Cabinet refuses to write-off $20 million hoteliers' debt

Cabinet has knocked back a proposal by the Tourism Minister Sala Fata Pinati for the Government to give $20 million to "financially distressed" hoteliers, which would enable them to pay off loans they took from the Development Bank of Samoa (D.B.S.) and other financial institutions.

The rejection was confirmed by the Samoa Tourism Authority Chief Executive Officer, Fa'amatuainu Lenatai Suifua, in response to questions from the Samoa Observer.

“I can only confirm that Cabinet has denied the request,” he said recently.  

In May this year the D.B.S. took legal action against eight tourism operators with outstanding loans, and advised in a public notice that the targeted properties will be put on auction. 

But the Minister intervened and submitted an internal memo to the Prime Minister Tuilaepa Dr Sailele Malielegaoi and his Cabinet, asking that the Government allocate $20 million to enable the D.B.S. and other financial institutions to “write off” the principal amounts owed.

He also urged the Government to ask the financial institutions to hold off on "all legal action" against the tourism operators while a solution is being worked out.   

Sala later said his requested for Government intervention was accepted and legal action has been deferred to December next year. 

“The tourism industry needs the hotels to remain in business.The consequences (of these hotels being closed) far outweigh the amount of the loans. We are not saying the hoteliers’ loans will be written off,” he said at that time.

“No they will pay their loans for the time being, and make up on the missing payments. The Cabinet is more concerned on the ripple effect. If the D.B.S. moves to seize the assets of the eight hotels, this means the workers will be jobless and they will have to look for means to pay for their loans and provide for their families.”

The Minister was also worried that the move by D.B.S. will have huge implications on the hoteliers.

“It’s true the hoteliers may have been reckless when they didn’t make the repayments, and I’m certain there are reasons behind that but in the end, the Cabinet have to consider the consequences once the Government proceeds with the D.B.S. auctions,” he said.

But with Cabinet's recent rejection of the proposal, it is not known if the D.B.S. will now go ahead and advise the affected local hotels of its intention to put them up for auction. 

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