Tonga has secured a US$12 million grant from the World Bank to strengthen its public finances, enhance energy efficiency, and improve disaster preparedness.
The Tonga Second Fiscal, Disaster, and Climate Resilience Development Policy Operation, approved by the World Bank’s Board of Executive Directors, aims to support key government reforms. These reforms focus on improving public finances and ensuring that early warning systems and emergency assistance reach those most at risk from natural hazards and climate shocks.
Tonga faces some of the highest levels of disaster risk globally, with events like the eruption of Hunga Tonga-Hunga Ha’apai and frequent cyclones disrupting lives, livelihoods, and infrastructure. High fuel costs and a narrow tax base further strain public finances and household budgets. The new operation will help address these challenges by strengthening government systems and supporting investments that deliver direct benefits for communities.
Key reforms include reducing inefficient tax exemptions and introducing energy efficiency standards to enhance household purchasing power and reduce reliance on costly imported diesel. The program also supports improvements to debt transparency and enhances early warning systems through legislation enabling disaster alerts via mobile phones, even in remote outer islands.
“This support from the World Bank will help Tonga to manage shocks more effectively and build a stronger foundation for sustainable growth,” said Hon. Dr. ‘Aisake Eke, Prime Minister of Tonga and Minister for Finance. “The reforms within the package will improve revenue mobilization, energy efficiency, and disaster preparedness, so that our communities are better protected, and our economy is more resilient.”
The operation is financed through a US$12 million grant from the International Development Association (IDA), the World Bank’s fund for the world’s most in-need countries.
Stefano Mocci, World Bank Country Manager for the South Pacific, stated, “Tonga continues to show leadership in putting long-term resilience and fiscal discipline at the heart of its development path. These reforms will deliver real benefits for people, especially the most vulnerable, and help ensure Tonga is better prepared for the future.”
The reforms supported under this operation are expected to benefit the entire population of Tonga by ensuring more reliable access to services, greater protection from climate and disaster risks, and a more stable economic environment.
