About the debt and G.D.P

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%. 

ADVERTISEMENT

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

ADVERTISEMENT

Related Stories


Bg pattern top

Sign in for free to read more stories

Bg pattern light

UPGRADE TO PREMIUM

Subscribe to Samoa Observer Online

Enjoy access to over a thousand articles per month, on any device as well as feature-length investigative articles.

Ready to signup?