First Resilience Development Policy Operation

closed

The proposed operation is the first in a programmatic series of two development policy operations (DPOs), aimed at boosting the resilience of Samoa to some of the majorrisks threatening its sustainable growth and development. The proposed operation will strengthen Samoa’s macroeconomic and financial resilience, including through increasingrevenue collection to help build the fiscal buffers necessary to respond to external shocks. It will also support the Government of Samoa’s (Government) efforts to increase Samoa's resilience to the effects of climate change, natural disasters, and non-communicable diseases (NCDs). Under the proposed operation, the World Bank (WB) will continue to support the implementation of reforms that have been prioritized by the Government, and that are closely aligned with target areas identified in the Strategy for the Development of Samoa 2017–2020 (SDS), including economic sustainability and business development, improved health outcomes, and climate and disaster resilience.As a very small remote economy that is highly vulnerable to external shocks, Samoa illustrates many of the constraints facing even well-performing small island states.Given these geographic constraints, remittances, tourism, and aid flows are critical to improving livelihoods and supporting the domestic economy.After a period of low and volatile growth, economic activity has picked up in recent years, and Samoa has largely recovered from the effects of Tropical Cyclone Evan in late 2012.According to national estimates, extreme poverty is rare in Samoa, and the incidence of basic needs poverty has also declined in recent years after peaking in 2008, although progress has been unevenly distributed across the country.According to internationally-comparable estimates, poverty is very low in Samoa compared with other countries in the region.In general, and compared to the rest of the Pacific, most Samoan households enjoy relatively good access to electricity, safe drinking water, and sanitation.The proposed operation is structured around two development objectives: i) To strengthen Samoa's macroeconomic and financial resilience; and ii) to increase Samoa's resilience to the effects of climate change, natural disasters, and non-communicable diseases.This operation builds on the substantial progress achieved under the previous DPO series in improving macroeconomic sustainability and in the specific policy areas of revenue mobilization, procurement reform, and climate resilience.Over time, the operation is likely to particularly benefit the poorer and more vulnerable in Samoa, by reducing the risks of: (i) a contraction in the provision of essential public services (due to insufficient fiscal buffers); (ii) a disruption to remittance flows; and (iii) alack of access to key services after a natural disaster.The main risks to the proposed operation stem from Samoa’s macroeconomic context and its vulnerability to external shocks.However, development partners continue to be a source of support for the Government's capacity-building efforts in these areas, which are closely aligned with the 2017-20 SDS, and the Ministry of Finance is playing a strong coordinating role and using the sector coordination mechanism to implement reforms.