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Government debt inches down to $1.04 billion

The Government's outstanding debts for the December 2019 quarter stood at $1.04 billion, a decrease of some $43 million over the preceding 12 months. 

The amount of outstanding debt was confirmed in an update on Governmental Finances for the 2019-20 Financial Year, released by the Samoa Bureau of Statistics (S.B.S.) this week. 

“Of the outstanding debt amount, 99.0 percent, which is equivalent to $1.03 billion, were external loans to bi-lateral and multilateral partners," the statement from the Bureau said. 

“The remaining balance was defaulted loans paid by the Samoan Government to our local banks and financial institutions.” 

The report says the loans based on bi-lateral agreements at the end of the quarter amounted to $477.9 million. Loans to the People’s Republic of China (P.R.C.) stood at $391.4 million and had decreased by $29.0 million over the previous year. 

“The remaining $86.5 million were monies owed to the Japanese Government through the Japanese International Co-operation Agency,” the Bureau said. 

Loans granted based on multilateral agreement for the quarter under review stood at $550.5 million, a reduction of $2.9 million compared to the corresponding quarter in 2018. 

Loans from the Asian Development Bank amounted to $226.9 million representing a decrease of $16.3 million from last year. 

“However, loans to World Bank have increased over time [by] $16.1 million to stand at $295.2 million in December 2019," the statistical statement read. 

"The domestic debt amount continued to deteriorate since the December 2018 quarter having to record the lowest amount ever of $11.4 million for the quarter under review.” 

The report does not include debts incurred by State Owned Enterprises. 

The S.B.S. noted they have completed refinements and improvements made to the framework to extend the coverage to include the Government Public bodies. 

“The first preliminary figures on the General Government level was submitted to the International Monetary Fund for assessment and an official confirmation to publish the figures for public use is still pending," the S.B.S. said. 

"However, it is anticipated that the Bureau will officially publish these numbers within the current fiscal year, 2019/2020.” 

Last year the International Monetary Fund (I.M.F.) urged the Samoa Government to include debts of state-owned businesses when aggregating the nation's total public debt.  

“The coverage of public debt should be widened to include debt from state-owned enterprises,” the I.M.F. report said.

The Fund's findings were the result of a fact finding mission undertaken with the Samoan Government between February and March last year. 

At the time the Minister of Finance, Sili Epa Tuioti, said the coverage of public debt should be widened to include debt from state-owned enterprises, which should be properly noted alongside any possible risks in budget documents. 

Some S.O.E. have also borrowed from local commercial banks, the Finance Minister said. 

“Sometimes they borrow directly from the commercial banks of the N.P.F. (Samoa National Provident Fund) or U.T.O.S. (Unit Trust of Samoa). Even with the corporations, they bank with the commercial bank and they go and borrow against their deposits and savings,” he added.

All S.O.E. organisations operate under the direction of a board of directors and require Cabinet approval if they wish to borrow funds for their operations. 

“The Government does necessarily step in to guarantee the loans by the state-owned enterprise, given that they have commercial arrangements with commercial banks and they don’t deposit their funds with the Government, their funds are deposited into the commercial banks," the Minister said. 

"And when they borrow, all they need to do is seek clearance from the Government to proceed with the project.” 

The Samoa Government currently has 15 S.O.E. entities: the Development Bank of Samoa; the Electric Power Corporation; the Land Transport Authority; Samoa Airways; the Public Trust Office; the Samoa Airport Authority the Samoa Housing Corporation; the Samoa Land Corporation; the Samoa Port Authority; Samoa Post; the Samoa Shipping Corporation; Samoa Shipping Services Limited; the Samoa Trust Estates Corporation; the Samoa Water Authority and the Unit Trust of Samoa Management Limited.  

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