SUCCESS IN SAMOA’S ECONOMY IS JUST AN ILLUSION

Commentary

SUCCESS IN SAMOA’S ECONOMY IS JUST AN ILLUSION

By Cherelle Jackson

APIA, Samoa (Feb. 26, 2009) - From outside, the Samoan economy is a success story, but perhaps the compliments are a little exaggerated. Of course, compared to the situation of neighbouring small island economies, like Fiji, Solomon Islands and Tonga, the Samoan economy does look quite flattering. But the positive image Samoa portrays in its financial situation is far from stable, when analyzed on its own.

The 2008 second quarter merchandise trade deficit sits at a SAT$56.0 million, a notable 18 percent ($8.6 million) higher than that of 2007. According to the recently released Foreign Trade Report (FTR) by the Central Bank of Samoa (CBS) throughout the actual outturn for November 2008, an overall balance deficit of $46.61 million was registered, a $32.08 million above budget estimate.

"The expansion of the overall deficit (outturn) was strongly caused by the shortfall of $58.42 million in total revenue, which is more than double the reduction in total expenditure ($26.30 million) compared to the budget estimates for the whole fiscal year (2007/08). The increase in revenue anticipated for the period was a result of improvement in tax compliance over the years. However this wasn’t achieved in the current fiscal year partly reflected in the overall decline of imports by $23.13 million when compared to the previous financial year," CBS stated.

The Quarterly Economic Review by the Ministry of Finance indicates a drop of 30.8% in export revenue over the June 2008 period.

This represented a drop of $3.20 million from the same period of 2007.

Imports declined by 5.8% over the comparable 2007 period.

The budget outturn showed an overall deficit of $46.61 million for FY 2007/08 compared with a surplus of $15.36 million in the previous FY 2006/07. The current deficit at $19.44 million compared to a surplus of $61.61 million in FY 2006/07;

Currently the official external debt is valued at $490.01 million or 34.8% of GDP.

Domestic credit outstanding at the end of June 2008 is totalled $562.97 million, increased by $60.01 million from the same period of 2007.

Employment declined by 0.03% in the second quarter of 2008.

The success of the Samoan economy is superficial in that on the surface it is stable and doing well, in actual fact the cost of living has consistently risen throughout the years.

Now even bus fares have increased including ferry tickets and the price of bread and tinned fish, which is the stable of low income families.

"This is hitting us the worse," says Larry Tiatia, a Nurse and lone income earner for his family of five.

"The thing is, the cost of living is increasing but my wages remain the same," he said.

The anticipation of the right hand drive switch in September will add further stress to the economy according to the Samoa Chamber of Commerce.

Only time will tell how superficial the Samoan success story really is.

Cherelle Jackson is a contributor to Samoalive News in Apia, Samoa.

 

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