## SAMOA ## Source details **Canonical URL:** [SAMOA](https://www.imf.org/-/media/files/publications/cr/2025/english/1wsmea2025001-print-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2025/english/1wsmea2025001-print-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2025/english/1wsmea2025001-print-pdf.pdf.json) --- ### CONTEXT - Samoa experienced a 15 percent contraction during FY2020-FY2022 and has recovered to pre-pandemic GDP levels, supported by a swift recovery in tourism. - Sound macroeconomic management and external support contributed to significantly lower public debt and higher FX reserve cover. - Key structural challenges: remoteness and small size, growing migration of workers abroad, rising climate risks, and pressures on correspondent banking relationships (CBRs) amid ML/TF concerns. - Authorities’ policy focus: District Development Program (DDP), public financial management (PFM) reforms, strengthening financial sector resilience, and implementing robust AML/CFT measures. - Samoa’s fiscal year runs from July to June. ### RECENT DEVELOPMENTS - Growth - Real GDP growth: 9.2 percent in FY2023 and 9.4 percent in FY2024. - Tourism-related sectors grew by 20.9 percent in FY2024. - Investment contracted due to a slowdown in public projects; consumption led the recovery, bolstered by remittances. - Inflation and labor - Headline inflation: averaged 12.0 percent in FY2023; declined to 0.8 percent y/y by end-FY2024; rose to 2.9 percent y/y in October. - Core inflation (excluding food and energy): averaged 5.0 percent in FY2023; 1.7 percent y/y in October. - New trimmed-mean core measure (IMF TA) suggests subdued underlying pressures. - Government announced minimum wage increase from $3 to $4.84 tala per hour over two years; affects around 15 percent of formal private sector employees; minimum wage ~50 percent of the average wage in Samoa. - Fiscal developments - Fiscal surplus: 3.0 percent of GDP in FY2023 → 10.1 percent of GDP in FY2024 (budget had envisaged a deficit of 3.3 percent of GDP). - Public debt: declined to 27.7 percent of GDP in FY2024, the lowest level in two decades. - Government deposits: rose to more than 19 percent of GDP in FY2024. - FY2025 budgeted deficit: 2.1 percent of GDP (envisages expansionary fiscal stance). - Note: GFS recorded capital expenditures of 0.3 percent of GDP in FY2024, likely an underestimate. - External sector - Current account: swung to a surplus of 4.0 percent of GDP in FY2024 from a deficit of 3.3 percent of GDP in FY2023. - Tourism earnings: 21 percent of GDP in FY2024. - FX reserves: 9 months of prospective imports at end-FY2024. - Tala: appreciated by an average 1.4 percent in nominal effective terms and 0.4 percent in real effective terms in FY2024; marginal depreciation in recent months. - Monetary and banking - Excess liquidity increased through the pandemic; CBS increased OMOs including longer-maturity securities (182-days and 365-days) and bidding changes to absorb liquidity. - Short-term interest rates rose to 0.9 percent in September 2024; excess liquidity stabilized though at high levels. - Bank credit: after 21 months of contraction, commercial bank loan growth turned positive in May 2024; PFI lending to households remained robust; business lending uptick linked to CHOGM-related lending. - Banking sector: liquidity ratios and profitability improved; capital ratios moderated but remain strong; gross NPL ratio over 4.5 percent in FY2024; provisioning >100 percent of NPLs. ### OUTLOOK AND RISKS - Growth projections - FY2025: Real GDP projected to expand by 5.5 percent, supported by CHOGM preparations and an expansionary fiscal stance. - FY2026: Growth expected to decline to 2.8 percent. - Medium term: Convergence towards historical average of about 2 percent. - Inflation - Headline inflation expected to rise to 3.5 percent by end-FY2025. - Medium term: Projected to stabilize around the CBS’s indicative target of 3.0 percent. - Current account and reserves - FY2025: Current account expected to record a small deficit of 0.5 percent of GDP. - Medium term: Current account deficit expected to stabilize at around 2.0 percent of GDP. - FX reserves: expected to remain well above the optimal level. - Risks - Downside: Growth slowdown in tourism source countries, global commodity price volatility, supply chain disruptions, minimum wage pressures, unexpected pickup in credit growth, prolonged delays in construction, sustained outflows of seasonal workers, ML/TF-related CBR pressures, natural disasters and climate change. - Upside: Stronger fiscal expansion, including election-related spending in 2026, could boost growth. - Authorities’ views - Broad agreement with staff on continued recovery and FY2025 outlook; authorities expected somewhat higher medium-term growth driven by Pathway for the Development of Samoa (PDS) reforms. - Authorities expected inflation to remain slightly above 3 percent and concurred with staff’s external sector assessment. ### POLICY DISCUSSIONS — Overall policy mix and structural priorities - Staff recommendation: expansionary fiscal stance to execute public investment, paired with tighter monetary policy to reduce excess liquidity—this mix supports productive capacity and guards against upside inflation risks while lowering the current account surplus; exchange rate peg remains credible anchor under closed