Dip in revenue justifies public sector review

By The Editorial Board 29 December 2021, 10:12AM

It appears Samoa is caught between a rock and a hard place, if a recent quarterly report detailing a drop in Government revenue collection is any indication.

Details of the Samoa Bureau of Statistics (S.B.S.) report titled “Government Finance Statistics” was published in the 28 December 2021 edition of the Samoa Observer (Tax, revenue income drop) and pointed to the Government’s coffers lacking replenishment due to a drop in revenue collection.

The report for the September 2021 quarter showed total revenue collection stood at $164.4 million. However, the bad news is there was a drop of $29.1 million on a yearly basis. Tax revenue, while totaling $122.8 million also dipped 3.1 per cent or $4.0 million when compared to the same quarter last year.

And while taxes on international trade went up by 4.3 per cent or $0.6 million when compared to the corresponding period of 2020, the S.B.S. report states that even the increase did not impact the baseline of tax collection positively.

This is why we would question whether the country is being given the raw end of the stick when it comes to international trade, amidst attempts by key players within our small island economy to recover from an unpleasant 12 months.

Unfortunately, the COVID-19 global pandemic spared no one as all economies including ours were impacted. And for a state that has been traditionally dependent on donor funding, family remittances, tourism and agriculture for many years, Samoa’s vulnerability to global economic shocks was a given.

The S.B.S. report should not come as a surprise to anyone: 21 months on since the closure of Samoa’s international borders to protect citizens from the coronavirus, we were feeling and living with its impact.

A major challenge now for a cash-strapped Government is how it can dig itself out from this financial quagmire? 

We can take confidence from a recently published report by the Central Bank of Samoa (C.B.S.), which had projections on Samoa’s economy on how it will move from the worst days of the pandemic-triggered recession to recovery mode.

The C.B.S. has forecast economic growth to rise by 1.7 per cent this current financial year from –8.1 per cent in 2020/21.

According to the C.B.S. Monetary Policy Statement for the Financial Year 2021/2022, the rebound in the Samoan economy is expected to boost sectors such as commerce, communications, personal and other services, food and beverage manufacturing and agriculture.

This projection by the C.B.S. is welcome news indeed as we countdown to the end of 2021 and the arrival of 2022.

But surely there could be more that the Fa’atuatua i le Atua Samoa ua Tasi (F.A.S.T.) Administration could do, in order to ease the pressure on the public purse, while maintaining essential services.

The Government should start work in the new year to identify expenditure items within its recurrent budget that should be reviewed with a view to making savings, which can then be diverted to priority areas.

We can already think of one area that would justify a review and that is the public sector wage bill, which in recent years has been the major factor behind the growth in Samoa’s recurrent budget.

It has been difficult to put a finger on the overall cost of Samoa’s public sector wage bill in the recurrent budget. Even the previous Human Rights Protection Party (H.R.P.P.) Administration was tight lipped, but thanks to data from a Public Service Commission report we can confirm that in 2012 Samoa had 4,319 public servants on the payroll.

A decade after the release of the P.S.C. report, we can only assume the public sector workforce has grown in size and so too has its wage bill.

So the next question is whether Samoa as a nation of about 200,000 people needs a 5,000-strong public service to effectively deliver services?

There is no doubt the Government should undertake a review of the public sector in 2022 in order to identify areas within the various Ministries where functions could be merged or even centralised in order to save costs.

The Government Ministries with a lion’s share of the public sector wage bill should also be directed to set and enforce fiscal targets for staffing expenditure, while embarking on internal reviews to reduce duplication of functions.

We also note with concern the S.B.S. report’s reference to outstanding external debt including $410 million in loans from China which put the total debt of the Samoa Government at $1 billion. Obviously debt controls within the Government should be tightened in the new year with its borrowing policy strictly targeting projects with high economic returns for the country.

There is a lot to do in the new year and tough decisions need to be made if the Government is to arrest the downhill slide of Samoa’s economy and make a rebound as recently projected. Starting with the public sector is long overdue. 

By The Editorial Board 29 December 2021, 10:12AM

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