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Govt. waits on China over debt suspension

The Government has not received official communication from China regarding its decision to suspend debt repayments by Samoa and 76 other developing nations.

Approached for a comment on how this benefits Samoa's recovery plans post-pandemic, the Minister of Finance, Sili Epa Tuioti, revealed that the Government is yet to be officially notified by China's government.

He assured that they will respond as soon as official confirmation is received.

The Samoa Observer can reveal that Beijing's adoption of Debt Service Suspension Initiative for Poorest Countries – which is an initiative of the G20 group of nations – will suspend both principal and interest payments by relevant countries from 1 May 2020 to the end of 2020 as confirmed by a Chinese Embassy Spokesperson.

The initial announcement was made earlier this month by China’s Vice Foreign Minister, Ma Zhaoxu.

"The initiative will benefit 77 LDCs [least developed countries] and IDA-countries that are current[ly] on debt service including Samoa," a spokesperson from the Chinese Embassy has confirmed in response to questions from the Samoa Observer.

"Guided by the vision of building a community with a shared future for mankind and the principle of pursuing the greater good and shared interests, China will act on the G20 consensus on debt suspension and provide assistance to the poorest countries to concentrate on COVID-19 response and sustain economic and social development. 

"In the meantime, China will continue to engage in international cooperation against the virus through both bilateral and multilateral channels."

According to Government Public Accounts for Financial Year ended June 30, 2019, Samoa has spent a total of $33,703,756 on debt servicing to the People's Republic of China.

The Statement of Borrowings revealed that as at June 2019, a total of $409,469,958 was still owed to China, with principal repayments of up to $25 million.

Aforementioned external debt services projects including the Parliamentary Complex MJCA Building, Government Building, National Medical, Samoa Medical, Samoa National Broadband Highway Project and the Faleolo International Airport Upgrading Project.

Two months ago, the Finance Ministry C.E.O., Leasiosiofaasisina Oscar Malielegaoi, assured that the Government is a “responsible borrower” and is prepared to make repayments for loans from China and multilateral institutions including the International Monetary Fund despite the global pandemic.

As of June 30, 2019, the Government's total foreign debts stood at $1.04 billion. This is a decrease from the $1.09 billion from the previous year.

Leasiosio said the Government is more than able to pay the debts.

Asked whether the Samoa Government would seek waivers of loan repayments given the economic situation, the C.E.O. did not say definitively. 

“If they do offer that, but we will not go asking, unlike other countries [which] are asking for [grace periods to be extended] and they’re missing the spirit that if you sign up to a loan, the expectation is that you pay what you owe,” the C.E.O. said. 

“We have the [financial] capacity and if we’re offered the option then we’ll take it.”

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