Public debts are "under control" — Minister Sili
Minister of Finance Sili Epa Tuioti says Samoa's public debts are under control, as he acknowledged recent concerns expressed by donor partners on the country's debt management strategy.
Speaking recently during an interview with the Samoa Observer outside Parliament, he said the concerns expressed by donor partners are understandable, due to the country's vulnerability to climate change and natural disasters.
But ultimately it is up to the Samoa Government and how it managed its resources, with the Minister revealing that Government's debt servicing programme for the current financial year is $71 million while domestic revenue is $636 million.
“It’s understandable the concerns raised by our overseas partners, but that is always their general concern given that our country is vulnerable to climate change and natural disasters.
“It is for us to manage our resources and to make sure that we can sustain in a case of an emergency.
“We do have insurance with other Pacific Islands through the A.D.B.; and we’re also looking at self-insurance fund and we can use the unforeseen the expenditure and some of that money can go into the fund.
However, we need to invest it and ultimately we need to prepare for those contingencies and I am comfortable with where we are with the debt," he said.
The Minister's statement coincides with his Ministry advising in its March 2019 Quarterly Debt Bulletin that Samoa's public debts currently stands at $1.07 billion, which is equivalent to 49.2 per cent of Samoa's gross domestic product (G.D.P.).
While the public continues to express concern at Samoa's debt levels, Sili said: “I am very comfortable and I like to think that people would understand that we would only go and borrow on needed basis.”
He then used the upgrading of the Faleolo International Airport last month, as an example of how the Samoa Government used loans from international partners such as China to fund critical public infrastructure.
“If we didn’t borrow from China, we wouldn’t be able to have that airport, the aerobridges and resealing of the runways. We borrow to enable us to invest in the infrastructure that will help us with the economy.”
According to the March 2019 Quarterly Debt Bulletin, public external debt stands at $1.05 billion and public domestic debt of $0.02 billion. Total public debt decreased by 1.2 per cent and by 2.8 per cent when compared to the December 2018 and March 2018 quarters respectively.
“The three main creditors in the portfolio are People for the Republic of China 38.8 per cent, International Development Association with the World Bank 25.9 per cent and Asian Development Bank of 22.5 per cent.
The other creditors are Japan at 8.4 percent, Organization of the Petroleum Exporting Countries with 2.2 per cent, and Unit Trust of Samoa 1.5 per cent with International Fund for Agriculture Development, European Investment Bank, Samoa Life Assurance Corporation with Samoa National Provident Fund at less than 1 percent.
Furthermore, Quarterly Debt Bulletin stated that the total debt service for the March 2019 quarter was $25.5 million with external debt service at $22.6 million and domestic debt service $2.9 million.
“The amount for the quarter decreased by 64.7 per cent and by 2.3 per cent when compared to December 2018 and March 2018 quarters respectively.”
Last month the International Monetary Fund (I.M.F.) urged the Samoa Government to include S.O.E. debts with public debts.
“The coverage of public debt should be widened to include debt from state-owned enterprises,” stated the I.M.F. in a report, following consultations with the Samoa Government in February/March this year as part of its Article IV Consultations.
But Sili said the Samoa Government is fine with the way things are, while acknowledging that they have borrowed with multilateral financial institutions such as the World Bank and the Asian Development Bank (A.D.B.).
“We have considered that, however we are comfortable with the way things are. We have borrowed from the A.D.B. and the World Bank, for State-owned enterprises (S.O.E.) projects and that mean we on-lend to those agencies; because they can’t go directly to the overseas partners.
"And obviously their requests are made through the Ministry of Finance and it is mainly for the road infrastructure; like the road works from Vaitele to the airport, that’s all loan financing,” he said.
The Government's S.O.E. also borrow domestically but these debts should not be categorised "public debts", added the Minister.
“I don’t think we should because it is not a public debt and as I said we have to make sure that they can afford to pay back their S.O.E. debts because they loan for what they need versus the public debts (incurred and paid for by the Government) for infrastructure and development of the country — there is a difference,” he said.
The Minister told this newspaper that the S.O.E. has to get approval from the Ministry of Finance if they want to take out a loan.
“And we have denied a few proposal and we emphasised to the S.O.E. that we loan on a needed basis."
When asked to name the S.O.E. whose proposals were unsuccessful, the Minister declined to name them.