capital account. - Structural priorities: attract foreign investment, improve human capital, implement financial sector reforms including addressing ML/TF risks. ### FISCAL POLICY — Promoting Near-Term Fiscal Support while Guarding Against Medium Term Fiscal Risks - Recent fiscal picture and strategy - Persistent fiscal surpluses improved buffers; low capital spending contributed to surpluses. - FY2025 budget projects a deficit of 2.1 percent of GDP driven by higher expenditures and recovery of capital spending. - Staff projects a smaller fiscal deficit of 0.1 percent of GDP versus budget, due to more optimistic revenue forecasts. - Policy guidance and risks - Scaling up capital spending is essential to avoid scarring in the construction sector and to boost growth potential; capacity constraints must be addressed to ensure timely execution of projects. - Scale up social spending and execute health and education programs to build human capital and strengthen social safety nets. - If external shocks hit tourism or commodity prices rise, targeted fiscal support should be provided to vulnerable groups. - Given high government cash reserves, fiscal deficits and debt servicing for the next two years can be financed by drawing down deposits; debt-to-GDP expected to decline to 19.3 percent of GDP by FY2026 (down from 44.3 percent of GDP in FY2019). - As government deposits decline to pre-pandemic levels, authorities should plan to secure concessional loans to meet financing needs from FY2027. ### FISCAL OUTLOOK AND MEDIUM-TERM DEBT DYNAMICS - Staff projection: debt-to-GDP ratio projected to rise moderately to 22.6 percent of GDP by FY2029. - The 2024 IMF-WB Debt Sustainability Analysis (DSA) lowered Samoa’s risk of debt distress from “high” to “moderate”. - Vulnerability: stress tests suggest a natural disaster shock could significantly impact debt dynamics, underscoring the need for a balanced medium-term fiscal strategy. - DDP details and PFM - DDP started in FY2023; allocates $1 million tala annually to each of Samoa’s 51 districts; scale: around 2 percent of GDP annually. - Implementation: about 74 percent of the allocated amount for FY2024 spent. - Authorities introduced strict PFM controls; recommendation: maintain strict PFM controls; external expert reviews could identify potential gaps; given limited implementation and absorptive capacity at district level, program should not be expanded. - PFM reform priorities: strengthen cash flow recording, monitoring, forecasting; enhance debt management; improve public investment management; continue Automatic Transaction System implementation with gradual transition to the Treasury Single Account; strengthen budget planning and scrutiny. - Fiscal data and budget estimates: notable divergence between budget projections and fiscal outturns; recommendation: improve accuracy of budget estimates and harmonize institutional coverage between MoF and Samoa Bureau of Statistics. ### CLIMATE ADAPTATION FINANCING AND PUBLIC INVESTMENT CAPACITY - CMAP findings and financing needs - The 2022 CMAP estimated additional financing of 6 percent of GDP per year would be necessary to fund climate spending needs. - Debt-investment-growth modeling: ex-ante funding of climate-resilient infrastructure is more cost effective than ex-post reconstruction after disasters. - Implementation and capacity constraints - Need better integration of climate considerations into budgeting and project planning. - Address capacity constraints, including labor shortages, that have hampered public investment execution since the pandemic. - Recommendation: continue implementing CMAP recommendations to build climate resilience. ### REVENUE ADMINISTRATION IMPROVEMENTS - Progress: rollout of electronic fiscal devices and wider adoption of the Tax Invoice Monitoring System (TIMS). - IMF TA priorities: improve IT systems; move towards a full self-assessment system; deepen segmentation to tailor services; improve risk management for enforcement of domestic and cross-border tax compliance. ### FISCAL RISKS FROM SOEs AND ENERGY SECTOR MEASURES - SOEs - Implementation of an SOE Health Check Tool with Fund TA; credit risk assessments of SOEs with government guarantees initiated. - Recommendation: implement measures based on assessments; expand Health Check Tool for forward-looking analysis and stress tests. - Electric Power Corporation (EPC) and tariffs - 2023: government removed the 20 percent pandemic-era electricity tariff cuts for government and commercial entities; residential tariff cuts remain. - Recommendation: gradually restore tariffs to improve EPC’s financial footing and investment capacity; periodic tariff review by electricity regulator should be reinstated. - Equity: lower tariffs could continue for low-income households if directly funded through the budget. ### MONETARY POLICY AND LIQUIDITY MANAGEMENT - Current stance: accommodative monetary policy amid significant excess liquidity; OMOs in current cycle higher than previous tightening cycles but small relative to outstanding excess liquidity. - Implications: short-term interest rates remain low; slower FX reserves accumulation, recovery in bank lending, and drawdown of government deposits as fiscal policy turns expansionary should reduce excess liquidity gradually, but liquidity likely to remain high without greater monetary policy