Tal og statistik

IMF Executive Board Concludes 2019 Article IV Consultation with Samoa

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Via IMF (Den Internationale Valutafond)

IMF Executive Board Concludes 2019 Article IV Consultation with Samoa







May 17, 2019















On May 8, 2019,the Executive Board of the International Monetary Fund (IMF) concluded the
Article IV consultation
[1] with Samoa.

Samoa’s economy faces several challenges but continues to show resilience.
Growth reached a five-year low at 0.9 percent in 2017/18, due to the Yazaki
manufacturing plant closure in August 2017 and the impact of cyclone Gita
in February 2018. Inflation picked up to 3.7 percent in 2017/18, compared
to 1.3 percent in the previous year, driven by the impact of Gita on local
food prices, a one-time increase in education fees, and higher price of
imported fuel. The current account recorded a surplus of 2.3 percent of GDP
in 2017/18, compared to a deficit of 1.8 percent of GDP in the previous
year, largely due to a temporary increase in transfers in the wake of Gita.
The Samoan Tala depreciated against the U.S. dollar and in nominal
effective terms but appreciated in real effective terms due to Samoa’s
relatively high inflation. Financial soundness indicators highlight that
commercial banks’ capital adequacy and liquidity indicators are trending
upwards. Banks’ profitability and earnings are subdued amidst a lending
slowdown.

Growth is projected to rebound to 3.4 percent in 2018/19, driven by
commerce, infrastructure spending, and development of the transport and
communication sector. Growth is expected to peak at 4.4 percent in 2019/20,
with an uptick in tourism related sectors as Samoa hosts the Pacific Games
in July 2019, before settling at just above 2 percent in the medium term.
Inflation is expected to be back below the central bank target of 3 percent
in 2018/19 as temporary inflationary pressures recede. The current account
is projected to revert to a deficit of 0.5 percent of GDP in 2018/19 as
transfers normalize.

Executive Board Assessment

[2]

Executive Directors commended the authorities for Samoa’s resilience in the
face of external shocks and welcomed the expected rebound in growth.
However, they noted that the risks to the outlook are tilted to the
downside, largely due to the country’s high vulnerability to natural
disasters and the withdrawal of correspondent banking relationships (CBR).
In this context,

Directors highlighted the need to build fiscal buffers and continue with
efforts to mitigate risks from CBR pressures, while implementing structural
reforms targeted at boosting potential growth and making growth more
inclusive.

Considering Samoa’s vulnerability to natural disasters and high risk of
debt distress, Directors called for embarking on a comprehensive fiscal
strategy to ensure fiscal sustainability. They called for improving the tax
administration, strengthening public financial management, lowering of the
long‑term debt‑to‑GDP target, and ensuring that newly contracted loans are
consistent with the Medium‑Term Debt Strategy. Directors also stressed the
need to make progress in monitoring and disclosing fiscal risks, including
from state‑owned enterprises.

Directors considered the current accommodative monetary policy stance
appropriate, but noted the need to strengthen the monetary transmission
mechanism, including by improving liquidity management, re‑establishing a
credit bureau and implementing measures to reduce credit risk and promote
lending.

Directors noted that financial sector policies should focus on completing
the implementation of the 2015 Financial Sector Assessment Program
recommendations. They called for upgrading the regulatory and supervisory
framework, improving systemic financial stability risk monitoring and
continued efforts to improve access to finance, while managing risks,
including from crypto‑assets. Directors welcomed the measures taken to
mitigate risks from CBR pressures.

They saw the need for further efforts aimed at enhancing the effectiveness
of the AML/CFT regime and continued engagement with relevant stakeholders,
including on tax cooperation issues. Directors encouraged establishing IT
solutions for customer identification and monitoring, and reducing the risk
profile of the offshore center. They also called for continued engagement
with relevant stakeholders and regulators to make progress toward a
regional solution to address CBR pressures.

Directors noted that the authorities’ structural reform agenda should focus
on building resilience to natural disasters and enhancing the business
environment. They stressed that measures should include upgrading
infrastructure, strengthening insolvency resolution, promoting financial
inclusion, and improving the trade facilitation framework. Directors also
advocated for more coordination among TA providers.




Table 1. Samoa: Selected Economic and Financial
Indicators, 2015/16-2023/24

Est.

Proj.

