The ADB and the Kingdom of Tonga have entered into a five-year Country Partnership Strategy (CPS) that focuses on poverty reduction anchored on infrastructure development, prudent economic and fiscal management, and private sector development.

"ADB worked closely with the Tongan government, its development partners, and other stakeholders to prepare the Country Partnership Strategy," said Philip Erquiaga, ADB Pacific Department Director General. "There is general acknowledgement that aid effectiveness in Tonga rests on the ownership and leadership of the government of Tonga over its development policies and strategies."

A Country Partnership Strategy is ADB's primary planning instrument for member countries that also serves to monitor and evaluate the country's development performance during the timeframe of the strategy, which is usually five years.

"ADB's strategy for Tonga will align with and support the implementation of the long-term development vision of the government, which is outlined in its Eighth Strategic Development Plan that seeks to provide higher living standards and a better quality of life for its people," said Fernando Garcia, principal country programs specialist of ADB's South Pacific Subregional Office in Suva, Fiji.

The Country Partnership Strategy 2007-2012 for Tonga will provide infrastructure for the poor through urban development, finance pro-poor policies through effective and prudent macroeconomic and fiscal management, and promote private sector development. The strategy is expected to improve social service delivery in urban areas, enhance fiscal governance and provide a more conducive environment for private sector investments.

ADB has proposed a financial assistance package of $21.3 million under the Country Partnership Strategy.

Tonga has made progress in working toward the Millennium Development Goals, which serve as a blueprint for all the world's nations and leading global development institutions in fighting poverty and improving lives.

"However, slow domestic economic growth has limited expansion of job opportunities and prevented significant poverty reduction," said Mr. Garcia.

The government of Tonga has recently had to address increasing demands for political reform, a major threat to macroeconomic stability arising from large public service wage increases and the serious economic and social consequences of urban riots that destroyed part of the capital's central business district in November 2006.

Over the period 1996-2006, gross domestic product expanded at an average annual rate of 2.5%, lower than the government's growth target of a little over 5%. The economy is expected to contract by about 3.5% in 2007 due to a 20% decline in public service employment and a weakening of commerce, restaurants and hotels following the urban riots.

Since the riots, the government has prioritized ensuring social stability through maintenance of law and order, promoting private sector development and investing in urban infrastructure.