effort. - Policy recommendations - CBS should continue to normalize monetary policy to reduce liquidity to reasonable levels and have a material impact on interest rates. - Aim to steer real interest rates into positive territory. - Monitor inflation and credit developments; reassess pace of normalization and potential terminal rates based on incoming data. - More rapid normalization if upside inflation risks materialize; more gradual tightening if envisaged expansionary fiscal stance fails to materialize. - Liquidity management tools - Increase size of OMOs relative to outstanding liquidity, particularly for longer maturities; consider rolling over securities. - Consider raising the statutory reserve ratio. - Potentially increase the overseas investment cap for the Unit Trust of Samoa and Samoa National Provident Fund to reduce their bank deposits. - Improve liquidity forecasting capabilities. - Authorities’ plan: aim to increase interest rates to 2-3 percent over the medium-term; noted challenges around weak monetary transmission and need to improve liquidity management, potentially with IMF TA; retain the exchange rate peg as nominal anchor. ### FINANCIAL SECTOR RESILIENCE AND SUPERVISION - Credit intermediation and PFIs - Share of PFIs in total financial sector credit reached 45 percent in FY2024, up from 40 percent in FY2019. - Leverage in the economy remains relatively high amid strong lending by PFIs; a rise in interest rates could strain debt servicing for some households and firms. - Recommendation: revise prudential regulations for PFIs and ensure strict enforcement; improve governance frameworks; clarify PFI lending mandates. - Development Bank of Samoa (DBS) - Progress: significantly reduced its NPL ratio and re-oriented new lending toward MSMEs and agriculture. - Recommendation: reduce exposure to the tourism sector, improve cash flow, strengthen governance and enable more independent financial decision-making. - Reform priorities and financial inclusion - Continue implementing 2015 FSAP recommendations; roll out national digital ID in FY2025-FY2026 to facilitate due diligence and service delivery. - National Financial Inclusion Strategy 2.0 introduced in FY2024 to improve access for the large unbanked population. - Key priorities: emergency liquidity assistance framework; review and enhance prudential standards; establish an online credit registry; improve regulatory framework for money lenders, credit unions and micro-finance institutions. - Safeguards - Update safeguards assessment completed in May 2021; recommendations mostly implemented. - Legal reforms in 2015 enhanced CBS autonomy and governance; financial reporting aligned with International Financial Reporting Standards. - CBS developing emergency liquidity assistance framework and strengthening business continuity plan with IMF TA. ### AML/CFT FRAMEWORK AND CORRESPONDENT BANKING RELATIONSHIPS (CBRs) - CBR pressures and financial integrity concerns - Two domestic banks lost their U.S. dollar CBRs in 2021; their AUD and NZD CBRs remain active. - Money Transfer Operators (MTOs), especially smaller ones, face challenges maintaining access to banking facilities abroad. - Key drivers of CBR pressures: low profitability, weaknesses in AML/CFT supervision, and ML/TF risks from the banking sector, MTOs, and trust and company service providers (TCSPS) in the offshore sector. - Recent developments - Updated national ML/TF risk assessment (NRA) and national AML/CFT strategy approved by cabinet in May 2024. - In September 2024, the Asia Pacific Group on Money Laundering (APG) approved two FATF Recommendation upgrades, and one downgrade for Samoa, following amendments to the Money Laundering Prevention Act (MLPA) in 2018 and enactment of Trustees Company Act in 2017. - Samoa remains on the EU list of non-cooperative tax jurisdictions; authorities plan to amend laws to address EU concerns, including preferential tax treatment of companies in the offshore center with limited economic substance. - Key reform priorities to mitigate CBR pressures - Legal framework reforms: amend MLPA and regulations to cover all AML/CFT preventative measures in international standards; provide powers for AML/CFT supervisors including sanctioning powers; require FIs and DNFBPs to implement a risk-based approach; establish the FIU in law and protect its operational independence; broaden definitions including PEPs. - Improve supervision: implement risk-based supervision by CBS, Samoa International Financial Authority, and Samoa Financial Intelligence Unit; focus on high-risk sectors identified in the 2024 NRA; increase resources and capacity. - Digital assets: approach any initiatives to promote digital assets with extreme caution due to ML/TF concerns and potential macroeconomic and financial stability risks. - Other priorities: roll out the e-KYC facility and National Digital ID; improve transparency of beneficial ownership for domestic legal persons, banks, MTOs, and the offshore sector. - Timing: authorities have a window to improve their AML/CFT regime ahead of Samoa’s next APG mutual evaluation in 2027. ### AML/CFT RISKS AND REMITTANCES — FINDINGS AND IMPLICATIONS - Risk assessments highlight low domestic and foreign ML/TF risks from cross-border payments. - A targeted review confirms limited ML/TF risks pertaining to remittances. - Implication: