(PRESS RELEASE); The IMF Executive Board approved the disbursement of US$22.03 million in emergency financing to help Samoa address urgent balance of payments needs created by COVID-19.
IMF financing support provides resources to the authorities to maintain macroeconomic stability with the aim of assisting the private sector adversely affected by COVID-19.
To address the pandemic, the Government of Samoa has taken measures to support businesses, workers, and households to safeguard the health and livelihoods of the population.
Washington, DC – The Executive Board of the International Monetary Fund (IMF) approved a disbursement to Samoa under the Rapid Credit Facility (RCF) equivalent to SDR 16.2 million (about US$22.03 million, 100 percent of quota) to help cover urgent balance of payments needs stemming from the global COVID-19 pandemic.
Samoa suffered from a severe measles outbreak in late-2019 (which claimed 83 lives and resulted in over 5,700 cases), and resulted in a much larger economic contraction than that of past natural disasters. The global pandemic of COVID-19 has exacerbated the economic downturn and will devastate the economy as it heavily depends on now-closed inbound tourism and remittances.
Samoa has shown resilience to multiple past economic shocks, underpinned by the authorities’ strong commitment to support the economy, and financial assistance provided by the international community. Samoa was among the first countries in the world to secure its border to protect its citizens.
The authorities’ response to the measles outbreak and the global pandemic has well identified the policy priorities, including safeguarding human capital, providing support to the private sector, and maintaining macroeconomic stability.
With support provided by external donors, the authorities aim to enhance the country’s preparedness to handle the impact of COVID-19, as well as improving the quality and efficiency of the health care system.
The authorities’ policy response also targets assistance to vulnerable businesses and households to ease the impact of the pandemic, and safeguard their livelihoods.
The financial assistance provided by the IMF will help the authorities maintain macroeconomic stability, thereby supporting the private sector and facilitating international payments for imports, which are needed to provide goods and services to sustain the livelihoods of the people.
Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, made the following statement:
1. “The global COVID-19 pandemic has exacerbated the impact of the measles outbreak of late-2019 on Samoa’s economy.
The border closure, combined with a sudden stop of tourist arrivals and decline in remittances, has led to a precipitous fall in two vital sources of foreign earnings and resulted in an urgent balance of payments need. IMF emergency support under the Rapid Credit Facility will help meet this balance of payments need, maintain macroeconomic stability, and catalyze additional donor support which is needed to fill the remaining balance of payments gap and ease the potentially sizable adjustment burden on the fiscal sector.
2. “Samoa has shown resilience to multiple past economic shocks. The authorities have put together a strong policy package in response to the pandemic, with policy measures aimed to strengthen the health care system, help vulnerable businesses and households, and accommodative monetary policy to ensure liquidity in the financial sector.
3. “Beyond the immediate response, the authorities will continue to implement structural reforms, with policies appropriately balanced between safeguarding debt sustainability and promoting economic growth. They also need to continue their efforts to enhance spending efficiency, strengthen social protection programs and safety nets, further improve tax administration, strengthen public financial management, and safeguard financial stability.
Addressing vulnerability to climate change remains a key medium-term challenge to create a fiscal buffer.”
