Soft loans from the Asian Development Bank (ADB) have been made even more affordable for Small Islands Developing States (SIDS).
The new lending terms, effective October 1, 2023, was announced in Suva this week during an official meeting between Minister of Finance Prof Biman Prasad and ADB president Masatsugu Asakawa, who is on an inaugural visit to Fiji to meet with the Government.
The new terms include a one per cent interest rate, a 10-year grace period, a 40-year maturity, and principal repayments of two per cent a year for the first 10 years after the grace period and four per cent a year thereafter.
“ADB is a long-standing partner in development with the Pacific and is committed to continuously refining its differentiated approach to helping SIDS build resilience amid intensifying vulnerabilities,” Mr Asakawa said.
“This significant improvement in concessional lending terms will help SIDS ramp up critical investments, including for climate operations and other global and regional public goods.”
The revised terms will help reduce future debt service obligations of SIDS, which have seen eroding fiscal space and rising debt burdens due to the lingering impacts of the pandemic and subsequent global shocks, the ADB stated. Cook Islands, Fiji, Niue, Palau, Papua New Guinea, Solomon Islands, Timor-Leste, and Vanuatu are eligible for the concessional ordinary capital resources lending.
Solomon Islands and Vanuatu are also eligible for grants from the Asian Development Fund, which provides grants to ADB’s poorest and most vulnerable developing member countries, along with the Federated States of Micronesia, Kiribati, Maldives, the Marshall Islands, Nauru, Samoa, Tonga, and Tuvalu.
