About the debt and G.D.P

125 Hits

Dear Editor,

Re: Debt is not that bad 

Of course those countries have industries and exports. However, if their debt is over 100%, it means that the more their GDPs rise (if they are rising), the more their debt rises as well to keep getting those high figures.

Samoa used to have a debt to GDP ratio of 88% in the 1980s. 

It then dropped right down to under 40% and then rose to around 60% a few years ago. 

It is now dropped again to 53% after 2 years of “belt-tightening” budgets.

This is why I say it is “healthy”. Our ratio is dropping while other countries remains well over 100%. 

So if our ratio is dropping it means that either our economy is growing or our debt payments are increasing. 

Both are good news.

The “debt” is not an annual debt of $1.1 billion. This figure is the TOTAL debt that has accumulated in Samoa over 30+ years. This debt does not need to be paid off all in one go.

Samoa’s annual GDP is around $2 billion. 

This is the total worth of all goods and services (economic activity) in Samoa per year. 

So this year, Samoa’s economy is worth $2 billion, next year another $2 billion, the year after that another 2 billion (although it would be nice if the figure keeps rising to $5 billion in a few years time). 

Our GDP has started to grow again after a several years after the tsunami and the cyclone of stagnate growth.

Tourism is the biggest growth industry accounting for about 25% of GDP.

 

Petelo Suaniu

© Samoa Observer 2016

Developed by Samoa Observer in Apia