Govt. to consider loans if downturn extends
The Samoan Government says it “may” consider resorting to going further into debt to boost the economy in the event that the coronavirus results in prolonged economic downturn.
Ministry of Finance head, Leasiosiofaasisina Oscar Malielegaoi, told the Samoa Observer that debt finance was a possibility in the event of a prolonged economic downturn.
The C.E.O. was speaking outside of Parliament following the passage of Tuesday’s supplementary budget.
On Tuesday during Parliament’s special session, lawmakers approved a stimulus package of $66.31 million. The assistance was characterised as an initial policy response.
“The Government is very responsible and that is why when you look at the deficit it’s increased from 1.2 to 1.7 percent,” Leasiosio said.
“The deficit is 0.5 to the G.D.P. and that is a very insignificant amount and we are looking at the long term.”
Leasiosio said the Government is not just concentrating all efforts and resources into one area.
“This is only the first phase and the second phase depends if the virus prolongs, then we will consider [borrowing].
“But [as to] the question [of] loan or no loan, we [will] first approach our partners such as the World Bank, Asian Development Bank.
“We [won’t] just consider only China. We [will] look at all the partners.”
The Government's outstanding debts for the December 2019 quarter stood at $1.04 billion and they were external loans to bi-lateral and multilateral partners.
The Governmental Finances for the 2019-20 Financial Year (second quarter) released by the Samoa Bureau of Statistics (S.B.S.) says loans based on bi-lateral agreements amounted to $477.9 million.
“Loans to the People’s Republic of China (P.R.C.) stood at $391.4 million; $86.5 million were monies owed to the Japanese Government; Asian Development Bank loans amounted to $226.9 million and World Bank loans [stood] at $295.2 million in December 2019," the statistical statement read.
The C.E.O. further said that overseas loans are tied to specific projects.
“Like the [Faleolo International Airport] and [buildings] for the Ministry of Justice and Court Administration, hospital and our loans from time to time, we usually consider our partners first, such as the World Bank.
“And not only are we getting grants but when we do loan, very concessional terms”.