2023/2024 Budget Address: “Advancing growth through sustainable pathways conducive to socio-economic welfare and building resilience”

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Mulipola Anarosa Ale Molio’o , MINISTER OF FINANCE

30 MAY 2023

2023/2024 BUDGET ADDRESS

“Advancing growth through sustainable pathways conducive to socio-economic welfare and building resilience”

Mr. Speaker,

As required under Standing Order 131, it is my pleasure to present to the House on behalf of Government, the Statement on the Main Estimates for the fiscal year 2023/2024.

I. BUDGET SETTING

Mr. Speaker,

The estimates laid before the House this morning is brought to you at the closure of a fiscal year that has been focused primarily on recovery.

Twelve months ago I presented a Government budget that prioritized inspiring a quick recovery for Samoa that considers inclusivity, innovation and ensuring resilience. It presented policies that targeted enabling the private sector and particularly the Tourism and Business communities in a bid to secure their ability to be hosts once again to the world when we opened our borders in August 2022.

Since then,

• a total of 77,195 visitors have been recorded for Samoa between August 2022 to March 2023;

• GDP growth for September 2022 and December 2022 came in high to stand at 5.2% and 10.7% respectively despite the effects of high inflationary pressures;

• Growth has been driven primarily by the reopening of our borders allowing our people to return home not only to visit families but also to bear witness to the events that occurred during the year including the 60th Independence celebrations, the revival of the Teuila Festival along with the Miss Samoa and Miss Pacific Island Pageants, and hosting of regional meetings including Annual Pacific Labour Mobility Meeting, 94th USP Council Meeting, the SIDS Agriculture Solutions Forum, and the ADB Pacific Regional Cabon Credits Workshop.

In addition, Samoa played host to the Catholic’s 5th World Apostolic Congress on Mercy (WACOM) and the Congregational Christian Church of Samoa Conference.

More recently the roll out of key budget policies also contributed to growth for the period which included assistance to MSMEs, tourism operators and the $1million district development program. These policies placed money directly into the hands of citizens and helped to drive consumption for the period under review.

Mr. Speaker,

The performance of the economy in the first half of the current fiscal year is a result of the implementation of policies that were laid out in the face of global uncertainties and as I have already highlighted, has paid off for our country. Against this success, we now have the foothold to set forth confidently under the theme of the new budget by “advancing growth through sustainable pathways conducive to socio-economic welfare and building resilience”.

II. MACROECONOMIC OUTTURN AND OUTLOOK

Fastest Network for 3 years running.

Mr. Speaker,

The International Monetary Fund projects global growth to be around 2.8% for the current fiscal year before settling at 3% over the medium term as economies around the world tighten policies as a way to address global inflation.

In retrospect, the Government of Samoa projects a higher than anticipated growth for the current year to be around 4.7% revised from a 0.6% projected during the budget period last year.

This revision is a result of the successful implementation of the Government’s commitments over the course of the past 10 months and is a testament to the need for a continued expansionary fiscal stance for the coming year, should we want to see a continuous increase in growth for the economy to drive recovery.

Please Keep Samoa Clean.

In this regard, the Government intends to increase its expenditure programmes for the fiscal year 2023/2024 by injecting spending directly into the economy to support business activity and consumption.

The budget therefore laid before the House today, Mr. Speaker, seeks to record a budget deficit of 3.3% of GDP for the coming fiscal year as the Government continues to drive its development agenda towards a quick recovery whilst ensuring that socio-economic welfare and stability is maintained

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The Government’s Medium Term Debt Strategy 2022-2026 will continue with the commitment of no non concessional loans and will therefore see the public debt to GDP ratio reduce to 32.1% by the end of FY23/24.

This declined from 51.8% in FY21/22 when the threshold was breached, to 34.4% by the end of FY22/23.

In terms of debt stock, this will reduce from $949.5 million tala to $934.0 million tala including external debt of $933 million tala and domestic debt of $1 million tala.

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Mr. Speaker,

The international finance community continues to be concerned with the global debt statuses of various countries around the world following the COVID19 Pandemic.

However, Samoa has managed to honor its commitment to no longer take on new loans opting instead for standby facilities that have been disbursed on a full grant basis.

