cook islands: investing in a sustainable future

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    DevelopmentEffectivenessBrief

    Cook IslandsInvesting in a Sustainable Future

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    DevelopmentEffectivenessBrief

    Cook IslandsInvesting in a Sustainable Future

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    2013 Asian Development Bank

    All rights reserved. Published in 2013.Printed in the Philippines.

    Publication Stock No. ARM136068-2

    The views expressed in this publication are those of the authors and do not necessarily reflect the viewsand policies of the Asian Development Bank (ADB) or its Board of Governors or the governments theyrepresent.

    The cover photo was taken by Beatrice Olsson. All the other photos were taken by Peter Stalker.

    Note: In this publication, $ refers to US dollars.

    6 ADB Avenue, Mandaluyong City

    1550 Metro Manila, Philippines

    Tel +63 2 632 4444

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    Contents

    Cook Islands Development Indicators iv

    Cook Islands and ADB: Investing in a Sustainable Future 1

    ADBs Contribution to Development and Poverty Reduction 4

    Standing Up to Storms 4

    Planning for Disasters 7

    Watching Out for Water 8

    Managing Waste and Recycling 10

    Operational Effectiveness: Improving Efficiency and Performance 13

    Future Challenges 15

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    Cook IslandsDevelopment Indicators

    Non-Millennium Development GoalsPopulation (millions)(2012)

    Annual population growth rate (%)(20102012)

    Adult literacy rate (%)

    Population in urban areas (%)(2011)

    Millennium Development GoalsPopulation living on less than $1.25 (PPP) a day (%)

    Population living below the national poverty line (%)(2006)

    Under-5 mortality rate per 1,000 live births(2011)

    Population using an improved drinking water source (%)

    (2007)

    ... = data not availableSource: ADB. 2013.Asian Development Bank and Cook Islands: Fact Sheet. Manila.

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    With limited opportunities at home and easy access to New

    Zealand, many Cook Islanders consider working overseas

    Cook Islands and ADB:Investing in

    a Sustainable Future

    In one respect, the Cook Islands is vast. Theexclusive economic zone extends across1.8 million square kilometers of the PacificOcean. But by most other measures this is amicrostate. The 15 volcanic islands and coralatolls add up to a land area of only 240 squarekilometers, which in 2012 were occupied by a

    resident population of around 13,200.

    As well as being one of the worlds smalleststates, the Cook Islands is also one of the mostremotefour hours by air from the nearestmajor population center, New Zealand. Eventravel within the country can be arduous andexpensive: the more remote northern group ofatolls and sand cays are 1,200 kilometers from

    the southern group. Relatively few Cook Islandershave visited other parts of their own country.

    Remoteness can be an asset. This is a largelyunspoiled tourist destination. Pristine palm-fringed beaches offer views of dolphinsplaying in the waves and attract over 100,000visitors each year from all over the world.There is some income from fishing andthe sale of the distinctive black pearls but

    nowadays the lifeblood of the economy istourismaccounting for around half of grossdomestic product (GDP). But distance is alsoa drawback. This is a relatively expensivedestination, so when the global economicclouds darken, people in the developedcountries are likely to cut back on vacations.Distance also means that for Cook Islanders lifeis relatively expensive, since most goods have

    to be imported.

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    Development Effectiveness Brief:

    Cook Islands

    Table 1: Loan Approvals ($ million)

    Combined with government

    investment in education and health,

    economic growth has enabled

    relatively high levels of human

    development. The Cook Islands

    is likely to achieve almost all the

    Millennium Development Goals

    From 2001 to 2004 growth was fairly steady,averaging around 3.5%. The economy thencontracted in 4 of the next 5 years, but turnedpositive again from 2010. Combined withgovernment investment in education andhealth, economic growth has enabled relativelyhigh levels of human development. The

    Cook Islands is likely to achieve almost all theMillennium Development Goals. Net enrolmentin primary education, for example, was 98%in 2011. There has been rapid progress inreducing child mortality and nutrition concernsfocus less on underweight than on obesity.Since 2002 there has been no maternalmortality.

