14 Dec 2018

ADB cautions Pacific countries over debt distress

4:53 pm on 14 December 2018

The Asian Development Bank is cautioning countries in the Pacific over high levels of debt distress.

The Asian Development Bank (ADB) is an Asia regional development organization dedicated to reducing poverty in Asia and the Pacific.

Photo: AFP/ Jay Directo

The bank said countries need to strengthen due diligence and planning to safeguard against debt repayment concerns.

In a report released Thursday, the Asian Development Bank said six countries in the Pacific were facing high risks of debt distress.

They are Kiribati, the Marshall Islands, the Federated States of Micronesia, Samoa, Tonga, and Tuvalu.

Tonga and Samoa are the worst off, with public sector debt totalling 56 percent and 51 percent of GDP respectively.

The issues stem from narrow economic bases, vulnerabilities to economic shocks and climate change.

The bank's director general for the Pacific, Carmela Locsin, said governments should improve debt monitoring systems and strengthen investment priorities.

Kiribati and Tuvalu were challenged by determining the optimal use for their sovereign wealth funds, the report said.

It said Vanuatu should spent more up front "to climate-proof infrastructure investments" to ensure long term benefits can be achieved from them.

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