Opposition looks for cash injection in second stimulus

The Government is expected to table a second stimulus package of more than T$80 million in response to the coronavirus (Covid-19) pandemic lockdown after Parliament reconvenes on Tuesday.

The second stimulus package will be tabled together with the budget for the 2020/2021 Financial Year. 

A senior Cabinet Minister said the second recovery package will extend the assistance offered to pensioners and also include more assistance for the national airline which had received T$1 million in the original stimulus measures. 

Businesses will also be given assistance for paying utility bills. 

The Government had initially tabled a T$66 million recovery package for the pandemic with the funding focusing primarily on health with T$20.2 million and T$12.5 million earmarked for the private sector. 

A sum of T$27.5 million was allocated to secure citizens’ purchasing power and T$2.5 million to assist Scientific Research of Samoa to establish a commercial arm for its research. 

The Government last year tabled a T$913.6 million budget with a theme of “shared vision for prosperity”. 

A total of T$583.7 million from that sum was allocated to expenditure programmes, while statutory expenditure accounted for $145.6 million. 

But with international border closure and businesses being on a standstill in the tourism sector, the President of the Tautua Samoa Party, Afualo Dr. Wood Salele said the priority for the forthcoming budget should be on expenditure. 

Afualo said it was no secret that revenues would be hugely impacted due to the coronavirus-led downturn and drop in remittances from families.

He urged the Government to streamline its expenditure in line with its declining revenue base. 

“Usually we collect revenue of T$500 million in the budget but that will less likely be the case this time around,” he said. 

“Revenue collected has been reduced because of [the] state of emergency orders and you can also expect companies to not pay up their dividends.

“So the Government, in its budget to be tabled, should have a real commitment to stimulate and inject revenue [into] the private sector…” 

Speaking about the first stimulus package in April, Afualo said T$20 million of the T$66 assistance was essentially cutting expenses on the provision of Government services such as rent, electricity and water bills. 

“But there was no real injection of revenue that was included in that package,” he said. 

“Hopefully this second one will do justice and [the] Government shouldn’t use the [state of emergency] as a scapegoat to shy away from what is the best economic policy to stimulate the growth of our economy, especially the tourism sector that's virtually on a standstill.”

Looking into the future, the former Member of Parliament said it is expected that the budget will focus largely on constructing an access road in the lead up to next year’s general election. 

“We had a lot of revenue before [the pandemic] to fix those access roads but you will see that a lot of those works will be done in the lead up to the election,” he said. 

“Of course it’s all politically motivated development for [the] campaign and they won’t say it but it’s to entice those in the villages. 

“But overall the budget should not reach the T$1 billion milestone announced by [the Ministry of] Finance Chief in your paper because we just don’t have that kind of money right now. But under our current circumstances, we will [need to borrow] again...” 

In a previous interview with the Samoa Observer, the Ministry of Finance, Chief Executive Officer, Leasiosiofa’asisina Oscar Malielegaoi, said the Government was not under pressure to seek external help to finance the coronavirus downturn.  

“We don’t have an appetite to borrow,” he said.

Leasiosio’s comments were made after predictions from the International Monetary Fund that debt levels would surge in the wake of the pandemic. 

He believes the debt-to-Gross Domestic Product ratio will increase because of the national economy contracting, not because of rising debt.

But Afualo said the comments are not accurate, saying the Government will need to borrow millions that will be treated as revenue to keep the budget afloat.  

In relation to the budget to be tabled by the Government, a spokesperson for the Samoa National Democratic Party, Vui Seinafolava Masinamua, expects the budget to focus on wages for workers. 

Vui said the Government needs to stop increasing salaries for Members of Parliament and give more money to the private sector that is the backbone of the country. 

In addition, he urged the Government to pay off more debt that has not moved from the T$1 billion mark.