New Zealand will contribute $5 million to further help Tonga’s economic recovery following the civil unrest which saw many businesses destroyed last year, Prime Minister Helen Clark announced today.

The announcement was made during Helen Clark’s visit to Tonga for the Pacific Islands Forum.

Helen Clark says the Government of Tonga has sought additional assistance to ensure the rebuilding of the central business district in Nuku’alofa, which was badly affected by the unrest of 16 November 2006.

“Reconstruction of Nuku’alofa‘s Central Business District has been slow. One reason for that is the lack of affordable medium to large scale loan finance which is needed to rebuild commercial business premises with rental space,” Helen Clark said.

“New Zealand’s $5 million will support a Private Sector Reconstruction Facility. It will offer reduced cost loans to rebuild commercial buildings. In restoring commercial rental space, businesses of all sizes will be able to get back up and running. This will stimulate economic recovery and provide employment opportunities.”

Australia will also contribute AUD$5 million to the Private Sector Reconstruction Facility. In addition, the Government of Tonga will support the scheme, and the low cost loans for business reconstruction will be provided through local banks in Tonga.

This initiative builds on the existing Business Recovery Facility, which is a joint initiative between New Zealand’s aid and development agency, NZAID; its Australian counterpart, AusAID; and the Government of Tonga.

The Business Recovery Facility was set up to provide short-term subsidised lending and loan guarantees for small to medium sized businesses affected by the civil unrest. Uptake of the initiative has been good, but smaller businesses in Tonga are still struggling to re-establish themselves without access to commercial rental space.

New Zealand’s $5 million contribution will come from NZAID’s 2007/08 Official Development Assistance allocation for the Pacific.