These facilities along with general budget supports from our development partners have enabled the Government of Samoa to raise its spending to the country over the course of the past three years. This has done a great deal to ensure that the economy remained buoyant despite the declining growth and high inflation.

In addition, remittances continue to climb with totals recorded at the end of the fiscal year 2021/2022 at $732 million and is expected to register at around $776 million for the current 2022/2023 fiscal year.

Visitors arrivals and earnings have also been restored with total visitors recorded at the end of March 2023 standing at approximately 77,195 and earnings to be around $253 million.

Gross Foreign Reserves stood at $948 million tala at the end of March 2023 which is sufficient to cover 9.5 months of imports.

Headline Inflation is anticipated to be around 12% at end of June 2023, as the country continues to be affected by the imported price component of the index.

III. BUDGET STRATEGY

Mr. Speaker,

When I first stood before you in September 2021, I voiced on behalf of the Government its firm belief that Samoa’s economy could return to high levels of growth. This was done through the collaboration of all Samoan citizens and the business community by increasing development opportunities and raising efficiency using inclusive policies and programmes that focus on the socio-economic welfare of our communities.

In accordance with the first Key Strategic Outcome: “Improved Social Development”, targeted measures implemented include:

o The Government has approved the National Social Protection Policy Framework that will ensure better coordination of social protection measures, including the Disability Benefit which has benefited 1,820 persons with disabilities.

o Samoa’s Multidimensional Poverty Index 2022 (MDPI) was also launched, providing a more comprehensive picture of how poverty will be measured by other dimensions than monetary. A district profile using the MDPI has been completed for Lotofaga electoral district and will be completed for all districts.

o In collaboration with Development Partners, the Government has continued its support to NGOs addressing social issues including domestic violence, NCDs through Komiti Tumamā and the PEN Faasamoa program (completing coverage of 12 out of 40 rural districts) and shelter financing (committing 2 million tala that benefitted 277 vulnerable households in the past two financial years);

o The government is also prioritizing social expenditures for early childhood development. This is implemented through early childhood education and vaccination efforts;

o The First Supplementary Budget 2022/2023 introduced one off relief measures for vulnerable groups, including a topup of $150 tala for the pension and $100 tala for the disability benefit, implemented during the last quarter;

o The tendering process has also been completed for the following health infrastructure including, improvements to the district hospitals, doctors living quarters, as well as the kitchen for the Tuasivi District Hospital;

o The roll out of the District Development Program has also contributed greatly to programs that aim to alleviate hardships and empower our people in their demand driven projects;

o I am happy to report that the first phase of the Public Service Review has been completed, and this has been reflected in the FY2023/2024 budget.

Under the Key Strategic Outcome 2: “Diversified and Sustainable Economy”, the Government decided to reopen our borders based on the high level of confidence with our health and border safety measures in place, as well as to encourage opportunities for our people and businesses to recover.

o This was accelerated through the financial assistance to the Private Sector over the last 2 years, including the 7.5 million to the hospitality industry that benefited close to 200 businesses operators, 3 million tala to the Samoa Business Hub that benefited 472 micro and small businesses, and 5 million tala to the Development Bank of Samoa that reached 50 medium sized businesses.

o In line with the 2023-2027 Finance Sector Plan, the Government launched its National Payment System using the Automated Transfer System (ATS) to improve the financial transactions and efficiency as well as the Central Security Depository System (CDS) to secure inter-bank transfers.

o The Government also launched the 2023-2027 Agriculture and Fisheries Sector Plan, that promoted agricultural and fisheries initiatives at the district level that were supported through the First Harvest (Ulua’i Seleselega) program. To date, 42 district development plans approved, prioritized this sector for development and food security.

o In addition, the restructuring of Samoa Trust Estates Corporation (STEC) into the new Samoa Export Authority is underway.

o To boost tourism development, Samoa has opened its skies to a number of Airlines, including the recent direct flight from China. This will complement direct flights from New Zealand through Air New Zealand, Fiji – through Fiji Airways, Australia – through Virgin Airlines and Qantas, as well as the Samoa Airways and Talofa Airlines servicing American Samoa and Savaii.

