Endure and remain "vigilant": Finance chief
Government debt stood at $1.01 billion this June; a year-on-year decrease of $46.2 million as the nation's Finance chief ruled out further borrowing for another two years.
The debt figure was revealed in a report called “Government Finance Statistics” issued by the Samoa Bureau of Statistics.
Another report by the Bureau showed Samoa’s Gross Domestic Product (G.D.P.) contracted by 11.6 per cent for the second quarter of this year when compared to the same period last year.
It represents the single largest quarterly decline since current measurements of economic activity were introduced in 1998.
But despite those challenges in an interview with Samoa Observer, the Chief Executive Officer of the Ministry of Finance, Leasiosiofa'asisina Oscar Malielegaoi, said the Government would not borrow more money for at least two years.
“We are not surprised, we expected exactly the [outcome] we have now,” he said.
Leasiosiofa'asisina added that the Government has made a commitment not only domestically but to its partners that we will not borrow.
“I think that Samoa is not alone, we will all be impacted one way or another,” he said.
“My message is to be vigilant, for the Government, we are exercising restraints, we know where to invest and where not to. For example, a project that will not be relevant now under the current circumstances, we can do a lot next year when the situation improves, why rush.
“But if for instance, we still have the pandemic in two years’ time then that will change the environment.”
The Finance Chief explained that borrowing will only be a last resort if everything shuts down.
He made reference to a flight that arrived in Samoa last week from Australia, saying he thinks it will be of high risk.
“If by chance we have a case, then things will change, eventually we will have to [go into] lockdown, shutdown everything, businesses and its activities and even projects, it will also impact our economic response,” he said.
However, Leasiosiofa'asisina was optimistic in saying that things will pick up if Samoa gets access to a COVID-19 vaccine in January 2021.
“Personally, I am praying for a vaccine soon, so we can all live peacefully, re-open our borders and start travelling,” he said.
“Once that happens, we will see our economy picking up again because tourism represents 20 per cent but it’s down to zero however, it may be down but not out.
“Fingers crossed, we will have a vaccine come next January, we’re confident the economy will only decline by 2 per cent and that relates to debt.”
He also added that things will also pick up complemented by the two stimulus packages, ongoing development projects which will sustain our economy over the short to medium term.
Of Samoa’s debt, external borrowings through bilateral arrangements totalled $463.9 million; 81.3 per cent or $377.3 million of that amount is owed to the Government of the People’s Republic of China.
Debts owed to the Government of Japan amounted to 18.7 per cent or $86.7 million of total borrowings.
Bilateral agreement decreased by 7.1 per cent or $35.5 million compared to the corresponding year of Financial Year 2018/2019.
Loans from international institutions summed to $540.6 million.
The majority of multilateral borrowings by the Government are with the World Bank and Asian Development Bank with total amounts of $294.9 million and $218.3 million respectively.
On a year-on-year basis, loans with multilateral institutions went down by $3.6 million of 0.7 per cent.
The total revenue for the June quarter under review stood at $239.0 million.
Taxation was the biggest component of revenue collection and contributed $116.2 million or 48.6 per cent; grants and other revenues contributed $95.7 million (40.1 per cent) and $27.0 million (11.3 per cent) respectively.