Tonga - Second Resilience Development Policy Operation with a Catastrophe-Deferred Drawdown Option

Overview & Synopsis

Ratings of the Tonga Second Resilience Development Policy Operation with a Catastrophe Deferred Drawdown Option for the Kingdom of Tonga were as follows: overall outcome was satisfactory; relevance of prior actions was satisfactory; achievement of objectives (efficacy) was satisfactory; Bank performance was highly satisfactory. Lessons learned include that a hybrid development policy operation with a Catastrophe Deferred Drawdown Option (CAT-DDO) is especially effective in disaster-prone contexts, as it both supports reforms and provides contingent financing to help close post-disaster gaps; that a two-operation series offers valuable flexibility under frequent shocks, enabling timely adjustments to prior actions and avoiding delays that can affect longer series; that supplemental financing is an efficient tool to address urgent fiscal gaps caused by unexpected shocks while keeping the reform program on track, and can be preferable to preparing a new crisis-response operation when reforms are advancing; and that long-standing engagement through repeated development policy operations and investment projects strengthens government ownership and enables seamless coordination with fast-track crisis responses. Recommendations arising from these lessons are to prioritize hybrid operations with CAT-DDO in contexts of high disaster risk to align financing with national disaster risk financing strategies, to design shorter and flexible programmatic series where exposure to shocks is high, to deploy supplemental financing swiftly when urgent needs threaten fiscal sustainability or recovery objectives and reform momentum is strong, and to maintain sustained partnerships and technical assistance to reinforce institutional capacity and ensure effective implementation across fiscal management, disaster risk management, and resilience-building agendas.