The Minister of Finance, Sili Epa Tuioti, has set the record straight in response to claims that the government is “broke.”

The claim has surfaced after the government revealed its plans to review tax laws with the view of increasing the V.A.G.S.T – among other taxes – to shore up its coffers. But the suggestion that the government is broke was rejected by Sili. 

“I don’t know how you got to that,” Sili said.

“The reason why we are looking at increasing taxation is really not because we don’t have the money. There is so much demand for roads and water supply. If you have been listening to Parliament then there is a high demand for water supply, road access." 

“As you know we are also now increasing the funding of free education which New Zealand had provided money for. Over time the shares of that funding, has decreased so the government has to pick up from there. So really, if we don’t raise taxes, or borrow, where is that going to get us? 

“It’s just going to take our economic development back but we are not broke.”

Sili said the government has sufficient monies for its plans.

But he admits that they need to prudent with spending and consolidate on cost cutting reforms.

“We need to review our expenditures. We did promise that we’ll be reviewing our expenditures in health and education sectors. 

“We just have to make sure that we are spending them on the right areas and we are getting value for that money. It’s the same with all of our expenditures.” 

Asked about the tax review, the Minister said it is necessary.

“It is something we need to look into after a couple of years, rather than waiting until things are really bad. I think it’s a very responsible move by government to do a review. 

“ You know when we review it does not necessary mean that there will be an increase, we may need to rebalance and reset to make sure we continue to provide the enabling environment for private sectors to reinvest in the economy, and to provide jobs. 

“We are continuing to look at investing in health and education to make sure that everyone has access to education and health and to improve the quality of the services we provide.” 

Minister Sili was also asked about Samoa’s foreign debt, and whether it is true it has reached the $2billion tala mark. The Minister would not confirm or deny the figure.

But he said: “Our foreign debt is now about 52-53 percent of our G.D.P. I think we need to make a point that historically our public debt as the percentage of our G.D.P is much lower than that, maybe 30 per cent. 

“But you know when we have natural disasters like the tsunami, flooding, and cyclones and obviously we need to borrow from the World Bank, A.D.B to rebuild our infrastructure because if we don’t, then it obviously it going to impact on the growth of the economy.”

Sili said nobody could plan when natural disasters strike.  But when they do, they come at a cost.

“We can’t leave our infrastructure in a damaged state. We need to make sure that businesses will be restored very quickly. 

“As the consequence of that, our public debt had increase in recent times.

“Obviously we had to borrow money for the airport terminal development. There’s always a question of whether we allow our key infrastructure to deteriorate and not do anything. Tourism is the key driver of our economic growth obviously, but we have one international airport, which is a gateway to Samoa. So it’s very important.”

The Minister added that the government has made a very wise decision to invest in facilities and infrastructure.

“Obviously the government is always wanting for grant financing but given the cost involved, it’s not very easy to have it all totally funded. 

“So we borrow from the government of China, but we are in the medium term and we will look at reducing our external debt as the percentage of G.D.P to around 50 percent again. 

“It’s one of the reasons why we are looking at the budget to try and consolidate, keep a close eye on how we manage our expenditures. We want to make sure that we create surpluses that will help us to rehabilitate our infrastructure in the event of natural disasters. 

“Not only that but we also need to look at a situation that we will be able to fund a lot of our ongoing maintenance from our own budget. 

“As you know we are still borrowing from the World Bank and A.D.B for the funding of the four lane roads. 

“A lot of work is going into climate proofing our infrastructure, so we need to raise the level. And unfortunately we can’t fund it from our budget, we have had to borrow that from the World Bank and A.D.B. although the terms are fairly contentious; I wish we only had to build the infrastructure and not to worry about maintenance and rebuilding. 

“But that’s the reason why we are where we are today. We are quite confident that we can bring that down to 50 per cent which is to me it will be quite good. 

“If we are too ambitious, then obviously it’s nice to say that oh, our debt is gone down to thirty percent forty percent but the question is; is that practical? Is that realistic? I don’t think so.”

Asked which country Samoa owes the most to, Sili said there was no particular country.

“Most of our lending is from the multilateral institutions, the World Bank and Asian Development Bank and then of course we borrow from China. It’s mainly the Asian Development Bank and the World Bank that we do borrow from.”

Looking at the future, Minister Sili said there is a lot of work to be done.

“We have an agenda to try and continue to grow the economy. We are estimating or projecting that the next four to five years, the economy will be growing at about 2.1- 2.2 percent on average.

“That’s pretty good by the standards of around the region. But we should be doing more and I think tourism is going to help us.”