American Samoa Governor: Bond Issue Debt Liquidation Improves Financial Integrity

Government now free to pursue other capital improvement projects

By Fili Sagapolutele

PAGO PAGO, American Samoa (The Samoa News, August 10, 2016) – Liquidation of old debts, which were paid off through American Samoa Economic Development Authority (ASEDA) issued bonds, has improved the “financial integrity” of government and the new revenue source from the bonds makes it possible for the government to pursue other capital improvement projects, says Gov. Lolo Matalasi Moliga.

The governor’s message, which praised the Fono for their support for the administration, was outline at the beginning of his 25-page fiscal year 2017 budget summary letter sent to lawmakers on Monday.

Without the Fono’s support, according to the governor, “we would not have been able to attain unprecedented economic and social growth.” And the governor commended the Fono for passing “major ...legislation designed for us to step out of the traditional status quo mode to boldly traverse unchartered waters.”

Lolo noted that the Executive and Fono had jointly decided to find alternative sources of capital financing outside of traditional US Interior Department’s capital improvement projects appropriations, to accelerate development of the territory.

As a result, the ASG bonds were issued — through ASEDA — to generate needed development capital. “Our efforts yielded new capital totaling $78 million,” Lolo said, adding that part of the money was used to liquidate long standing ASG debts, which were carried in its financial statements over extended periods of time.

Among the debts liquidated were the remaining balances of the two ASG loans with the ASG Employee Retirement Fund that are now fully paid; LBJ Medical Center’s court settlements incurred in previous years; and disaster settlements to compensate injured individuals and destruction of property caused by the Fagatogo landslide, which occurred more than 15 years ago.

Additionally the old Laufou Shopping Center fire court settlement of about $8 million — inclusive of accumulated interest — is fully liquidated after being negotiated down by the Attorney General to a little over $5 million; and the $8.7 million owed to the American Samoa Power Authority, has been paid off and the Authority in turn has reinvested this money to “electrify the Manu’a islands totally by solar energy thus producing savings for Tutuila and Aunu’u customers,” Lolo said.

According to the governor paying off these debts allowed ASG to refinance them at lower interest rates facilitating the unencumbered of earmarked debt service revenues to finance “other critical projects” such as completing roads rehabilitation program which started in January 2013.

Additionally, the “liquidation of old debts improved the financial integrity of the American Samoa Government and gravitated the reduction of risk and enhances the government’s financial image.”

The gubernatorial team of former lieutenant governor Faoa Aitofele Sunia and Rep. Larry Sanitoa have raised concerns over the issuance of the bonds and questioned the ability of the government to meet bond payments and the long-term debts created by the bonds.

However, the governor in his letter to the Fono says the new debts allowed ASG to supplement DOI-CIP funds to construct a brand new Manu’a vessel instead of continued reliance on the MV Sili that has definitely exceeded its useful life causing redirection of limited funds for its continued maintenance.

According to the governor, the new debts also allowed ASG to:

  • relocate the airport jet fuel tanks to a more secure area and the relocation project will trigger the release of approximately $40 million of US Federal Aviation Administration funds to improve condition of the Pago Pago International Airport;
  • restore stability to banking services by establishing the government owned Territorial Bank of American Samoa after an exhaustive search for a US based bank to continue banking services by Bank of Hawaii;
  • purchase scanning equipment (for Customs Office) to abate the illegal entry of drugs, guns and circumvention of paying excise taxes on imported goods and improve border security, let alone generating new revenue for ASG; and
  • allow the Legislature to begin the process of rehabilitating the Fono chambers as the current complex is deteriorating fast posing a threat on the lives of lawmakers.

“Our collective decision to create new debt reflects our foresight and acute recognition that if we want to secure a prosperous and a stable future for our children we need to take bold steps in investing now in building our economy,” the governor said.

“Opting to maintain status quo jeopardizes the future of our children,” he added.

Samoa News understands that a handful of lawmakers have requested, with the assistance of the Legislative Finance Office, to obtain the latest financial statement of the bonds and status of projects, which have received funding from revenues generated through the sales of the bonds.

Also being requested is an update on the ASG payments of the bonds, which is an issue that will be raised by lawmakers when the Fono holds hearings on the FY 2017 budget. The target of the questions is revenue forecast for FY 2017 and if it will be able to not only meet bond payments but also cover all ASG’s other expenditures.

Samoa News should point out that during the recent overnight by the Secretary of Transportation Anthony Foxx last weekend, the governor said that Foxx has informed local leaders that the federal agency will fund the multi-million dollar jet fuel tank relocation project at the Pago Pago International Airport. According to the Port director, Taimalelagi Dr. Claire Tuia Poumele, the project’s estimated cost is between $6 million to $8 million. Samoa News understands the Fono is planning to ask about these bond funds that are now ‘available’.

The Samoa News
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