Australian aid supports Tonga to pursue effective economic, governance and private sector development reforms, by linking aid payments to mutually agreed reform benchmarks.
Tonga also benefits from Australian-funded Pacific regional programs. Activities include stimulating trade through the Pacific Horticultural and Agricultural Market Access program; and identifying alternative modalities to support access to finance, especially for women, through the Asian Development Bank’s Private Sector Development Initiative.
Performance Linked Aid
Up to $12 million, 2016-2018
The Tonga performance linked aid funding provides incentive-based aid in recognition of reform progress and achievements agreed through the Joint Policy Reform Matrix. The Joint Policy Reform Matrix is the mechanism which successfully coordinates the work of Tonga, Australia, World Bank, Asian Development Bank, the European Union and New Zealand in support of economic, public financial management and private sector development reforms. Performance linked aid is paid, in recognition of Tonga’s policy reforms. Development partners also provide some technical assistance, to support Tonga’s achievements of these reforms.Through this work Tonga has improved its budget and debt situations and introduced reforms to encourage foreign investment and rationalize state-owned enterprises.
Outer Island Renewable Energy Project
Up to $5.7 million, 2013-2020
Tonga is highly dependent on imported fuel to meet its overall energy requirements. The Tongan economy and electricity consumers have been exposed to high and volatile electricity prices over the last ten years due to fluctuations in the international price of oil. The Asian Development Bank-led Outer Island Renewable Energy Project (OIREP) is assisting Tonga to reduce its dependence on imported fossil fuel by increasing continuous, reliable, safe and affordable solar energy. The Project focuses on the three main outer island groups of Eua, Ha’apai and Vava’u, which represent 20 per cent of the Tongan population. Australia is contributing AUD5.7 million to the total estimated project cost of USD16.1 million over 2013-20. OIREP will contribute towards Tonga’s commitments made at the COP21 Paris climate change conference.