From transition to transformation: Our economic journey

This is the second in a series of opinion pieces covering the Cook Islands development journey. Written by Financial Secretary, Garth Henderson.

As we mark 60 years of self-governance, we also mark a critical economic shift, from transition to transformation.

Transition was our response to crisis. When COVID-19 brought global tourism to a halt, the Cook Islands faced a financial shock few nations could withstand. But thanks to prudent foresight, we were prepared.

In July 2019, we established a $57 million Stabilisation Fund. Our “rainy day” fund, just eight months before the pandemic struck. It gave us the fiscal space and resilience to think and make decisions for ourselves. That enabled the largest economic support package in our history. We kept people in work, maintained essential services, and stabilised our economy. That was the work of recovery. Urgent, difficult, and necessary.

Transformation, however, is the work of vision. It’s not just about regaining what we lost, it’s about building a stronger, smarter, and more inclusive future.

The irony of our careful development planning and consistent growth pre-COVID was our graduation from Official Development Assistance (ODA) eligibility in January 2020, just weeks before borders closed. Graduation occurs when a developing country’s Gross National Income per capita reaches a threshold considered “high-income” by international institutions like the Asian Development Bank, World Bank, and OECD Development Assistance Committee. It marks an economic milestone. But it also meant reduced access to concessionary finance and grants, even as we continued to face the unique vulnerabilities of a Small Island Developing State: geographic isolation, small populations and markets, a narrow economic base, and increasing climate and disaster risk.

Despite ODA graduation, the urgency to get our economy back on its pre-COVID trajectory, to minimise long-term scarring, remained. With an infrastructure gap of more than $600 million, we have had to be more assertive in engaging development partners, negotiating more favourable terms, and seeking new opportunities. These constraints have also made our efforts to pursue meaningful economic diversification even more essential.

Since 2020, we haven’t just recovered, we’ve reformed. Our fiscal framework has been overhauled, debt levels are sustainable, and we have returned to surplus. These are not abstract achievements, they are the result of disciplined decision-making and responsible governance.

We are growing again, but with greater purpose. While tourism has returned, we are broadening our focus. Investing in modern infrastructure, expanding digital connectivity, strengthening financial services, and responsibly exploring ocean and maritime resources.

We are also preparing for the long term. That is why we are establishing a Sovereign Wealth Fund, to preserve national wealth, protect future generations, and provide a buffer in times of future crisis. It is a step that reflects not only recovery but readiness.

At the same time, we are deepening our investment in people. The current budget delivers targeted wage increases, new support for first-home buyers, a modernised social assistance policy, and increased funding for education and training. These are deliberate policies to enhance resilience, reduce inequality, and lift long-term opportunity.

None of this progress has come easily. And it hasn’t come by chance.

It is the result of setting clear priorities: putting people first, protecting our sovereignty, and using every available tool to shape a secure and sustainable future.

Our relationship with development partners continues to be a key part of our progress. While there have been recent differences in interpretation with Aotearoa New Zealand, officials on both sides are engaging constructively to clarify expectations and maintain confidence in the frameworks that underpin our cooperation.

As we look ahead, the economic lessons of the past five years are clear. Resilience is not just about weathering shocks, it’s about being ready for what comes next. The progress we’ve made is the result of deliberate, disciplined policy and a public service committed to delivery.

This 60th anniversary is not just a milestone, it’s a turning point. The transition is complete. The transformation is underway.