Under the Key Strategic Outcome 3: “Security and Trusted Governance”, the Government has initiated the following key initiatives:

o The Government Audit Committee has been activated, to provide oversight on Government agencies in terms of risk management, compliance to internal audit charters, and financial and performance management. To date, 11 government agencies have adopted internal audit charters.

o The National Security Policy is currently under review, to ensure relevance given the changes in the global environment impacting on Samoa’s national security.

The Key Strategic Outcome 4: “Secured Environment and Climate Change”,0 highlights the Government’s commitment to maintain a safe and sustainable environment through the following initiatives:

o The Government has committed 1.5 million tala over the last two years on the Tree Planting program. Samoa has increased its target to 3million trees under the Environment Sector after achieving 2million trees. This initiative is being complemented by the District Development Program.

o Regarding waste management, government has endorsed the increase in rubbish collection zones from 19 to 26 zones to ensure efficiency and effectiveness of service provided for the country.

o Government has also approved its Disaster Risk Financing policy to support access to climate financing and the Risk Assessment of public facilities (Health and Education) have been completed. These will inform the development pipeline for climate resilient investments.

o In terms of renewable energy mix, which includes biogas systems, hydro, solar and wind, we have now achieved about 32%.

Under the last Key Strategic Outcome 5: “Structured Public Works and Infrastructure”, Government is committed to ensure that public works and infrastructure are guided by a long-term phased development plan that underpins socio-economic progress in Samoa. The initiatives implemented includes the following:

• Government through the School Connectivity project has supported 120 shools with internet access by establishing very small appeture terminal (VSAT) satellites;

• Continued access to affordable quality utility services is subsidized through the provision of CSOs benefiting 39,956 households for electricity services, and 23,312 households for water services;

• Through the launch of the 2021-2025 Water, Sanitation and Hygiene Sector Plan, and approval of the Transport and Infrastructure Sector Plan 2023-2028, the Government has progressed infrastructure projects including access roads, Upolu Central Cross Island and West Coast roads, the Apia urban drainage, Matautu Port development, and the re-opening of the Fagalii Airport;

• The Government has also signed the agreement to commence construction of the new Savalalo Market, for development of MSMEs.

Mr Speaker,

It is with great pride that I stand before you knowing that positive growth has been restored as seen in the revised projections for the current fiscal year, and to announce that with the new policies and programmes that are part of the 2023/2024 estimates, we intend to see yet another high growth for the new fiscal year anticipated to stand at 5.0%.

These policies and programmes have been grouped into the following 4 key areas:

1. Community Development

The new budget will continue to prioritize the implementation of district development plans through the $1m per District programme which is now well underway with 42 district development plans now implemented.

The review of the aforementioned development plans has highlighted the following key common areas of priority:

o Education;

o Agricultural and Fisheries Development;

o Health;

o Social Wellbeing;

o Cultural Development;

o Environment and Climate Change;

o Tourism Development;

o Infrastructure;

o Sports Development; and

o Finance.

2. Commonwealth Heads of Government Meeting

Samoa will be hosting all the Heads of Government from the 56 Commonwealth nations in October 2024. The next 12months will therefore be focused primarily on preparing infrastructure as well as enabling all services of the Government to cater to this major event. The Government will also provide support to the private sector so that the country is fully equipped to host an event of this magnitude.

3. Cost of Living Adjustment

Mr. Speaker,

I am happy to announce that the budget before you for the new fiscal year 2023/2024 includes a Cost of Living Adjustment (COLA) for all public servants to become effective on the 8th of July 2023.

This COLA will see a 10% increase in the annual salaries of all Principal Officers and below. Those earning above Principal Officers to below CEO level will see a 5% increase whilst CEOs and above including the Civil List will see a 3% increase.

This adjustment is a result of a rigorous review by the Remuneration Tribunal, the Public Service Commission and the Ministry of Finance in identifying which key salary earners are feeling the burden of the current inflationary pressures the most. In consideration of the ability of the private sector to keep up, this COLA will be implemented over 2 years (fiscal years 2023/24 and 2024/25).

