Economist alarmed by Govt’s increasing budget deficits

An Economist has expressed concerns about the increasing amount of budget deficits by the current Government since 2016. 

Former Member of Parliament, Afualo Dr. Wood Salele, said that since the General Election in 2016, there has been a constant increase in deficit year after year, which is alarming.

On Tuesday, the Minister of Finance, Sili Epa Tuioti, tabled a $913.6 million budget for 2019/2020 with an expected overall fiscal deficit of approximately $87 million. This is $3.56 million more in the budget deficit compared to the 2018/2019 budget.

While there are many factors that contribute to the growing deficit, there is concern that growing deficit from Government is nowhere near its collected revenue to cover expenditures. Afualo said this is worrying.

“From what has been tabled it appears that the burden hasn’t been lessened,” said Afualo. “If the deficit is now $87 million — as opposed to $83 million in the previous year — it shows that it continues to grow and the revenue cannot service our economy.

“We cannot finance our economy if our revenue is not performing and that is why we end up with deficits.”

In the event that Samoa is hosting the Pacific Games and several more regional meetings in the next financial year, Afualo is hopeful that the projected revenue will show some positive signs.

In addition to the Pacific Games, Samoa will host the A.C.P. Fisheries and Aquaculture Ministers’ Meeting and the Regional Energy and Transport Ministers’ Meeting in September. Next year the country will host the Pacific Festival of Arts and the Post Cotonou Signing Agreement in June.

In the absence of the Budget Estimates that has been referred to Parliament Finance Committee for scrutiny before it is made public, Afualo said the Committee and Parliament should be concerned about the deficit.    

He made the point that with many failed projects costing millions in wasted taxpayers money, it is crucial that the Government rethinks its priorities and new multimillion tala planned projects.

The failed projects that Afualo referred to include the $21 million abandoned Satitoa wharf and the Asau Harbour, to name a few.

He also questioned the newly-constructed Tiavea airport and its viability and urged the Government to look back at its previous multimillion tala investments.

“That is the big question for these big development, is their viability,” he said.

“Given the bad experience at the Satitoa wharf and many other failed projects, Government needs to consider its priorities in terms of development, especially with other sectors needing the funding; for example water supply and of course the cost of living.”

According to the budget estimate summary, other Government major projects include new Electoral Building, V.A.G.S.T. Electronic Register, Tiavea Airport, National Digital Identification Project, New High Commission in Wellington, the new road at Vaiaata/Patamea, new consular building in American Samoa and a five-storey building at Savalalo.

Furthermore, Afualo also spoke about the increase in the Ministry of Health, with $20.25 million being injected compared to the previous financial year.

According to the 2019/2020 budget for the Ministry of Health, $112.1 million has been appropriated under the Ministry.  In the 2018/2019 financial year before the health sector merge, the Ministry of Health was given $11.75 million while the National Health Services got $80.1 million, which in total was $91.85 million.

Afualo asked why the number increased after the merger between the two entities.

“I have not seen how the allocation is itemised but the question is why has it increased when it has re-merged instead of dropping,” he asked.

“That was the concern and one of the reasons it was merged because there was duplicate in the work and core functions.

“If it has now been put together and one person is being paid to do the work that was done by two (persons) then shouldn’t the number go down especially up at the management positions.

“I am not aware how the money is being allocated, but I do hope that this increase includes the grievances of doctors that had asked for pay-rise.”   

The Ministry of Health's $112.1 million budget allocation comprises of $73 million for the normal operations of the Ministry, $23 million Transactions on behalf of State which includes provisions for hospitals supplies, $8 million for overseas treatments, $7.6 million grant for the National Kidney Foundation, $9.3 million in grant development projects for the Health sector and $5.1 million in-kind assistance.

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