Fiscal Sustainability and Climate Resilience DPO

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The operation supports Fiji’s reform effort to strengthen medium‐term fiscal sustainability while undertaking structural reforms to improve the business climate and resilience to climate change. The proposed operation of US$15 million is the first in a programmatic series of two development policy operations (DPOs). At the request of the Government of the Republic of Fiji, the World Bank has worked closely with the Asian Development Bank (ADB) on the preparation of this operation. The ADB is expected to provide a similar level of financing through a Policy‐Based Loan, using criteria that are consistent with the Bank’s proposed operation. The operation follows the post‐Cyclone Winston emergency DPO in 2016, which supported Fiji’s recovery from the immediate impact of Winston through the formulation of a recovery plan and the provision of post‐disaster social protection to the most vulnerable. The program development objective of the proposed DPO series is to support the government’s effort to: (i) strengthen medium‐term fiscal sustainability; (ii) improve the investment climate; and (iii) build climate resilience. Under the first pillar, the government is simplifying the tax system to encourage compliance and private‐sector‐led growth and strengthening the monitoring framework of fiscal risks associated with the country’s sizeable state‐owned enterprise (SOE) sector. Under the second pillar, the government is removing obstacles to Foreign Direct Investment (FDI) by updating the country’s arbitration law to recognize and enforce overseas arbitration awards and improving the business climate by reducing costs of dealing with construction permits. Under the third pillar, the government is strengthening climate resilience of all new buildings by adopting more stringent building standards.