4. Resumption of Development Projects

Following three years of border restrictions affecting much of the country’s infrastructural developments, the new fiscal year 2023/2024 will see much of the large projects of Government resume therefore injecting more spending into the economy, creating much needed employment and generating more income for our citizens and thereby further pushing economic growth.

IV. BUDGET AGGREGATES

Mr. Speaker,

I would now like to highlight the key components of the 2023/2024 Budget:

The 2023/2024 Main Estimates laid before the House today is expected to record a Cash Deficit of approximately $185.7million which is equivalent to a Net Lending requirement of $88.1million under the GFS or 3.3% of GDP.

V. REVENUE MEASURES

Mr. Speaker,

Total Receipts for the Government is expected to increase by 12% in the new fiscal year 2023/2024 which will be driven up primarily by Ordinary Receipts.

Ordinary Receipts of Government which include both Taxation and Non Tax Revenus are projected to increase by 12% overall as a result of an anticipated increase in tax collections by 13% whilst Non Tax Revenues will decline by 1%.

Mr. Speaker,

I would like to emphasize that the projected increase in Taxes is attributed solely to the anticipation of increased economic activity driven by Government spending and a recovering global economy but in no way does it indicate any increased tax rates.

VI. EXPENDITURE PRIORITIES

Mr. Speaker and Honorable Members,

The aggregated total expenditures for the fiscal year 2023/2024 is estimated at $1,081,210,959 or $1.08billion inclusive of development programmes sourced by our development partners, which will increase by 11% over the current year’s estimates.

The increase in expenditures for the new fiscal year is a testament to the Government’s commitment to raise its spending in order to drive recovery and restore economic growth.

Mr. Speaker,

I will now outline the details of the estimates for each Ministry for the fiscal year 2023/2024:

1. Ministry of Agriculture and Fisheries – $19,967,480

• Outputs provided by the Ministry – $12,319,055

• Outputs provided by Third Party – $5,155,359

• Transactions on Behalf of State – $2,493,067

Key Developments for the Ministry include:

• $510,000 for the First Harvest Program

• $342,500 for the Exporters Stimulus Package

2. Scientific Research Organisation of Samoa – $5,815,359

Government Grant – $5,105,359

• Outputs provided by the SOE – $5,375,150

• Transactions on Behalf of State – $440,209

3. Ministry of Commerce, Industry & Labour – $18,926,871

• Outputs provided by the Ministry – $6,192,294

• Outputs provided by Third Party – $10,674,454

• Transactions on Behalf of State – $2,060,124

Key Developments for the Ministry include:

• $3 million for Private Sector Support Fund (PSSF)

• $400,000 for Samoa Business Hub

• $200,000 for Samoa Chamber of Commerce

• $200,000 for Private Sector Organisations

4. Samoa Tourism Authority – $7,171,354

Government Grant – $7,074,454

• Outputs provided by the SOE – $6,504,086

• Transactions on Behalf of State – $667,268

5. Ministry of Communications and Information Technology – $11,596,849

• Outputs provided by the Ministry – $3,473,004

• Outputs provided by Third Party – $3,782,221

• Transactions on Behalf of State – $4,341,624

Key Developments for the Ministry include:

• $880,000 for the Samoa Connectivity

6. Office of the Regulator – $3,782,221

Government Grant – $3,782,221

• Outputs provided by the SOE – $3,282,755

• Transactions on Behalf of State – $499,465

7. Ministry of Education, Sports and Culture – $139,162,748

• Outputs provided by the Ministry – $81,623,137

• Outputs provided by Third Parties – $47,333,646

• Transactions on Behalf of State – $10,205,965

Key Developments for the Ministry include:

• $18 million for the One Government Grant (OGG)

• $1.5 million for the Teachers Higher Education Scheme

• $2.5 million for the Sports Development Fund including sports fields for district schools

