The Asian Development Bank (ADB) will now kick-start the process of due diligence to facilitate Fiji and Tonga’s request for the bank to raise local currency bonds in the Fijian dollar and Pa’anga. “We are going through a process of all of the legal, legislative, parliamentary requirements to allow us to put a bond into your finance market, said Emma Veve, ADB’s Director General for the Pacific Department in Manila. She adds the bank’s Treasury reached out to Pacific who have their own currencies to explore their interest in raising bonds in their local currency. “We’ve asked all of them. Vanuatu and Samoa are both very interested in that – sort of agreed to go forward fairly soon. I think Vanuatu is dealing with the aftershocks of the earthquake – so a bit further down the track. And Fiji and Tonga are the first ones to go. This new financing initiative will benefit the private sector in these countries who can borrow from the ADB in their own local currency. “Like what your Ministry for Finance do when they want to finance their budget. They’ll put a bond out, local banks, maybe the super fund will buy that bond. And then with the local currency, usually the government, but in this case ADB, would have that local currency that we could then lend to the private sector. “What we’ve been hearing from the private sector, when we try to talk to them about borrowing from us, is that we usually lend in US dollars or a couple of other currencies that they’re big international currencies. But if someone wants to borrow in Fiji dollars or the Tongan Pa’anga, we weren’t able to help that. And that moves the foreign exchange risks, if we could, from the borrower to us. And we’re much better equipped to balance all those foreign exchange risks. We’re dealing in large amounts of money and lots of currencies.” For governments, the ADB is already raising loans in local currency for some member countries. “With governments we can already do local currency loans to governments. In places like the Cook Islands with the New Zealand dollar, we’ve been doing that for quite some years. But when it comes to the private sector, we have to have a bond to raise the currency. On the concerns of the dwindling correspondent banking relationship in the Pacific, Veve assured this is an issue the bank will continue to focus its support for Pacific member countries. “We came to an agreement that the World Bank would have a really strong focus on developing the system by which countries who didn’t have access to banking could operate, still operate a banking system with the support of the World Bank. “We agreed that we would come in behind that with a lot of technical assistance, capacity building and work with local banks and governments to try to build their skills. “Some Pacific countries are not World Bank members or don’t have access to World Bank grant financing. So, the ADB and the Government of Japan are helping as well. We’ll come in and help finance what’s needed to be done in those countries, assured Veve. “I think the islands are vulnerable, particularly if there’s not homegrown banks. And really BSP is the only homegrown, it’s a Papua New Guinean bank servicing many Pacific countries now, said the head of the ADB Pacific Office.