design advance, PPTA = project preparatory technical assistance; PSD = private sector development; PSM = public sector management; SPSO = Pacific Subregional Office; TRA= transport, tbd = to be determined, WUS = water and other urban infrastructure and services. a World Bank will cofinance Program 1 with a $25 million loan. b World Bank will cofinance Program 2 with a $25 million loan. c Government funding for the multitranche financing facility will be $150.1 million in total. d European Investment Bank will cofinance with a $49.2 million loan. e World Bank will cofinance Program 3 with a $25 million loan. f Investment in the port sector will be subject to the outcome of the ADB's port master plan technical assistance (TA) under implementation. Source: Asian Development Bank estimates Appendix 3 5
Assistance Name 2017 Policy Reform Program Table A3.2: Nonlending Products and Services, 2017 2019 Sector Division PSM SPSO Assistance Type PATA Sources of Funding ADB Others Amount Source ($'000) Source TASF 80 80 Amount ($'000) ($'000) 80 80 6 Appendix 3 2018 Preparing the Ports Project TRA PATE PPTA TASF 1,00 1,00 1,00 1,00 ADB = Asian Development Bank; PATA = policy and advisory technical assistance; PATE = Transport, Energy, and Natural Resources Division; PPTA = project preparatory technical assistance; PSM = public sector management; TASF = Technical Assistance Special Fund; TRA = transport. Source: Asian Development Bank estimates.
ASSISTANCE PROGRAM FOR CURRENT YEAR Table A4.1: Lending Products, 2016 Project/Program Name 2016 Firm Urban water supply and wastewater management project (Tranche 1) Sector Poverty Targeting Strategic Agendas and Drivers of Change Division WUS GI ESG/GCD/ GEM/IEG/ PAR Year of PPTA/ PDA OCR Cost ($ million) ADB ADF Loans Grants Gov t Cofinance PAUS 2015 180.4 42.1 42.1 80.7 a 57.6 b Fiji Cyclone Emergency Response Project PSM GI GCD/IEG PAR/PSD SPSO NA 10 5 5 5 c 280.4 92.1 92.1 80.7 107.6 ADB = Asian Development Bank; ADF = Asian Development Fund; ESG = environmentally sustainable growth; GCD = governance and capacity development; GEM = gender equity and mainstreaming; GI = general intervention; Gov t = government; IEG = inclusive economic growth; OCR = ordinary capital resources; PAUS = Urband, Social Development and Public Management Division; PDA = project design advance; WUS = water and urban infrastructure services. Source: Asian Development Bank estimates. a Thegovernment will fund $150.1 million of the multitranche financing facility. b Final decisions yet to be made. assumes a loan of $26.6 million from the European Investment Bank and a $31 million grant from the Green Climate Fund (approved in November 2015) and $80.7 million in government finance. c World Bank cofinanced with a $50 million loan. Table A4.2: Nonlending Products and Services, 2016 Sources of Funding ADB Others Assistance Name Sector Division Assistance Type Source Amount ($'000) Source Amount ($'000) ($'000) 2016 NA NA NA NA NA ADB = Asian Development Bank; NA = Not Applicable Source: Asian Development Bank estimates. Appendix 4 7
LIST OF INDICATIVE KNOWLEDGE PUBLICATIONS AND EVENTS Table A5.1: Knowledge Publications and Events for 2016 Title of Publication or Event Subject Type Department or Sector Group or Thematic Group Technical Assistance Asian Development Outlook, Small Pacific Economies 2016 Economics Publication or document report PARD Pacific Economic Monitor July 2016 Economics Publication or document report PARD RETA-8565 Pacific Economic Monitor December Economics Publication or document report PARD RETA-8565 2016 IMF Article IV Governance and Public Policy advice, capacity development PARD Sector Management Country Performance Assessment 2016 Governance and Public Sector Management Publication or document report, Briefing Material or talking Points PARD Pacific Subregional Office Brochure Economics Publication or document report PARD 2016 Country Information Note Fiji 2016 Economics Publication or document report PARD Asian Development Bank Fiji Fact Economics Publication or document report PARD Sheet 2016 Awareness-raising brochure or leaflet number of publications = 8 number of events ADB = Asian Development Bank, IMF = International Monetary Fund, 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. Source: ADB K-Nexus. 8 Appendix 5
Table A5.2: Additional Knowledge Publications and Events Delivered in 2016 Title of Publication or Event Subject Type Asian Development Outlook Launch and Economics, regional Publication and dissemination cooperation and integration documentation, event organization Pacific Economic Monitor (July) Economics Publication and documentation, event organization Pacific Economic Monitor December Economics Publication and documentation, event Country Diagnostic Study Finding Balance 2016: Benchmarking the Performance of State-Owned Enterprises in Island Countries Targeted Pacific Financial Sector Strengthening: Supporting National Risk Assessments (Fiji) Briefing on the Asian Development Bank's Accountability Mechanism Policy Pacific Economic Update Training for Microfinance Institutions on Client Protection Principles Capacity development, economics, private sector economics, Capacity development, economics, private sector economics, organization Publication and documentation, event organization Publication and documentation, event organization Department or Sector Group or Thematic Group PARD/SPSO PARD PARD ERCD PLCO/PSDI Technical Assistance RETA-8565 Capacity development Capacity development OGC RETA-8659 Capacity development Capacity development OSFMD Economics, regional cooperation and integration Capacity development Event organization PARD/SPSO Capacity development, event organization SDCC RETA-8561 Regional Workshop for Pacific Pension Providers Capacity development Capacity development, event ERCD organization Regional Workshop on Risk Management for Capacity development Capacity development, event ORM SME Lending in the Pacific organization number of publications = 5 number of events = 6 ADB = Asian Development Bank. ERCD = Economic Research and Regional Cooperation Department, OGC = Office of General Counsel, ORM = Office of Risk Management, OSFMD = Operations Services and Financial Management Department, PARD = Pacific Department, PLCO = Pacific Liaison and Coordination Office, PSDI = Pacific Private Sector Development Initiative, REG = regional economic growth, RETA = regional technical assistance, SDCC = Sustainable Development and Climate Change Department, SME = small- and medium-sized enterprise, SPSO = Pacific Subregional Office. 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 that were included in the 2015 2017 country operations business plan. Source: ADB K-Nexus 9 Appendix 5
Table A5.3: Innovation, Advanced Technology, and Pilot Initiatives to be Implemented in 2017 Item Nature Project Number Sector or Theme Division number of innovation, advanced technology, and pilot initiatives = 0 NA NA NA NA Source(s): Asian Development Bank. 10 Appendix 5