Grants, aid could assist Samoa's recovery: expert

Samoa might need to put its faith in grants and foreign aid turning around the fortunes of its economy as the country looks at its options.

That is the view of Alexandre Dayant, a Research Fellow in the Pacific Islands Program at the Lowy Institute in Sydney, when responding to questions sent by the Samoa Observer.

He expressed confidence that after all the numbers from 2020 and 2021 have been collected and scrubbed, the data is expected to show “blockbuster years” in terms of foreign for Samoa.

The economic crisis brought on by the COVID-19 pandemic has created a loss of Government revenues, he said.

Mr. Dayant said grants are the preferred way to support the economy because there is not much fiscal space to add additional loans for Samoa.

“I think 2020 and 2021 are going to be blockbuster years for Samoa in terms of Aid. The COVID-19 economic crisis has created an important loss of government revenues that need to be refiled,” he said.

“There is not much fiscal space to add additional loans in Samoa so grants should be (and have been) the preferred way to support the economy.”

Aid flows have also decreased in Samoa between 2018 and 2019 going from US$188,783,623.66 to $154,983,729.08 according to data.

Mr Dayang said aid flows have in fact decreased by about $34 million and he said the decline was to be expected.

“This follows a general trend we have noticed across the Pacific,” he said.

“Indeed, in this year’s edition of the Pacific Aid Map, we notice that aid has dropped by 15 per cent in 2019 in comparison to the blockbuster year that was 2018, to reach a total of $2.44 billion US dollars.

“In Samoa, the fall is coming from three main development partners.

“China has reduced its aid by 66 per cent, New Zealand by -27 per cent and the European Union by -59 per cent.

“For New Zealand and the European Union, you could say those are due to the conclusion of big projects being financed until 2018.

“For China, this fall of aid could be a result of aid saturation – there’s very limited fiscal space remaining in Samoa these days and the country might be more reluctant to take loans from China.

“It could be that China has focused its attention somewhere else, like Africa or Southeast Asia, and doesn’t want to offer additional loans.”

“It could also be that Chinese aid has largely served its purpose of injecting Chinese State Owned Enterprises into the country.”

Mr Dayang then expressed hope that the international community will continue to support Samoa.

“I hope the international community is going to maintain its support to the country as we are not out of the woods yet,” he said.

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