2015/16

2016/17

2017/18

2018/19

2019/20

2020/21

2021/22

2022/23

2023/24

(12-month percent change)

Output and inflation

Real GDP growth

7.2

2.7

0.9

3.4

4.4

2.2

2.2

2.2

2.2

Nominal GDP

5.5

3.8

3.8

6.3

7.2

4.9

5.1

5.2

5.1

Consumer price index (end of period)

2.3

1.0

5.8

4.0

2.9

2.6

2.8

2.9

2.8

Consumer price index (period average)

0.1

1.3

3.7

2.9

2.7

2.6

2.8

2.9

2.8

(In percent of GDP)

Central government budget

Revenue and grants

36.1

34.2

34.3

34.0

33.8

33.6

33.5

33.5

33.3

Of which: grants

9.3

7.2

7.9

7.0

6.6

6.2

6.2

6.2

6.0

Expenditure

36.5

35.3

34.2

35.2

35.7

36.0

36.1

36.3

36.1

Of which: Expense

24.5

23.0

23.3

23.5

23.8

23.9

23.9

24.0

24.0

Of which: Net acquisition of non-financial assets

4.9

7.0

5.8

7.0

7.4

7.6

7.9

8.0

8.0

Net operating balance excl. grants

2.2

4.0

3.1

3.5

3.5

3.6

3.5

3.4

3.4

Overall fiscal balance

-0.4

-1.1

0.1

-1.2

-1.8

-2.3

-2.5

-2.7

-2.7

Overall fiscal balance excl. grants

-9.7

-8.3

-7.8

-8.2

-8.4

-8.5

-8.7

-8.9

-8.7

Public debt

52.6

49.1

50.3

49.3

48.9

49.8

50.8

51.6

53.7

(12-month percent change)

Macrofinancial variables

Broad money (M2)

7.1

7.8

3.8

6.3

4.7

4.9

5.1

5.2

5.2

Net domestic assets

19.2

-0.7

-3.8

Private sector credit, Commercial banks

13.6

7.2

6.0

7.4

7.5

6.9

7.0

6.5

6.5

Total loan growth, Commercial banks

7.7

4.8

1.7

Total loan growth, Public financial institutions

3.3

4.4

6.0

(Ratio)

Individual credit to GDP

27.8

29.1

31.2

..

..

Total capital to risk-weighted exposures

24.5

25.1

27.3

Non-performing loans

5.2

4.1

4.3

(In millions of U.S. dollars)

Balance of payments

Current account balance

-37.3

-14.7

19.9

-4.2

-8.1

-6.9

-8.4

-9.4

-12.3

(In percent of GDP)

-4.7

-1.8

2.3

-0.5

-0.8

-0.7

-0.8

-0.9

-1.1

Merchandise exports, f.o.b. 2/

36.9

38.0

35.6

42.9

43.3

44.2

45.1

46.0

46.9

Merchandise imports, f.o.b.

307.2

308.6

322.6

353.1

380.9

396.8

414.0

432.7

455.3

Services (net)

119.6

142.0

162.1

157.9

171.9

180.1

187.4

197.9

208.8

Income (net)

-18.6

-26.8

-28.9

-35.0

-29.1

-30.7

-30.1

-30.8

-31.1

Current transfers

132.0

140.7

173.8

183.1

186.6

196.3

203.2

210.2

218.5

External reserves and debt

Gross official reserves

111.4

122.3

163.0

177.3

170.0

169.1

170.7

167.2

158.9

(In months of next year’s imports of GNFS)

3.4

3.6

4.5

4.6

4.2

4.0

3.9

3.7

3.6

Public debt (in millions of tala) 3/

1,080.7

1,047.4

1,113.8

1,160.2

1,234.6

1,317.8

1,411.2

1,509.6

1,651.9

(In percent of GDP)

52.6

49.1

50.3

49.3

48.9

49.8

50.8

51.6

53.7

External debt (in percent of GDP)

50.7

47.7

49.4

48.7

48.6

49.6

50.5

51.4

53.5

Exchange rates

Market rate (tala/U.S. dollar, period average) 4/ 5/

2.61

2.54

2.57

Market rate (tala/U.S. dollar, end period) 4/ 5/

2.55

2.51

2.57

Nominal effective exchange rate (2010 = 100) 4/ 5/

111.8

110.6

109.8

Real effective exchange rate (2010 = 100) 4/ 5/

109.8

108.4

110.4

Memorandum items:

Nominal GDP (in millions of tala)

2,055

2,133

2,213

2,354

2,523

2,646

2,781

2,924

3,074

GDP per capita (U.S. dollars)

4,015

4,258

4,323

4,501

4,735

4,874

5,027

5,188

5,353

Sources: Data provided by the Samoan authorities; and IMF
staff estimates and projections.

1/ Fiscal year beginning July.

2/ Includes re-export of fuel after 2009/10.

3/ Includes domestic and external public debt.

4/ IMF, Information Notice System (calendar year).

5/ Latest data available.




[1]

Under Article IV of the IMF’s Articles of Agreement, the IMF holds
bilateral discussions with members, usually every year. A staff
team visits the country, collects economic and financial
information, and discusses with officials the country’s economic
developments and policies. On return to headquarters, the staff
prepares a report, which forms the basis for discussion by the
Executive Board.


[2]

At the conclusion of the discussion, the Managing Director, as
Chairman of the Board, summarizes the views of Executive Directors,
and this summary is transmitted to the country’s authorities. An
explanation of any qualifiers used in summings up can be found
here:

http://www.imf.org/external/np/sec/misc/qualifiers.htm

.


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Brian Walker

Phone: +1 202 623-7100Email: MEDIA@IMF.org






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