In a significant move to bolster its climate resilience and foster sustainable growth, the Government of Fiji has secured a US$70 million loan agreement with the Asian Development Bank (ADB).
This landmark agreement, signed by Deputy Prime Minister and Minister for Finance, Biman Prasad, and ADB Director General for the Pacific, Leah Gutierrez, took place at the sidelines of the Forum Economic Ministers Meeting in Suva.
“This budget support policy-based concessional loan will finance the Fiji Climate Resilience and Sustainable Growth Programme,” said Deputy Prime Minister Prasad.
He expressed gratitude towards the ADB and other development partners, highlighting the collaborative effort in leading the first Joint Budget Support Operation for the fiscal year 2023/2024.
The Fiji Climate Resilience and Sustainable Growth Programme is designed to improve public financial management, foster private sector development, and enhance climate and disaster resilience.
Prasad emphasised the importance of this program in Fiji’s ongoing reform initiatives, which span governance, public finance management, trade, and fiscal sustainability.
Over the past six fiscal years, Fiji has received over US$2 billion in blended financing from development partners in the form of grants and concessional loans and the current financial year Fiji has received US$500 million in direct Budget Support (loan) financing from ADB and under various programmes.
“Development partners who are engaged with Budget Support programmes for FY 2024 include the World Bank, Asia Development Bank, Government of Australia and New Zealand and the European Union.
“This has enabled the Fiji Government to secure a total Budget Support funding of almost FJD$542 million (US$271 million), comprising of concessional loans and grants. The policy reform actions have since been achieved through a coordinated Government effort,” DPM Prasad said.
Gutierrez noted that the new programme builds on ADB’s previous policy-based loans in Fiji, which provided critical budget support during the COVID-19 pandemic.
“The Sustainable and Resilient Growth Program will support Fiji to continue accelerating reforms to improve the business environment and strengthen resource mobilisation. It also mainstreams gender equality, expands gender-responsive budgeting to all line ministries, and enhances community preparedness for disasters,” she said.
The loan agreement features highly concessional terms, including a 40-year term with a 10-year grace period at a fixed interest rate of 1 percent per annum. This will help reduce Fiji’s future debt service obligations, creating more fiscal space for the government to finance critical development spending and public investments.
“This highly concessional loan will help us to navigate ourselves better in terms of creating a better fiscal space by reducing our debt servicing commitments in the future. It is part of our overall strategy to progressively reduce the debt burden and bring down the debt-to-GDP ratio,” Prasad said.
The ADB programme comprises two sub programmes, with the second sub programme to be accessed in 2026.
The current scope includes enhancing the enabling environment for private sector development and improving public financial management for fiscal resilience and inclusion. It will also support critical climate adaptation and mitigation priorities.
The formalisation of this agreement marks a significant milestone in the relationship between the Fijian Government and the ADB.
“The loan financing under this program is the first-ever policy-based financing on very concessional terms that the Government will receive from the ADB,” Prasad said.
“This further strengthens our cooperation and support.”
As Fiji continues to navigate the challenges posed by climate change and strives for sustainable economic growth, this loan agreement represents a pivotal step in ensuring a resilient and prosperous future for the country.
