Tonga receives a US$25 million World Bank grant to strengthen financial and credit stability and resilience

The Kingdom of Tonga, one of the world's most exposed countries to climate change and natural disasters, will receive a $25 million (TOP$58.7 million) World Bank grant to strengthen financial and credit stability and increase climate and disaster resilience.

January marks two years since the catastrophic Tonga Hunga-Tonga-Hunga-Ha'apai volcanic eruption, which generated a tsunami and ash that directly affected at least 85,000 Tongans and caused about US$90.4 million (TOP$208 million) in damages; Equivalent to approximately 18.5% of Tonga's GDP.

The Tongan government has placed a high priority on strengthening financial, disaster and climate resilience to improve Tonga's growth and development prospects. The Tonga First Financing, Disaster and Climate Change Resilience Development Policy Activity, with a Disaster Deferred Drawdown Option (GATE DTO) approved by the World Bank Board of Directors, includes a US$5 million (TOP$11.7 million) development policy grant and an option. Immediate access to US$20 million (TOP$47 million) in the event of a major crisis or disaster caused by weather (such as a tropical cyclone or flood), seismic activity (such as a volcano or earthquake) or a health emergency.

„We continue to stand with other development partners in Tonga's efforts to improve financial and credit management and strengthen disaster preparedness and response,” said Stefano Mocchi, World Bank Country Manager for the South Pacific. „This grant will support Tonga in improving its social protection systems and working towards greater economic prosperity and more resilient societies.”

World Bank action supports government efforts to improve domestic revenue collection, reduce national debt, and improve resilience to climate change and natural disasters. The measure also prioritizes the development of more robust national disaster management plans to ensure rapid and efficient delivery of emergency assistance after severe weather events. Cabinet approval of a comprehensive National Social Security Policy will help ensure timely and effective disaster response, including for the country's most vulnerable citizens, post-disaster.

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“We have come a long way since the Tonga HT-HH eruption and tsunami, but there is still much to do as we continue to face the increasing challenges posed by climate change and extreme weather events,” said Hon. Theophilusi Duty, Tongan Minister of Finance. „This support will increase the resilience of our government and our communities to future shocks and ensure we can better respond and recover from disasters.”

The grant is funded by the International Development Association (IDA), the World Bank's fund for the world's most needy countries.

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