opportunities for supervisory guidance, simplified due diligence, and regulatory harmonization across main remittance corridors. - Recommendation: authorities’ outreach on CBR pressures should leverage the understanding of low ML/TF risks from remittances and focus on streamlining AML/CFT controls in line with identified risks. ### MIGRATION, LABOR MOBILITY, AND ECONOMIC IMPACTS - Migration overview and demographics - Permanent emigration increased from around 40 percent of the total population in 1990 to over 60 percent in 2020. - Largest Samoan diaspora in New Zealand; Australia and American Samoa also significant. - Majority of Samoans abroad are relatively young (less than 30 years old); slightly more Samoan females live abroad than males. - Temporary labor mobility schemes and participation - Samoa participates in RSE (New Zealand), PLS, SWP (Australia), consolidated into the PALM scheme in 2022. - Samoa has been the third largest supplier to labor mobility schemes in the Pacific. - Pre-COVID participation: about 1.5 percent of the population in 2019; post-pandemic participation exceeded 3 percent of Samoa’s population. - Women constitute only around 5 percent of participants from Samoa. - Economic benefits and costs - Remittances and compensation of employees are main benefits; around 80 percent of Samoan households receive remittances. - Staff estimates: seasonal workers earn between 3.5 to 4.5 times higher wages per hour than the average wage in Samoa. - For RSE, average residual income for a Samoan fruit picker during 2017-2018 was $14,601 to $18,723 tala. - Average gross monthly income in Samoa for paid employment is around $1,444 tala (annual SAT$17,328). - Labor market impacts and skills composition - Construction and tourism-related sectors saw significant resignations of workers who joined labor mobility schemes. - Around 28 percent of returned migrant workers had tertiary levels of education or technical/vocational training. - Policy framework and recent reforms - August 2023: “Policy for Temporary Labour Migration under the Labour Mobility Schemes of Australia and New Zealand.” - Key provisions: capping number of workers mobilized annually to 6000 for New Zealand and another 6,000 for Australia; prioritizing vulnerable communities; cost recovery measures: administration fee for workers ($50 tala) and participation fee for constituency committees ($1000 tala). - Cap currently not binding. - Policy recommendations - Improve domestic labor market conditions; review foreign investment restrictions; strengthen social safety nets; provide upskilling and re-skilling for returned workers; enhance migration data collection. - Encourage female labor force participation via early-childhood education, childcare availability, and flexible work environments. ### STRUCTURAL CHALLENGES AND POLICY MEASURES TO FOSTER INCLUSIVE AND SUSTAINABLE GROWTH - Key constraints: remoteness and small size; merchandise goods exports ~4 percent of GDP; low FDI inflows; weak public investment since the pandemic; growing migration raising concerns about productive capacity. - Policy measures underway: Samoa Export Authority; agriculture and fisheries sector plan; National Investment Policy Statement clarification; Policy for Temporary Labour Migration; focus on improving labor market conditions, minimum wage increases, and education/TVET strengthening. ### STAFF APPRAISAL — MACRO OUTLOOK, POLICY PRIORITIES, AND SPECIFIC RECOMMENDATIONS - Near-term outlook - GDP growth in FY2025 projected to remain well above pre-pandemic levels, supported by CHOGM preparations and envisaged expansionary fiscal stance. - Inflation expected to rise moderately as the recovery continues; converge to about 2 percent over medium-term. - Fiscal and monetary recommendations - Overcome capacity constraints to execute public investment, including climate-related projects. - Maintain PFM controls over the DDP, including through the election cycle. - Improve fiscal data and implement further PFM reforms. - Fully reverse pandemic-era utility tariff cuts, while implementing any support for low-income households transparently through the budget. - Monetary policy normalization should continue, aiming to guide interest rates higher; exchange rate peg remains appropriate nominal anchor. - To guard against domestic inflation risks, reduce excess liquidity to reasonable levels and push real short-term rates to positive territory. - Financial sector and CBR recommendations - Strengthen financial supervision and regulation, including for PFIs. - Operationalize emergency liquidity assistance framework; enhance prudential standards; upgrade governance and prudential regulations for PFIs. - Establish an online credit registry; strengthen AML/CFT legal framework and risk-based supervision ahead of APG mutual evaluation in 2027. - Ensure timely rollout of e-KYC facility and National Digital ID. - Given low ML/TF risks from remittance payments, streamline regulatory and supervisory requirements on both sides of main remittance corridors. ### DEBT SUSTAINABILITY — KEY FINDINGS FROM THE DSA - Public debt and external debt levels - Central government debt (public debt) was 27.7 percent of GDP in FY2024. - Public and publicly guaranteed (PPG) debt totaled 31.3 percent of GDP in FY2024; guarantees were 3.4 percent of GDP. - External public debt was US$277.5 