Bank calls for private sector assistance; closes Vaitele branch
The Country Manager of ANZ in Samoa, Bernie Poort, has called for more Government assistance to the private sector with no end to the country’s economic downturn in sight.
The call comes as Mr. Poort revealed exclusively that the bank would be closing its Vaitele branch as customer numbers have fallen by as much as 50 per cent and it seeks to cut costs amid the severe economic downturn.
On Friday, the Samoa Observer revealed that the Central Bank of Samoa had told the country's private banks in a confidential letter the country's economy seemed poised to move into an economic depression.
Mr. Poort, who is also the Chairman for the Banker’s Association, said they are waiting for the Government to provide some sort of package to assist the private sector.
“But nothing seems to be forthcoming,” he said.
“Looking around other Pacific Islands, like Australia and New Zealand their Governments are spending large amount of money to keep people employed and their economies moving forward, in Samoa we just haven’t seen that.”
An August analysis by the Australian National University (A.N.U.) economists and Pacific experts, Stephen Howes, and Sherman Surandiran found that Samoa was, unlike other Pacific countries actually decreasing its expenditure.
But the authors concluded the following Financial Year was a necessary time for Governments to increase their expenditure in order to stimulate national economies.
The report found that Samoa was projecting an 8 per cent decrease in its Government expenditure this financial year during the COVID-19 led downturn, unlike other Pacific countries.
(Australia, by contrast, the authors said will increase its aggregate expenditure in the 2020-21 Financial Year by 32 per cent; Tonga will increase its spending by 15 per cent.)
“All Pacific governments need to be able to increase their aggregate expenditure to respond to the COVID-19 crisis,” the A.N.U. economists found.
Mr Poort said the Government should unveil a plan to increase support to the private sector soon as there was little chance of the economy returning to normal in the short-term.
“Unless we are going to have a travel bubble with Australia and New Zealand and if that is not going to happen, someone needs to come up with a better solution,” Mr. Poort said.
An earlier analysis by the A.N.Z. Bank provided to its private clients found that a tourism slowdown will devastate Pacific economies including Samoa, which will face up to an 18 per cent economic downturn.
But the report also said that with decisive, targeted and a right-sized fiscal stimulus package, policy makers could cushion the economic blows of the pandemic.
The government to date has issued two stimulus packages valued at more than $100 million.
The impact of the pandemic has led the A.N.Z. to close down their Vaitele branch by mid-November, confirmed Mr Poort.
“There is about 50 per cent reduction in the number of customers using the Vaitele branch. Also the lease is due and it is an expensive proposition and with the COVID-19 were trying to find ways to cut back costs,” he said.
Mr Poort noted it is only five kilometers between Vaitele to Apia, their main office.
He assured that all the five staff members will not lose their jobs. “The staff are protected as they will work at the main branch and for our clients, we intend to extend trading hours,” said Poort.
Analysis this month released by the Central Bank of Samoa found that the nation’s total economic output for the first quarter of the current Financial Year was some 11.9 per cent lower on a year-on-year basis.