S.N.P.F. deal a question of transparency
Despite our politicians best efforts at Parliament’s despatch box, the shabby truth about Samoa’s economy is plain for all to see: this nation’s finances are in poor shape.
After the twin tyrannies of the measles crisis and now the once-in-a-century coronavirus downturn all our best laid plans to bring the budget under control lie in tatters.
We haven’t been told as much, of course.
But the Government’s actions spoke much louder than its words. The stimulus package passed as part of the supplementary budget earlier this month told us much more about this nation’s fiscal status than any report ever could.
The roughly $40 million in private sector stimulus measures passed by the Parliament earlier this month were filled with padding that did not represent a real cost to the Government, or the actual point of economic stimulus: pumping new money into the economy in a time of crisis.
Measures such as waiving Samoa National Provident Fund (S.N.P.F) contributions requirements for employers, or allowing S.N.P.F. members' early withdrawal of their own contributions, were not stimulus measures in any classical sense.
The reality is we live in a part of the world more prone to external shocks, such as natural disasters, than perhaps anywhere else in the world.
The high risk of such unexpected economic shocks have long been baked into Governments’ financial accounting not just in Samoa but the entire Pacific.
The writing about the Samoan economy facing major constraints has been on the wall for a long time - before even these two most recent disasters appeared on the horizon.
In 2018, the Asian Development Bank named Samoa as just one of six Pacific countries in high debt distress.
That very same year the International Monetary Fund (I.M.F.) wrote to Samoa in April to issue a warning about the levels of debt the nation was carrying and warning it was verging upon debt distress.
Debt repayments, we were told by the Ministry of Finance last week, already account for some nine per cent of our total budgetary spending.
In today’s edition of the Observer we learn that these debt levels are now set to skyrocket, on the calculations of the I.M.F. itself.
From exactly where this extra debt is expected to come is something neither the I.M.F. nor the Finance Ministry has divulged so far. It is something we deserve to know.
But again, we do not fault the Government for going into debt in the name of trying to save the economy at a time of a generational financial crisis. Keeping our economy alive comes at a cost. And we should be prepared to wear it. But we should also know where the money comes from.
Recent reporting has raised some very serious questions about decisions taken by the S.N.P.F. at the very same time as international organisations were ringing the alarm about Samoa’s finances.
A 2018 deal by the S.N.P.F. that was previously unannounced until it was reported in the Sunday Samoan showed the S.N.P.F. spent $34 million on acquiring the land on which the Sheraton resort at Mulifanua sits (“S.N.P.F. buys Mulifanua resort land for $34 million”).
The S.N.P.F.’s role is enshrined in its name. Provident decisions are those which are future-minded.
What is provident, then, about paying $34 million to buy land already owned by two agencies of the Government - the Samoa Trust Estates Corporation (S.T.E.C and the Samoa Airport Authority (S.A.A.)?
We question the justification for the purchase provided by the S.N.P.F.’s Chairman.
“This decision was also aligned with our strategic plans to showcase Samoa as one of the best destinations in the Pacific,” said Leasiosiofaasisina Oscar Malielegaoi.
It would be easy to criticise the Fund for making an investment in tourism infrastructure just before the industry collapsed entirely due to the coronavirus. It would also be unfair. We do not propose to make such a criticism, nor do we expect the S.N.P.F. to have foreseen a global economic crash that no one else did.
But there are a number of questions about the strategic merits of the S.N.P.F. buying land from other arms of the Government.
Can we imagine a scenario in which the S.T.E.C. and the S.A.A. would come into conflict with Fund? Questions must be asked about the necessity of this decision but also the transparency with which it was taken.
Why was it that we were only this week able to confirm the purchase of the land and the amount of money spent on the purchase, for an institution meant to be the guardian of all Samoans’ financial health?
The S.N.P.F., of course, made a similarly curious - and ruinous - decision to invest in the Desico oil company; a fiasco that happened years ago but will not soon be forgotten.
But for all this, we must temper our criticism of the S.N.P.F.
Among dozens of state owned enterprises that fail to turn a profit it does. As a whole, its decisions have benefited its members.
It was also proactive in promoting stimulus packages for the Samoan economy during times of economic crisis - something for which we applaud it.
But we believe that their decisions should be made transparently and, without exception, in keeping with its mission to benefit the average Samoan.
The $34 million spent on the resort land, we believe, fell short of its mission. And, needless to say, that is a sum of money that could have been very useful during the current economic downturn.
Instead of “stimulus” measures that are ultimately paid for by S.N.P.F. holders themselves in the form of early, withdrawals we could have nearly doubled this nation’s stimulus response with real cash injections.
That could mean loans to businesses to buy the materials needed to start new businesses that would boost the employment of Samoans. Or, if it were insistent on investing in centrepiece tourism products, the Fund could have invested in one that employed Samoans who are currently being laid off en masse as the economic downturn bites our country.
We expect of the S.N.P.F. only what they expect of themselves: prudent decisions and, according to their mission statement, “transparent and ethical practices”.
The deal to buy land at Mulifanua, we believe, fell short of those goals, especially at a time when Samoa was being warned about its finances.
A public body dedicated to looking after its members best interests has nothing to lose by making its decisions transparently.
The Mulifanua deal shows us that it is high time for the S.N.P.F. to start doing so. .