8. Samoa Qualifications Authority – $6,913,566

Government Grant – $6,890,865

• Outputs provided by the SOE – $3,205,271

• Transactions on Behalf of State – $3,708,295

9. Samoa Sports Facility Authority – $3,612,717

Government Grant – $3,462,717

• Outputs provided by the SOE – $2,894,125

• Transactions on Behalf of State – $718,592

10. National University of Samoa – $30,856,805

Government Grant – $18,930,064

• Outputs provided by the SOE – $26,205,870

• Transactions on Behalf of State – $4,650,935

11. Ministry of Finance – $114,471,307

• Outputs provided by the Ministry – $19,010,343

• Transactions on Behalf of State – $95,460,964

Key Developments for the Ministry include:

• $20 million for CHOGM 2024 preparations

• $3 million for the Concessional Financing Facility through the Development Bank of Samoa for businesses to prepare for CHOGM,

• $33.4 million for the Senior Citizens Pension Scheme

• $2 million for the Disability Benefit Package

• $1 milion for the Forensic audits

• $500,000 for Shelter / Hygiene financing through ADRA Samoa

12. Ministry of Foreign Affairs and Trade – $27,205,453

• Outputs provided by the Ministry – $24,331,852

• Transactions on Behalf of State – $2,873,601

Key Developments for the Ministry include:

• $150,000 for the hosting of the Atoa Samoa Executive meeting in October 2023

13. Ministry of Health – $146,544,809

• Outputs provided by the Ministry – $108,760,747

• Outputs provided by Third Parties – $11,075,819

• Transactions on Behalf of State – $26,708,243

Key Developments for the Ministry include:

• $200,000 for the Diabetes Clinic

• $100,000 for the Goshen Trust

• $100,000 for the Samoa Red Cross Society

• $100,000 for the Samoa Cancer Society

• $100,000 for METI

• $1.6 million for Returning Graduates (Doctors / Nurses)

• $5 million for the Overseas Medical Treatment Scheme

• $3 million for the Medical Specialist Clinic

• $1 million for District Hospital refurbishments

• $1 million for Rural Doctors’ Residences

14. National Kidney Foundaiton – $10,875,819

Government Grant – $10,425,819

• Outputs provided by the SOE – $6,446,060

• Transactions on Behalf of State – $4,429,795

15. Ministry of Justice and Courts Administration – $15,572,666

• Outputs provided by the Ministry – $13,575,409

• Transactions on Behalf of State – $1,997,257

16. Ministry of Natural Resources and Environment – $29,374,460

• Outputs provided by the Ministry – $14,348,088

• Galuega e Avea ai ma Sui o le Malo – $15,026,372

Key Developments for the Ministry include:

• $4.5 million for Waste Management Services contracts

• $4 million for Land Compensation

• $400,000 for Seawall constructions

• $300,000 for National Forest Replanting

• $245,000 for Lawn Maintenance

17. Ministry of Police and Prisons – $55,701,690

• Outputs provided by the Ministry – $37,305,612

• Outputs provided by Third Party – $13,703,379

• Transactions on Behalf of State – $4,692,700

18. Fire and Emergency Services Authority – $13,920,455

Government Grant – $13,703,379

• Outputs provided by the SOE – $12,921,311

• Transactions on Behalf of State – $999,145

19. Ministry of the Prime Minister and Cabinet – $9,583,853

• Outputs provided by the Ministry – $6,786,328

• Transactions on Behalf of State – $2,797,525

20. Ministry for Customs and Revenue – $13,441,055

• Outputs provided by the Ministry – $10,636,632

• Transactions on Behalf of State – $2,804,423

21. Ministry for Women, Community and Social Development – $64,755,036

• Outputs provided by the Ministry – $11,308,029

• Transactions on Behalf of State – $53,447,007

Key Developments for the Ministry include:

• $51 million for District Development Program

• $500,000 for SVSG (Victim Support Care)

• $500,000 for NGO Capacity Support Program

• $100,000 for Ending Violence Program support for NGOs

• $50,000 for Mapuifagalele (Aged Care Budget Support)

• $20,000 for Mapuipulotu (Aged Care Budget Support)

