EXTERNAL LOANS, “LAST RESORT”, SAYS MOF CHIEF EXECUTIVE
By Nanai Taofiga Laveitiga Tuiletufuga
Resorting to external loans to bail out the country should the COVID 19 continues to prolong posing drastic effects on the local economy and residents livelyhoods, will be the Government’s “last resort.”
The latest Economy Report compiled by the Central Bank of Samoa and released March 12th 2020, showed that as of December 2019, Samoa’s outstanding external debts at $1,028.5 million (around 45.6 percent of nominal GDP), 3.3 percent which was lower than $1,063.9 million at end December 2018 (49.3 percent of nominal GDP).
And annual Debt Servicing Repayment as at the end of December 2019 totalled $71.43 million, which was 0.4 percent lower than $71.70 million in the year up to December 2018.
“This was equivalent to
• 10.63 percent of recurrent revenue ;
• 14.70 percent of foreign reserves ; or
• 8.54 percent of total exports of goods and services,”
Clarified the Economy Report.
“What this means is that for every tala that is earned by Government (Recurrent) Revenue, approximately 11 sene is used to pay off Samoa’s foreign debt,” clarified the CBS document.
“For every tala that is saved as the country’s foreign reserves, 15 sene is used to pay for our external debt,” the report continued.
“For every tala that we earn from the export of our goods (export earnings from fish, taro, nonu juice etc…) and services (mainly tourism earnings), we use around 8 sene of those earnings to repay our foreign loans.
And the report, says Chief Executive Officer of the Ministry of Finance, Leasiosio Oscar Malielegaoi reflects that 11% Government’s Revenues are dedicated to External Debt Service while the remaining 89% is utilized by Government to meet its financial obligations ranging from funding major infrastructural projects and maintaining public services for instance health. Overall he reiterates that the External Debt is manageable and speaks volumes for Government’s financial stability.
On that note, the MOF Chief added that at this point in time, considering additional new external loans as a result of COVID 19 is not on the table and will be a “last resort,” says Leasiosio in an exclusive interview with Savali News Monday this week.
For the COVID 19 response, Leasiosio says that the Government’s initial response of $66 plus million tala approved will be complemented by a Second Stimulus Package to be introduced to Parliament alongside the new fiscal year 2020-2021 Budget estimates in May.
However he is not at liberty to reveal details until the Budget Estimate and Second COVID 19 Stimulus Package is tabled before Parliament.
Leasiosio acknowledged that Samoa like the rest of the world is experiencing the “harsh reality of COVID 19 and its impact “and as part of Government’s vigilant surveillance, MOF is constantly liaising with her international stakeholders such as the IMF, World Bank etc.
He added that to ensure that Government can respond to the needs of the country should COVID-19 escalates, MOF’s strategy is to anticipate the worse scenario.
“On the heels of the measles epidemic which the country is still in recovery mode, Samoa was again confronted by the Coronavirus pandemic,” he continued. “And contrary to views questioning the Government’s first $66.3 million tala Stimulus Package now providing immediate and essential relief for our people, we have to plan ahead.”
