Fiji: Growth and Resilience Second Development Policy Financing (Under the Energy, Food Security and Economic Resilience Facility)

OBJECTIVE

To help Fiji mitigate the adverse macroeconomic and social impacts of the Middle East conflict while supporting structural reforms to strengthen fiscal, climate and disaster resilience, and the foundations for private sector development.

DESCRIPTION

The Program is proposed as a Policy-Based Co-financing (PBCF) operation under AIIB’s Energy, Food Security and Economic Resilience Facility to provide fast-disbursing budget support to the Republic of Fiji. 

The Program will co-finance the World Bank’s (WB’s) second operation in its programmatic Development Policy Financing (DPF) series. It supports six prior actions under two pillars: (i) building fiscal, climate, and disaster resilience, through domestic revenue mobilization and disaster risk financing reforms; and (ii) building the foundations for private sector development, through reforms on personal insolvency and MSME rehabilitation, tourism regulation, digital financial services, and school nutrition. These six prior actions are a targeted subset of Fiji’s Joint Policy Matrix, selected based on alignment with the National Development Plan 2025-2029, demonstrated government ownership, continuity with prior WB DPF-supported reforms, and availability of technical assistance.

ENVIRONMENTAL AND SOCIAL INFORMATION

Applicable Policy and Categorization. AIIB’s Environmental and Social Policy (ESP), including the Environmental and Social Exclusion List (ESEL), apply to this Program. The provisions on environmental and social (E&S) categorization in the ESP do not apply to PBCF operations. AIIB has conducted a streamlined Environmental and Social Due Diligence (ESDD), based on the government and WB’s analytical work, review of the supported prior actions, and government systems relevant to managing potential E&S impacts. No prior action is proposed to be excluded from AIIB financing under ESEL. 

Environmental and Social Aspects. Based on AIIB’s streamlined ESDD, informed by WB’s analytical work, the Program’s policy actions mainly support fiscal, institutional, and regulatory reforms and are not expected to have significant adverse E&S impacts. Significant positive environmental effects are expected from the National Disaster Risk Financing Policy (NDRFP) and the Tourism Act, while the remaining prior actions are environmentally beneficial. The reforms are broadly expected to benefit the low-income and vulnerable households through improved domestic revenue, resilience to shocks, and business conditions, including in the tourism sector. AIIB will closely monitor the implementation of the prior actions, including the possible price increases from expanded VAT compliance among small firms under the Electronic Fiscal Devices reform and for food affordability under the Healthy Canteens Policy. In addition, gender considerations are reflected in selected prior actions and the results frameworks. NDRFP may benefit women and female-headed households through strengthened disaster risk financing, National Privacy and Personal Data Protection Policy may support women-owned and women-led MSMEs through broader access to low-cost digital payment channels, and Policy on School Canteen includes school nutrition and physical activity indicators disaggregated by girls and boys. These aspects will be monitored through the Program’s results framework and relevant government systems. 

Program Grievance Redress Mechanism (GRM) and Monitoring Arrangement. Individuals and communities who believe that they are adversely affected by the Program may submit complaints to the responsible government authorities and the appropriate local/national grievance mechanisms. The information about the GRM to be used will be timely disclosed in an appropriate manner. The Ministry of Finance (MOF) is an Executing Agency, and the implementing agencies will include the Ministries of Education and Health. Monitoring will rely on data from relevant ministries and agencies, publicly available sources, and regular Joint Policy Matrix reviews with development partners. The MOF has demonstrated adequate capacity to coordinate, monitor, and evaluate program-related indicators to date. AIIB will participate, as appropriate, in development partner coordination under the Joint Policy Matrix to monitor reform progress, implementation issues, and emerging risks.