MANILA, PHILIPPINES - The Asian Development Bank (ADB) and the Government of the Republic of Palau have agreed to a five-year strategic partnership aimed at supporting sustainable development and alleviating the impacts of climate change.

Endorsed by ADB's Board of Directors in Manila today, the Country Partnership Strategy (CPS) 2009-2013 provides for $9.8 million in lending to build essential public infrastructure and attract private investment. A further $3 million will be spent on technical assistance to strengthen economic and financial management, enhance institutional effectiveness, boost private sector growth, and support the implementation of a climate change adaptation action plan.

This is the first time the ADB and Palau have entered into a CPS. Palau joined the ADB in 2003 and is classified as a Pacific developing member country.

"This important new partnership will support Palau's efforts to create enabling conditions for investment and growth, and to protect its unique environment from adverse climate change impacts," said S. Hafeez Rahman, Director General of ADB's Pacific Department.

Palau, like many small-island economies, remains vulnerable to external shocks. Rising food and oil prices in 2008, followed by the volatility created by the global economic crisis, has negatively impacted on the island's economy.

"Creating resilience and greater capacity to respond to external shocks is the central objective of the CPS," said Anthony Gill, ADB's Palau Country Specialist. "Palau is keen to broaden its narrow economic base by establishing it as a sustainable, world class tourism destination."

The CPS was developed in close coordination with the United States and other development partners in line with the goals listed in Palau's National Master Development Plan and their Medium-Term Development Strategy.

A CPS 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.