Govt. debt currently sits at $1.1 billion

By Joyetter Feagaimaali’i-Luamanu ,

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The report says foreign currency risk is the main risk in the portfolio, with 98.2 per cent of the total public debt portfolio denominated in foreign currency.

The report says foreign currency risk is the main risk in the portfolio, with 98.2 per cent of the total public debt portfolio denominated in foreign currency. (Photo: Areta Areta/Samoa Observer)

The Government’s total debt as of June 2018 remains at $1.1 billion tala. 

This is according to the Ministry of Finance quarterly bulletin for the financial year 2017-2018.

The $1.1 billion debt is similar to the figure released by the Samoa Bureau of Statistics Financial Statistics for the December 2017 quarter. 

The $1.1 billion debt is equivalent to 50.3 per cent of GDP1. According to Ministry of Finance report, the total amount outstanding comprises of public external debt of $1.09 billion and public domestic debt of $0.02 billion. 

“Total public debt increased by 1.1 per cent and by 6.3 per cent when compared to March 2018 and June 2017 quarters respectively.  

“Continuous disbursements of external loan funded programs and depreciation of the Tala against the main loan currencies were the main contributors to the increases,” stated the report.

The main creditors highlighted in the portfolio are EXIM Bank of the People’s Republic of China at 39.5 per cent, International Development Association 25.2 per cent and the Asian Development Bank at 22.5 per cent.

Other creditors are the Japan International Cooperation Agency 8.2 per cent, Organisation of the Petroleum Exporting Countries 2.2 per cent, and Unit Trust of Samoa 1.7 per cent and with International Fund for Agricultural Development; European Investment Bank; Samoa Life Assurance Corporation and Samoa National Provident Fund with less than one per cent according to the report. 

The total debt service for the June 2018 quarter was $15.7 million (external debt service $12.8 million and domestic debt service $2.8 million). And the amount for the quarter decreased by 40.1 per cent when compared to March 2018 quarter but increased by 22.5 per cent when compared to June 2017 quarter, stated the report. 

The total public external debt outstanding at the end of June 2018 was $1.09 billion (51 per cent multilateral creditors and 49 per cent bilateral creditors). 

The outstanding amount increased by 1.3 per cent and by 7.5 per cent when compared to March 2018 and June 2017 quarters respectively. 

“Creditors composition of the public external debt portfolio shows that the EXIM Bank of PRC (40.2 per cent), IDA (25.7 per cent) and ADB (22.9 per cent) are the main creditors in the external debt portfolio.

“Cost of the existing debt is the average interest rate of 1.6 per cent per annum, mainly driven by highly concessional interest external borrowing from multilateral banks,” stated the Ministry of Finance report. 

Furthermore, the refinancing risk is lower in the portfolio, with longer ATM at 10 years and 5.8 per cent of the total debt to mature in one year. 

“Interest rate risk exposure is minimal as the total debt portfolio is on fixed interest rate. Total debt with interest rate to re-fix in 1 year is about 5.8 per cent and longer A.T.R. (ability to repay) of 10 years. 

“The report says foreign currency risk is the main risk in the portfolio, with 98.2 per cent of the total public debt portfolio denominated in foreign currency. 

The total disbursements for external debt during the quarter was $33.5 million, of which pertained to the EXIM Bank of China to the Faleolo Airport Upgrade, IDA-SACEP, and OPEC-Petroleum Bulk Storage Facilities Project,” stated the report. 

© Samoa Observer 2016

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