    Nevertheless, this is a small country with afairly narrow economic base and limited jobopportunities. Cook Islands residents holdNew Zealand citizenship and many youngerpeople take advantage of this to migrate toNew Zealand and Australia for education oremployment. So while natural populationgrowth is around 4% per year the residentpopulation has been declining, especially on

    the outer islands. More than three times asmany Cook Islanders live overseas than in theCook Islands: more than 50,000 reside in New

    Zealand and an estimated 1

    On the other hand, this is alocation for New Zealanderset up small businesses, so immigration of entrepreneu

    Cook Islands joined ADB in of 2012 had benefited fromamounting to $65.71 milliothe loans were directed tow

    the pearl industry but more been used for investment ininfrastructure. The most diff

    Sector Distribution of Loan and G

    Source: Asian Development Bank.

    31 December 2012

    1% 4

    3%

    36%

    Agriculture and Natural Resou

    Education

    Finance

    Public Sector Management

    Transport and Information andTechnologyWater and Other Municipal Infr

    Multisector

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    the mid-1990s, when the country faced a fiscal

    crisis. An ADB review concluded that the countrywould need to restructure loans and seek debtrelief from its bilateral creditors. This resulted indebt write-offs, lower interest rates, extendedmaturities, and other major concessions.

    In response to the crisis, the governmentembarked from 1996 on an EconomicRestructuring Program (ERP), supported

    by a $4.8 million ADF loan, completed in1998, to improve public sector institutionalcapacity and create a more competitive,private-sector-based economy. This wassupported by five technical assistance projectsat a total cost of $2.4 million. New Zealand,also offered support and coordinated theircontributions, with ADB taking the lead.Following this experience it was agreed thatfurther ADB lending to the country should beon concessional terms. This lasted until 2009,when the Cook Islands graduated to full accessto funds from ordinary capital resources (OCR).

    By the end of 2012 there have also been32 technical assistance projects worth almost$11.4 million. Some of these have directly

    supported loan projects; others have helped

    develop tourism and strengthen environmentalmonitoring and management.

    The governments long-term developmentframework is Te Kaveinga NuiLiving theCook Islands VisionA 2020 Challenge. Theeight goals of the long-term framework fordevelopment are articulated through theNational Sustainable Development Plan

    20112015. ADBs assistance to the CookIslands is guided by the Pacific Approach20102014 and support is provided tofour of the eight goals: an innovative andwell-managed private sector-led economy;sustainable use and management of naturalresources and the environment; strengthenedand affordable basic infrastructure, transport,and utilities; and a safe, secure and resilientcommunity. Assistance is operationalizedthrough the country operations businessplan. ADB supports the Cook Islands intransport, energy, public management andsocial protection. For ADB, some of themost substantial contributions have beenfor transport, particularly by supporting thedevelopment of wharfs.

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    ADBs Contrito Developme

    Poverty Red

    ADB support has benefited those who workin the tourism industry which is the mainstayof the economy. Reconstruction following theseries of 2005 cyclones supported increasesin visitor arrivals which although dipping in

    2008 increased in 2009 and 2011. Technicalassistance has also enabled the country toestablish an emergency management systemwhich has already shown its value in theresponse to subsequent cyclones. In addition,ADB has made a major contribution to publichealth through the development of sustainablewaste management systems on the mostpopulous islands of Rarotonga and Aitutaki.

    Financial Secretary, Richard Neves says: ADBhas not just been a source of funds for theCook Islands but also a guideto ensureinvestments provide both economic and socialreturns. In the mid-1990s, we were over-borrowed and people became worried aboutthe excesses of government.

    Now the psyche is debt averse. So when weborrow money we have to be doing it forgood reasonsfor assets which will producea particular return. We have set a limit for thetotal public sector debt of 35% of GDP and debtservicing of 5% of crown revenue. Most of thecore government debt is with ADB State owned

    Standing Uto Storms

    One of the most critical sectransport. For this, the Cooheavily on Rarotongas por