million (25.9 percent of GDP) at end-FY2024. - Over half (57.6 percent) of outstanding public external debt at end-FY2024 was from multilateral creditors. - Projections and assumptions - Discount rate used to calculate NPV of external debt: 5 percent. - Baseline incorporates assumed long-term effects of frequent and severe natural disasters; from FY2031 onward baseline reduces annual real GDP growth by 1.3 percentage points to 0.7 percent and increases the current account deficit by 0.5 percent each year from FY2031–37 (cumulative increase of 3.5 percent of GDP). - FY2025 growth projected at 5.5 percent; headline inflation projected to rise to 3.5 percent by end-FY2025 and stabilize around 3.0 percent medium term. - Baseline debt path and risks - Staff projection: debt-to-GDP ratio projected to rise moderately to 22.6 percent of GDP by FY2029. - Under the baseline, the PV of external debt-to-GDP ratio expected to increase gradually from 15.6 percent of GDP in FY2025 to 51.6 percent of GDP in FY2045 but remain below the 55 percent threshold. - Tailored natural disaster stress test: assumed new debt to finance disaster damages increases public debt-to-GDP ratio by 21 percent in FY2026 (median historical damage); real GDP declines by 3 percent in FY2026; exports decline by 6 percent in FY2026. - Risk rating: moderate risk of debt distress (upgrade from high). - Financing and buffers - Short-term: drawdown of government deposits over next two years. - Medium-term (from FY2027 onward): concessional external financing largely in line with current debt profile; grant element of all new loans is 43 percent on average. - Samoa accumulated sizeable cash reserves, reaching more than 19 percent of GDP in FY2024; reserves expected to be used to amortize external debt over next two years. - Stress test outcomes - Standard stress tests: PV of external debt-to-GDP ratio breaches threshold in all standard stress tests, mostly in the long term. - Export shock triggers earlier breach in FY2033 for PV of external debt-to-GDP ratio. - Natural disaster shock has largest negative impact, causing a large breach commencing in FY2039 for external debt trajectory and breaches earlier for public debt under some scenarios. - Policy implications - Given limited space to absorb shocks, priority on grants and highly concessional lending for climate adaptation. - Maintain the policy of zero non-concessional borrowing and continue strengthening fiscal risk management and PFM. ### MANAGING EXCESS LIQUIDITY — KEY FINDINGS AND POLICY OPTIONS - Historical and recent liquidity developments - Banking system liquidity: around $100-$200 million tala during 2009-2018; rose to $250-$350 million tala during the pandemic; surged further in 2023 and peaked at over $500 million Tala in early-2024. - Increase in liquidity largely driven by a significant rise in Net Foreign Assets (NFA), FX reserve inflows, government grants, high FX purchases from banks due to strong remittances and tourism. - Government deposits related to budget support received through the CBS increased since mid-2023. - Bank balance sheet implications - Sharp increase in commercial bank deposits driven by household and business deposits and increased government deposits amid budget under-execution. - Loan-to-deposit ratio fell below 80 percent from more than 100 percent pre-pandemic. - Policy measures recommended - Increase scale of OMOs with greater focus on longer-term maturities; consider rolling over securities upon maturity. - Consider fixed-rate full-allotment OMOs if temporary drivers of liquidity persist; FY2024 Monetary Policy Statement target: weighted average yield for OMOs to 2-3 percent compared to 0.9 percent as of September 2024. - Increase statutory reserve deposit (SRD) ratio (last raised in 2008 to 4.5 percent). - Increase outward investment by PFIs (UTOS and SNPF) subject to prudential limits. - Improve liquidity forecasting and develop a secondary market for CBS securities; make CBS securities eligible as collateral to promote inter-bank lending. - Improve CBS lending facilities and align them with monetary policy stance; CBS currently has four standing lending facilities. - Institutional/fiscal considerations: CBS Act (2015) requires a share of CBS net profit as dividend to government; in case of net loss, entire amount absorbed by CBS General Reserve Account. ### ANNEX HIGHLIGHTS — Implementation, FSAP, CMAP and Risk Assessment - Implementation of previous IMF recommendations - Fiscal: FY2025 budget envisages expansionary stance and increase in capital spending; strict PFM controls maintained over DDP; self-assessment of PEFA underway. - Monetary/financial: National Digital ID law passed in FY2024; work in progress on online credit registry; CBS increased size and tenure of OMOs but interest rates remain low. - Structural: Samoa Export Authority established; TVET expansion; Labor and Employment Relations Amendment Act 2023 enacted. - FSAP and supervisory reforms - Improve quality and coverage of data; draft amendments to Financial Institutions Act; on-site inspections for PFIs; work on Emergency Liquidity Assistance framework with IMF TA. - CMAP implementation - Disaster Risk Financing (DRF) Policy 2022-2025 approved; Multi Hazard Early Warning System operating since May 2024. - 2022 CMAP estimated additional financing of 6 percent of GDP per year