22. Ministry of Works, Transport and Infrastructure – $42,779,504

• Outputs provided by the Ministry – $5,430,144

• Outputs provided by Third Parties – $36,651,828

– Samoa Water Authority CSO – $2,500,000

– Electric Power Corporation CSO – $2,500,000

– Samoa Water Authority Budget Support – $4,050,000

– Land Transport Authority – $27,601,828

• Transactions on Behalf of State – $697,532

23. Land Transport Authority – $42,601,827

Government Grant – $27,601,828

• Outputs provided by the SOE – $37,865,974

• Transactions on Behalf of State – $4,735,853

24. Office of the Attorney General – $5,840,075

• Outputs provided by the Ministry – $5,023,069

• Transactions on Behalf of State – $817,006

25. Office of the Auditor General – $4,492,999

• Outputs provided by the Ministry – $3,809,697

• Transactions on Behalf of State – $683,302

26. Office of the Electoral Commissioner – $4,266,735

• Outputs provided by the Ministry – $2,679,976

• Transactions on Behalf of State – $1,586,763

Key Developments for the Office include:

• $1.1 million for the Upgrade of the E-Roll Biometric System

27. Office of the Clerk of the Legislative Assembly – $8,227,199

• Outputs provided by the Ministry – $6,893,101

• Transactions on Behalf of State – $1,334,098

28. Office of the Ombudsman – $1,683,902

• Outputs provided by the Ministry – $1,457,030

• Transactions on Behalf of State – $226,872

29. Public Service Commission – $10,530,220

• Outputs provided by the Ministry – $4,968,607

• Galuega e Avea ai ma Sui o le Malo -$5,561,613

Key Developments for the Commission include:

• $4.7 million for the Government Scholarship Scheme

30. Samoa Bureau of Statistics – $5,789,365

• Outputs provided by the Ministry – $4,494,260

• Transactions on Behalf of State – $1,295,105

31. Law Reform Commission – $1,506,886

• Outputs provided by the Ministry – $1,252,719

• Transactions on Behalf of State – $254,167

32. Ministry for Public Entreprises – $ $7,840,279

• Outputs provided by the Ministry – $2,739,302

• Transactions on Behalf of State – $ 5,100,977

Key Developments for the Ministry include:

• $4 million Assistance to Samoa Airways

• $500,000 for STEC Restructuring

VII. UNFORESEEN EXPENDITURES

The estimated Unforeseen Vote for the fiscal year 2023/24 is $22.8million based on the total Ministries’ expenditure programmes.

VIII. DEVELOPMENT EXPENDITURES

Mr. Speaker,

The total cash grant assistance of $165.4million is expected to finance development expenditures for ongoing projects, sector programs, as well as new approved investments in all sectors, primarily in the transport & infrastructure, agriculture & fisheries, health and education sectors. The sector budget support will continue for the health, water, agriculture & fisheries sectors, with the final year for the education sector program.

In addition, the in-kind assistance estimated at $104.3million for fiscal year 2023/24 will be directly received by the beneficiaries and not delivered through the Government systems, in support of the implementation of the Government’s development priorities at national and community levels.

The Government also secured standby facilities and contingency financing with the Asian Development Bank (CDF) and World Bank (CAT-DDO) for effective response to natural disasters or health emergencies that may affect Samoa in the future.

Samoa looks forward to continuing its effective and genuine partnerships with all development partners in support of our national development priorities, and our international commitments.

IX. CONCLUSION

Mr. Speaker,

This 2023/24 Budget will see the continued commitment of the Government to the implementation of the Pathway for the Development of Samoa through partnerships with communities and the private sector.

It continues to emphasize the prioritization of the socio-economic welfare of the nation, particularly following three years of uncertainty under the threat of the COVID-19 pandemic.

The current fiscal year include policies that were bold in the face of global economic turmoil but as we have seen, it has paid off with higher than anticipated growth for the current and the new financial year.

On behalf of the Government, I sincerely acknowledge with great appreciation all our development partners, the private sector and Non Government Organisations as well as all District Councils for your continuous support. Faafetai, faafetai tele lava.

It is therefore with high-spirits that we journey into the new fiscal year with the intention of strengthening our partnerships and building our resilience.

Mr Speaker,

With great pleasure, I as Minister of Finance, hereby commend the 2023/2024 Budget to the House.

Happy Independence and God bless Samoa!

Soifua ma ia Manuia.