Debt repayment delays irked Audit Office
The Samoa Audit Office had raised concerns at the implications that delays in repaying external debt could have had on the Government of Samoa.
The concerns were highlighted during a performance audit on public debt management at the Ministry of Finance in 2014, which the Audit Office undertook at that time.
The performance audit was done is to assess whether public debt management was effective and efficient to achieve long-term sustainability and financial stability.
“We conducted a preliminary review of the public debt management processes within the Government of Samoa, and focused primarily on debt servicing activities. In particular, to assess whether the database (CS-DRMS), which records the debt servicing transactions, is complete, accurate and consistent to provide reliable financial information,” stated the Audit Office report.
The audit team reviewed repayments for 50 per cent of all government external loans, and the process of their repayments. The loans were randomly selected and the payments were compared to the forecasted due dates from the CS-DRMS and the actual dates the payments were made by Central Bank of Samoa (C.B.S.)
The audit team highlighted instances where delays of debts repayments had occurred.
“After further discussion with the parties involved, there is a need to coordinate the involvement of both parties as there was no formalised arrangement between both parties, repayments have been done in good faith and good relations with C.B.S. Although, there are no penalties charged for overdue payments, the analysis did show that late payments may result in variances that could be costly to the Government of Samoa.”
The audit team recommended that the Ministry of Finance establish a formal agreement between the Ministry and the C.B.S., to clearly articulate what their respective responsibilities were in relation to debt servicing, and it should be reviewed from time to time as part of the internal control systems of the Ministry.
Furthermore, the audit team recommended that to ensure efficiency in operation – where Ministry of Finance needs to submit any payments advice to C.B.S. in advance so they are made on time and on the intended due dates – the C.B.S. is to provide confirmation of payments to the Ministry and monthly bank statements after end of each month for timely reporting.