for climate needs. - Progress on asset management systems and DRF but limited progress on full costing of adaptation and some mitigation recommendations. - Risk Assessment Matrix (RAM) - Likelihood characterizations: “low” <10 percent, “medium” 10–30 percent, “high” ≥30 percent. - RAM highlights natural disaster and climate risks, export volatility, and CBR/AML risks among key concerns. ### SELECTED HIGHLIGHTS FROM TABLES (fiscal year basis; preserve exact figures) - Output and inflation (real GDP and CPI) - Real GDP: 2020/21 -7.0; 2021/22 -5.4; 2022/23 9.2; 2023/24 9.4; 2024/25 5.5; 2025/26 2.8; 2026/27 .12.0; 2027/28 2.0 - Consumer price index (end of period): 4.1; 10.8; 10.7; 0.8; 3.5; 2.6; 3.0; 3.0; 3.0 - Central government finances (percent of GDP) - Revenue and grants: 36.5; 38.5; 34.1; 36.0; 33.0; 32.0; 31.5; 31.5; 31.4 - Expenditure: 34.7; 33.1; 31.0; 25.9; 33.1; 33.5; 33.4; 33.5; 33.6 - Overall balance: 1.7; 5.4; 3.0; 10.1; -0.1; -1.5; -1.9; -2.0; -2.2 - Gross debt outstanding: 46.3; 43.7; 33.3; 27.7; 22.5; 19.3; 20.4; 21.5; 22.6 - Balance of payments (percent of GDP) - Current account balance: -14.5; -11.3; -3.3; 4.0; -0.5; -1.2; -1.3; -1.6; -2.0 - Services (net): -3.9; -2.9; 10.8; 17.6; 16.4; 16.0; 16.0; 16.0; 16.0 - Tourism receipts (percent of GDP): 0.0; 0.0; 0.0; 16.4; 21.0; 21.9; 21.5; 21.5; 21.5 - Gross official reserves (million U.S. dollars): 288.5; 303.2; 401.7; 494.3; 503.8; 506.2; 523.9; 542.9; 557.5 - Reserves coverage (months): 7.9; 6.4; 8.3; 9.0; 8.8; 8.5; 8.5; 8.3; 8.2 - Central government nominal figures (millions of tala) - Total Revenue: 791; 835; 873; 1,060; 1,056; 1,085; 1,122; 1,179; 1,237 - Total Expenditure: 753; 719; 795; 763; 1,059; 1,135; 1,190; 1,254; 1,322 - Overall balance (millions of tala): 38; 177; 82; 97; -3; -50; -67; -75; -85 - Banking system soundness (selected ratios) - Regulatory capital to risk-weighted assets, ratio: 28.7; 28.1; 28.8; 33.2; 29.0 - Non-performing loans to total gross loans, ratio: 2.9; 3.7; 4.6; 4.6; 4.6 - Return on assets, ratio: 2.4; 2.8; 2.5; 2.8; 3.1 - Liquid assets to total assets, ratio: 16.8; 19.9; 17.7; 26.0; 27.5 - Total loans to total domestic deposits: 85.6; 79.8; 76.8; 63.5; 65.9 ### SURVEILLANCE RECOMMENDATION - It is recommended that the next Article IV consultation with Samoa take place on the standard 12-month cycle. *Source: IMF staff report excerpts for Samoa (content unit: 1wsmea2025001-print-pdf).* ### 2024. The IMF team comprised of Siddharth Kothari (head), Arpitha ### SAMOA ### CONTEXT - Samoa experienced a 15 percent contraction during FY2020-FY2022 and has recovered to pre-pandemic GDP levels, supported by a swift recovery in tourism. - Sound macroeconomic management and external support contributed to significantly lower public debt and higher FX reserve cover. - Key structural challenges: remoteness and small size, growing migration of workers abroad, rising climate risks, and pressures on correspondent banking relationships (CBRs) amid ML/TF concerns. - Authorities’ policy focus: District Development Program (DDP), public financial management (PFM) reforms, strengthening financial sector resilience, and implementing robust AML/CFT measures. Samoa’s fiscal year runs from July to June. ### RECENT DEVELOPMENTS - Growth - Real GDP growth: 9.2 percent in FY2023 and 9.4 percent in FY2024. - Tourism-related sectors grew by 20.9 percent in FY2024. - Investment contracted due to a slowdown in public projects; consumption led the recovery, bolstered by remittances. - Inflation and labor - Headline inflation: averaged 12.0 percent in FY2023; declined to 0.8 percent y/y by end-FY2024; rose to 2.9 percent y/y in October. - Core inflation (excluding food and energy): averaged 5.0 percent in FY2023; 1.7 percent y/y in October. - New trimmed-mean core measure (IMF TA) suggests subdued underlying pressures. - Government announced minimum wage increase from $3 to $4.84 tala per hour over two years; affects around 15 percent of formal private sector employees; minimum wage ~50 percent of the average wage in Samoa. - Fiscal developments - Fiscal surplus: 3.0 percent of GDP in FY2023 → 10.1 percent of GDP in FY2024 (budget had envisaged a deficit of 3.3 percent of GDP). - Public debt: declined to 27.7 percent of GDP in FY2024, the lowest level in two decades. - Government deposits: rose to more than 19 percent of GDP in FY2024. - FY2025 budgeted deficit: 2.1 percent of GDP (envisages expansionary fiscal stance). - Note: GFS recorded capital expenditures of 0.3 percent of GDP in FY2024, likely an underestimate. - External sector - Current account: swung to a surplus of 4.0 percent of GDP in FY2024 from a deficit of 3.3 percent of GDP in FY2023. - Tourism earnings: 21 percent of GDP in FY2024. - FX reserves: 9 months of prospective imports at end-FY2024. - Tala: appreciated by an average 1.4 percent in nominal effective terms and 0.4 percent in real effective terms in FY2024; marginal depreciation in recent months. - Monetary and banking - Excess liquidity increased through the pandemic; CBS increased OMOs including longer-maturity securities (182-days and 365-days) and bidding changes to absorb liquidity. - Short-term interest rates rose to 0.9 percent in September 2024; excess liquidity stabilized though at high levels. - Bank credit: after 21 months of contraction, commercial bank loan growth turned positive in May 