Samoa: 2015 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Samoa
IMF Staff Country Reports, July 20, 2015
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- Samoa: 2015 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Samoa
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Bibliographic details
- Published: July 20, 2015
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513568713.002
Outlook and risks
- Growth is recovering gradually from natural disasters and inflation remains subdued.
- The current account deficit is expected to narrow on lower international oil prices and a planned fiscal consolidation.
- Main external risk: occurrence of another natural disaster in the presence of already high public debt and vulnerabilities in financial institutions.
- Main domestic risks: delay in rebuilding macroeconomic buffers, in particular through fiscal consolidation, reforms of public financial institutions (PFIs) and financial oversight.
- Reserves are adequate by standard metrics, but a stronger external position with higher reserves would provide greater resilience.
Improving financial resilience
- A recent financial sector assessment program (FSAP) mission identified risks in some commercial banks and public financial institutions (PFIs).
- Policy directions:
- Refocus the role of PFIs to reduce contingent liabilities for public finances and to support development of private financial markets.
- Improve regulation and supervision of financial institutions to reduce the risk of an adverse feedback loop from banks and PFIs to the public finances in case of another external shock.
- Strengthen financial infrastructure to improve the flow and allocation of credit.
Rebuilding macroeconomic buffers
- The authorities plan a gradual fiscal consolidation to reduce public debt to the target of 50 percent of GDP by 2020.
- Fiscal consolidation expected to be achieved mainly through:
- Improvements in revenue.
- Reduction in current expenditure.
Boosting growth
- Authorities’ structural reform initiatives emphasize:
- Revitalization of agriculture and food processing.
- Tourism.
- Creating an enabling environment for business.
- Reforms to state-owned enterprise (SOE) governance are beginning to bear fruit.
- Government is advised to continue planned privatizations and amendments to legislation to reduce the burden of SOEs on the public finances.
Key findings and policy recommendations (summary)
- Continue planned fiscal consolidation to rebuild buffers and meet the 50 percent of GDP public debt target by 2020.
- Strengthen supervision and regulation of commercial banks and PFIs to limit systemic risks and contingent liabilities.
- Refocus PFIs toward market development and away from activities that increase fiscal risk.
- Persist with SOE governance reforms, privatizations, and legal amendments to lower fiscal costs.
- Bolster external resilience by increasing reserves above current adequate levels where feasible.
- Advance structural reforms in agriculture, food processing, tourism, and business environment to sustain growth.
Source: Samoa: 2015 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Samoa (July 20, 2015).