ADB approve loan for Covid-19 support

Thursday 26 November 2020 | Written by Emmanuel Samoglou | Published in Economy, National

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ADB approve loan for Covid-19 support
Government says a $20 million loan from the Asian Development Bank will go towards assisting individuals and businesses affected by the economic downturn caused by the Covid-19 pandemic.

A loan recently signed by the Government will provide $20 million towards Covid-19 financial assistance for businesses and individuals.

The Government announced on Wednesday it has signed an agreement with the Asian Development Bank (ADB) to receive a $20 million loan to assist with the nation’s economic response to the Covid-19 pandemic.

The support, which is part of a $20 billion ADB Covid-19 assistance programme for developing member states, is designed to assist with government’s Economic Response Plan (ERP).

Launched earlier this year at the onset of the global pandemic, the government support programme includes wage and training subsidies, one-off payments for vulnerable individuals, families and businesses, as well as interest relief for homeowners and loans for businesses. 

With no signal from government officials and their New Zealand counterparts that borders will be opened, a number of economic response measures have been extended through to the New Year.

The $320 per week wage subsidy has been extended through to the end of February 2021, and government will be paying out an additional sole trader grant from 1 January of $2,000. Interest relief payments for businesses and individuals will also carry through to June 2021.

According to the government estimates, total debt stands at just over $193 million. That figure does not include the $20 million ADB loan.

Ministry of Finance and Economic Management secretary Garth Henderson said: “We appreciate the speed at which ADB officials and the Board have been able to process and approve the loan in a responsive manner.”

“This will go a long way towards sustaining the ERP measures delivering support to employers, employees and our vulnerable groups.”

Earlier this month, ANZ Bank’s Pacific Economist Kishti Sen said the nation’s debt level were at sustainable levels. “ … total public debt as a share of GDP is well below comparable rated sovereigns  so there is plenty of wriggle room for the government,” he told CI News.

According to the ADB, the economy is expected to have shrunk by seven per cent for the 12-month period ending in June.

The economy is expected to contract a further 15.4 per cent upon completion of the current financial year.

The ADB estimates tourism-related employment accounts for approximately 50 per cent of private sector jobs, or a third of the entire workforce, and a continued economic contraction risks unwinding recent development gains.

“ADB is committed to supporting the people of the Cook Islands as they respond to the impacts of the Covid-19 pandemic,” said ADB President Masatsugu Asakawa.

“This assistance will enhance the government’s ability to prevent the pandemic from entering the Cook Islands, manage any possible cases, and mitigate the negative social, health, and economic impacts caused by the pandemic on livelihoods and local business, with a special focus on vulnerable households.”

The latest ADB loan follows a $10 million loan and million dollar grant provided to the Cook Islands in July, as well as ADB grant funds received during the pandemic in collaboration with UNICEF to procure medical supplies.