2024; PFI lending to households remained robust; business lending uptick linked to CHOGM-related lending. - Banking sector: liquidity ratios and profitability improved; capital ratios moderated but remain strong; gross NPL ratio over 4.5 percent in FY2024; provisioning >100 percent of NPLs. ### OUTLOOK AND RISKS - Growth projections - FY2025: Real GDP projected to expand by 5.5 percent, supported by CHOGM preparations and an expansionary fiscal stance. - FY2026: Growth expected to decline to 2.8 percent. - Medium term: Convergence towards historical average of about 2 percent. - Inflation - Headline inflation expected to rise to 3.5 percent by end-FY2025. - Medium term: Projected to stabilize around the CBS’s indicative target of 3.0 percent. - Current account and reserves - FY2025: Current account expected to record a small deficit of 0.5 percent of GDP. - Medium term: Current account deficit expected to stabilize at around 2.0 percent of GDP. - FX reserves: expected to remain well above the optimal level. - Risks - Downside: Growth slowdown in tourism source countries, global commodity price volatility, supply chain disruptions, minimum wage pressures, unexpected pickup in credit growth, prolonged delays in construction, sustained outflows of seasonal workers, ML/TF-related CBR pressures, natural disasters and climate change. - Upside: Stronger fiscal expansion, including election-related spending in 2026, could boost growth. - Authorities’ views - Broad agreement with staff on continued recovery and FY2025 outlook; authorities expected somewhat higher medium-term growth driven by Pathway for the Development of Samoa (PDS) reforms. - Authorities expected inflation to remain slightly above 3 percent and concurred with staff’s external sector assessment. ### POLICY DISCUSSIONS - Overall policy mix - Staff recommendation: expansionary fiscal stance to execute public investment, paired with tighter monetary policy to reduce excess liquidity—this mix supports productive capacity and guards against upside inflation risks while lowering the current account surplus; exchange rate peg remains credible anchor under closed capital account. - Structural priorities: attract foreign investment, improve human capital, implement financial sector reforms including addressing ML/TF risks. - A. Promoting Near-Term Fiscal Support while Guarding Against Medium Term Fiscal Risks - Recent fiscal picture and strategy - Persistent fiscal surpluses improved buffers; low capital spending contributed to surpluses. - FY2025 budget projects a deficit of 2.1 percent of GDP driven by higher expenditures and recovery of capital spending. - Staff projects a smaller fiscal deficit of 0.1 percent of GDP versus budget, due to more optimistic revenue forecasts. - Policy guidance and risks - Scaling up capital spending is essential to avoid scarring in the construction sector and to boost growth potential; capacity constraints must be addressed to ensure timely execution of projects. - Scaling up social spending and executing health and education programs can build human capital and strengthen social safety nets. - If external shocks hit tourism or commodity prices rise, targeted fiscal support should be provided to vulnerable groups. - Given high government cash reserves, fiscal deficits and debt servicing for the next two years can be financed by drawing down deposits; debt-to-GDP expected to decline to 19.3 percent of GDP by FY2026 (down from 44.3 percent of GDP in FY2019). - As government deposits decline to pre-pandemic levels, authorities should plan to secure concessional loans to meet financing needs from FY2027. *SAMOA INTERNATIONAL MONETARY FUND* ### 2.2 percent of GDP in the medium term on staff projections, the debt-to -GDP ratio is projected to ### 1wsmea2025001-print-pdf - 2.2 percent of GDP in the medium term on staff projections, the debt-to -GDP ratio is projected to ### Fiscal outlook and medium-term debt dynamics - Staff projection: debt-to-GDP ratio projected to rise moderately to 22.6 percent of GDP by FY2029. - The 2024 IMF-WB Debt Sustainability Analysis (DSA) lowered Samoa’s risk of debt distress from “high” to “moderate”. - Vulnerability: stress tests suggest a natural disaster shock could significantly impact debt dynamics, underscoring the need for a balanced medium-term fiscal strategy to preserve fiscal space and continue reform momentum. - Authorities concurred with staff’s recommendation to implement an expansionary fiscal stance in the near term, citing strong tax revenue collections driven by improvements in tax compliance and challenges in implementing planned expenditures, especially capital spending, due to capacity constraints at line ministries. ### Fiscal policy, DDP, and public financial management (PFM) - Development Delivery Program (DDP) details: - Started in FY2023. - Allocates $1 million tala annually to each of Samoa’s 51 districts. - Scale: around 2 percent of GDP annually. - Implementation: about 74 percent of the allocated amount for FY2024 spent. - Authorities introduced strict PFM controls covering project selection, procurement, accounting, and auditing requirements; these have contained risks but slowed implementation. - Recommendation: maintain strict PFM controls; external expert reviews could identify potential gaps; given limited implementation and absorptive capacity at