By Alfred Acenas
EBC Hawaii Bureau
HONOLULU(Eagle News) – The Executive Board of the International Monetary Fund (IMF) approved a disbursement to the Independent State of Samoa under the Rapid Credit Facility (RCF) the equivalent of about US$22.03 million to help cover urgent balance of payments needs stemming from the global novel coronavirus 2019 (COVID-19) pandemic.
Samoa is still reeling from a severe measles outbreak in October 2019, which claimed 83 lives out of over 5,700 cases and resulted in a much larger economic contraction than that of past natural disasters.
The global pandemic of COVID-19 has exacerbated the South Pacific country’s economic downturn as it heavily depends on the now-closed inbound tourism and remittances from overseas laborers.
Having learned a hard lesson from the influenza pandemic of 1918-1919, Independent Samoa was now among the first countries in the world to secure its border to protect its citizens. As of this report, Samoa has zero deaths to COVID-19.
“The border closure, combined with a sudden stop of tourist arrivals and decline in remittances, has led to a precipitous fall in two vital sources of foreign earnings and resulted in an urgent balance of payments need,” said Mr. Tao Zhang, IMF Deputy Managing Director and Acting Chair, following the Executive Board meeting. “IMF emergency support under the Rapid Credit Facility will help meet this balance of payments need, maintain macroeconomic stability and catalyze additional donor support which is needed to fill the remaining balance of payments gap and ease the potentially sizable adjustment burden on the fiscal sector.”
Zhang pointed out that Samoa has shown resilience to multiple past economic shocks, underpinned by the authorities’ strong commitment to support the economy, and financial assistance provided by the international community.
He added, “The authorities have put together a strong policy package in response to the pandemic, with policy measures aimed to strengthen the health care system, help vulnerable businesses and households, and accommodative monetary policy to ensure liquidity in the financial sector.”
As for long-term solutions, the IMF official emphasized that the Samoan government will need to continue implementing structural reforms, with policies appropriately balanced between safeguarding debt sustainability and promoting economic growth.
“They also need to continue their efforts to enhance spending efficiency, strengthen social protection programs and safety nets, further improve tax administration, strengthen public financial management, and safeguard financial stability,” Zhang stated.
(Eagle News Service)