Tonga Secures $12M World Bank Support to Boost Fiscal Resilience and Climate Preparedness

In a significant move to reinforce its economic stability and climate resilience, the Kingdom of Tonga is set to benefit from a new phase of strategic World Bank support, aiming to boost public financial management, enhance energy efficiency, and improve national preparedness for natural disasters. The initiative—officially titled the Tonga Second Fiscal, Disaster, and Climate Resilience Development Policy Operation—represents a critical step in addressing Tonga’s economic vulnerabilities and its exposure to environmental threats.

The operation was recently approved by the World Bank’s Board of Executive Directors and is underpinned by a US$12 million grant from the International Development Association (IDA), the World Bank’s concessional financing arm dedicated to the world’s poorest nations.

Tackling Fiscal and Climate Challenges Head-On

Tonga ranks among the most disaster-prone nations globally, facing a multitude of hazards including cyclones, earthquakes, and volcanic eruptions. The catastrophic 2022 Hunga Tonga-Hunga Ha’apai eruption, combined with frequent cyclones, has underscored the critical need for effective disaster preparedness and robust public infrastructure. At the same time, Tonga’s fiscal landscape is burdened by a narrow tax base, rising fuel costs, and limited fiscal buffers—conditions that constrain public service delivery and exacerbate household financial pressures.

The World Bank-supported operation is designed to address these intersecting challenges. It promotes reforms aimed at reducing wasteful tax exemptions, enhancing energy efficiency standards, and increasing debt transparency. By strengthening these government systems, Tonga hopes to create a more resilient and self-reliant economy.

Concrete Measures for a More Resilient Future

Among the most impactful reforms supported by this policy operation is the introduction of energy efficiency standards that will help households reduce energy consumption and minimize reliance on expensive, imported diesel fuel. These reforms are expected to not only lower electricity bills for families but also cut down on national fuel import costs—an important step in improving economic self-sufficiency.

Another key component is legislation to modernize and expand early warning systems. This includes new regulations mandating that mobile phone alerts for natural disasters be delivered across the entire country—including to remote and outer islands. These alerts will be crucial in providing people, particularly women, children, and the elderly, with timely information to evacuate or prepare in the face of imminent hazards.

The reforms will also establish stronger frameworks for debt reporting and revenue mobilization. These improvements are essential for ensuring the government can make well-informed investment decisions in vital sectors such as healthcare, education, and public infrastructure.

Government and Global Leaders Applaud the Initiative

Tonga’s Prime Minister and Minister for Finance, Hon. Dr. ‘Aisake Eke, welcomed the support, emphasizing the importance of resilience and sustainable growth for the nation.

“This support from the World Bank will help Tonga to manage shocks more effectively and build a stronger foundation for sustainable growth,” said Prime Minister Eke. “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.”

Echoing this sentiment, Stefano Mocci, World Bank Country Manager for the South Pacific, praised Tonga’s leadership in embedding fiscal responsibility and climate preparedness into its national development strategy.

“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,” Mocci stated.

A Nationwide Impact with Global Implications

This latest round of support is expected to generate benefits that extend to every citizen of Tonga. By enhancing the efficiency and equity of public resource allocation and preparing the country for the growing threat of climate-induced disasters, the policy reforms aim to fortify both the economic and social fabric of the nation.

As climate change intensifies the frequency and severity of natural disasters across the Pacific, Tonga’s integrated approach—combining fiscal strengthening with disaster risk reduction—could serve as a blueprint for other small island developing states facing similar existential threats.