This DSA has been produced in consultation with the Asian Development Bank (ADB). It is based on the common standard LIC DSA framework. Under the Country Policy and Institutional Assessment (CPIA) Tuvalu has been provisionally rated a weak performer, and the DSA uses the indicative threshold indicators on the external public debt for countries in this category: 30 percent for the ratio of the present value (PV) of debt to GDP; 100 percent for the ratio of PV of debt to exports; 200 percent for the ratio of PV of debt to revenue; 15 percent for the ratio of debt service to exports; and 18 percent for the ratio of debt service to revenue.
An effectively defunct and wholly government-owned public enterprise called the National Fishing Corporation of Tuvalu (NAFICOT), is party to both JVs. NAFICOT owns 50 percent of the TPOC venture and 40 percent of the Korean one, and pays dividends to the government. Loans taken out by both JVs are on market terms. Tuvalu’s share of the debts amounts to 28 percent of GDP.
The EIB loan is a credit line to the Development Bank of Tuvalu, which is fully owned by the government. Overdrafts at the National Bank of Tuvalu, which the government uses for cash management but also for short-term financing, are not included in the debt stock.
The scenario assumes TTF nominal returns of 7 percent, slightly below historical levels and in line with the authorities’ targeted asset returns.