World Bank Urges ‘Strong Debt Management’ In Samoa

admin's picture

Vice President, delegation on two-day visit to country

By Deidre Fanene

APIA, Samoa (Samoa Observer, Feb. 23, 2015) – The Vice President of the World Bank for East Asia and Pacific, Axel van Trotsenburg, has emphasised the importance of strong debt management for Samoa.

In Apia for a two-day visit, the Vice President told the Samoa Observer during an interview that from his experience in dealing with debt issues in similar small countries, it is vital for the government to manage Samoa’s foreign debt well.

"Clearly when I talk to governments (about debt management), I talk also as the former chief negotiator of the Bank for the Heavily Indebted Poor Countries (HIPC) initiative, which was the largest debt relief programme for poor countries in the world.

"In that programme, we basically had to relieve countries of unsustainable debt. So one of the lessons I took away is strong debt management. That is the way to go."

Asked to elaborate, Mr. Trotsenburg said: "One needs to evaluate every external obligation within the overall context of economic development but also the physical implication and the balance of payments implication.

"We are interested that countries can maintain a strong position and particularly sustainable debt. I believe this can be done and I have confidence that also here in Samoa government is working towards that goal."

Mr. Trotsenburg’s view was sought following numerous warning from the Bank about Samoa’s external debt.

In 2013, the Bank warned that Samoa’s public external debt was "high-risk" and that the government was in danger of breaching policy limits they had previously agreed to. The Bank also warned about "debt distress" where public loans would exceed 56 per cent of economic activity each year, known as GDP, Gross Domestic Product.

After meetings with Prime Minister, Tuilaepa Sa’ilele Malielegaoi and other key public and private sector officials during the weekend, the Vice President said there are a number of areas where Samoa can tap into to improve her economy.

"I think improving the connectivity to the world (would be a great help and) I believe that is happening soon," he said.

"I’m thinking of the internet connections. We also believe that there is a lot of tourist potential and then we also need to look at what the country is producing.

"We think that every country has hidden treasures and potential. "I the case of Samoa, I think this is a wonderful country but it has also challenges of geography and therefore I think maybe also the modern means can help.

"This brings me to the study we want to do, Pacific Possible. We emphasize the possibility rather than the impossibility. We believe that it can be developed and I think Samoa has a rich culture, has a lot to offer and what we would certainly hope is that can we actually as an international community compliment the Samoan efforts to have a better future."

So what is Pacific Possible?

According to materials provided by the Bank, Pacific Possible will examine the potential increases in income and living standards that could be achieved through regional policies supported by Pacific Island countries, along with partners around the broader Pacific Rim (Australia, Japan, Korea and others).

"Pacific Possible will aim to provide sustainable recommendations that can deliver transformational differences to smaller Pacific Island countries such as Samoa," van Trotsenburg explained. "The World Bank has experience at using data and analysis to produce reports on development options in countries including China and Vietnam – Pacific Possible will apply this approach to the challenges facing Pacific Island countries."

Away from Samoa’s debt and the economy, another area of concern for the Bank is climate change.

"We are clearly as concerned as you about the negative impact of climate change on all the Pacific Island countries and we are standing in solidarity with their plight," he said.

"So what we want to do is three fold:

"One is certainly advocacy for the case of the Pacific island countries, that world attention needs to be brought and ultimately financial resources need to be ensured so that countries can confront this challenges.

"Secondly we are keen on adaptation agenda. An enormous amount of money is available (for this). There is also the mitigation agenda, then there is the disaster relief agenda, we need to help countries rebuild and rebuild better.

"We also are doing and developing on a regional basis projects that target the resilience and early warning systems that could help the countries. Clearly our message to the world is that it is important that the world realises the specific challenges of the Pacific region, we need to do something about it and we need to act now."

Mr. Trotsenburg visited a number of World Bank projects in Samoa during the weekend. To date, the Bank has injected close to $200million in terms of projects to help Samoa over the years.

Rate this article: 
No votes yet

Add new comment