Re: Creative accounting
Aside from the debt figures, the report itself was gobblygook and difficult to read or understand.
This is partly a reflection of my one term of economics at a local training institute but partly due to how the figures are presented.
Like a good bureaucratic report, only those in the economics area of the Department of Statistics would understand what the figures actually mean.
The explanatory material only paraphrases what the figures say, not what they actually mean, ie, there was very little analysis.
For instance, the good December quarter figures look like they are due to timing issues and not because of any good financial management. I don’t even know whether this is what the figures are saying, but that is my guess.
It would be extremely helpful to ordinary folks on the street if after every six months, the head of the central bank and/or the head of the ministry of finance come out with statements on how the debt management issue is going and/or how the budget is progressing against forecasts.
And in language that simple folks like me can understand - not this throwing figures at us and hoping that we somehow can make sense of them.
As to the debt/GDP ratio, I read somewhere that a ratio of 30% is ideal and anything above that is beginning to be an issue. It doesn’t really matter how long the debt has been accumulated. The point is that, now, out of every dollar Samoa earns (GDP), 50 cents of that goes to paying off the debt.
That is of concern.
Any reserves Samoa has should be put aside to cater for unexpected and unforeseen events like hurricanes, tsunami, etc. As the Minister points out, a lower rate is preferable.