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LESSONS:

Economic Support Program

| country: Nepal

The program was successful in helping the government to stabilize the economy and protect vulnerable members of society and valuable lessons were learnt, particularly for other development partners, none of which had provided general budget support to Tonga before. Subsequent budget support operations by other development partners have drawn on the following lessons from ADB’s experience.

(i) Policy Actions need to match capacity. Technical and managerial capacity is a scarce commodity in small Pacific island nations. These were fully stretched in Tonga during the implementation of the program. In addition, the government was keen to receive ADB financing before the general elections were held, which led to ambitious, even unachievable, timeframes for completion. Therefore, the scope of the program needs to be kept as simple as possible to reflect the country’s capacities, and policy actions for the release of tranches should be appropriate and achievable by the government and the executing agency.

(ii) A single government-led policy matrix will enhance coordination and collaboration. The program provided a building block for future budget support operations to Tonga, for example, the World Bank’s current operation. Coordination between development partners and the government has drawn from ADB’s experience with the program to improve coordination and implementation.

(iii) Verification requirements need to be clear from the outset. Information critical to the program was not disclosed during the design stage. More transparency through clear guidance on ADB’s verification requirements would have avoided the delay in the achievement of policy actions.

(iv) Technical assistance will aid program implementation. There is a need for technical assistance (TA) consultants to spend more time in the country (depending on the technicality of the policy actions) to deal with issues as they arise, and to support the timely delivery of outputs and outcomes. Related to this, umbrella regional TAs such as the Private Sector Development Initiative (PSDI) and Pacific Economic Management (PEM) have proven effective in terms of being able to rapidly and flexibly respond to Tonga’s request for specific pieces of ad hoc analytical work as needed.

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