the district level, the program should not be expanded. - PFM reform priorities and progress: - Authorities conducting a self-assessment of their public expenditure and financial accountability (PEFA) framework. - Priorities: strengthen cash flow recording, monitoring, and forecasting; enhance debt management capabilities. - IMF TA-identified priorities: improve public investment management (project planning, execution, monitoring); continue Automatic Transaction System implementation with gradual transition to the Treasury Single Account; strengthen budget planning through greater scrutiny of budget proposals and outcomes. - Fiscal data and budget estimates: - Notable divergence between budget projections and fiscal outturns in recent years. - Recommendations: improve accuracy of budget estimates (including revenue forecasts); harmonize institutional coverage between MoF budget estimates and Samoa Bureau of Statistics fiscal outturns; improve capital expenditure estimates (currently treated as a residual) using alternative methods and data sources per IMF TA. ### Climate adaptation financing and public investment capacity - CMAP findings and financing needs: - The 2022 CMAP estimated additional financing of 6 percent of GDP per year would be necessary to fund climate spending needs. - Debt-investment-growth modeling: ex-ante funding of climate-resilient infrastructure is more cost effective than ex-post reconstruction after disasters, supporting higher grants for climate adaptation. - Implementation and capacity constraints: - Need better integration of climate considerations into budgeting and project planning. - Address capacity constraints, including labor shortages, that have hampered public investment execution since the pandemic. - Recommendation: continue implementing CMAP recommendations to build climate resilience. ### Revenue administration improvements - Progress made: rollout of electronic fiscal devices and wider adoption of the Tax Invoice Monitoring System (TIMS). - IMF TA priorities: - Improve the information technology system. - Move towards a full self-assessment system to reduce resource-intensive checking of returns. - Deepen segmentation to better tailor services to large and small taxpayers. - Improve risk management to strengthen enforcement of domestic and cross-border tax compliance. ### Fiscal risks from SOEs and energy sector measures - SOEs: - Progress: implementation of an SOE Health Check Tool with Fund TA; credit risk assessments of SOEs with government guarantees initiated. - Recommendation: implement measures based on assessments to improve financial performance and risk profile; expand Health Check Tool to conduct forward-looking analysis and stress tests. - Electric Power Corporation (EPC) and tariffs: - 2023: government removed the 20 percent pandemic-era electricity tariff cuts for government and commercial entities; residential tariff cuts remain. - Recommendation: given reduced inflationary pressures, gradually restore tariffs to improve EPC’s financial footing and investment capacity; periodic tariff review by electricity regulator should be reinstated to align with global fuel prices. - Equity consideration: lower tariffs could continue for low-income households if such support is directly funded through the budget. - Authorities’ views: concurred with PFM priorities, committed to strict controls over DDP, acknowledged large climate adaptation financing needs and limited implementation capacity, and noted tariff removals have improved EPC’s position. ### Monetary policy and liquidity management - Current stance: accommodative monetary policy amid significant excess liquidity in the banking system; OMOs in current cycle higher than previous tightening cycles but small relative to outstanding excess liquidity. - Implications: short-term interest rates remain low; slower FX reserves accumulation, recovery in bank lending, and drawdown of government deposits as fiscal policy turns expansionary should reduce excess liquidity gradually, but liquidity likely to remain high without greater monetary policy effort. - Policy recommendations: - CBS should continue to normalize monetary policy to reduce liquidity to reasonable levels and have a material impact on interest rates. - Aim to steer real interest rates into positive territory. - Monitor inflation and credit developments; reassess pace of normalization and potential terminal rates based on incoming data. - More rapid normalization if upside inflation risks materialize (domestic wage pressures or surge in credit growth); more gradual tightening if envisaged expansionary fiscal stance fails to materialize. - Liquidity management tools: - Increase size of OMOs relative to outstanding liquidity, particularly for longer maturities; consider rolling over securities. - Consider raising the statutory reserve ratio. - Potentially increase the overseas investment cap for the Unit Trust of Samoa and Samoa National Provident Fund to reduce their bank deposits. - Improve liquidity forecasting capabilities. - Authorities’ plan: aim to increase interest rates to 2-3 percent over the medium-term; noted challenges around weak monetary transmission and need to improve liquidity management, potentially with IMF TA; retain the exchange rate peg as nominal anchor. ### Financial sector resilience and supervision (PFIs, DBS, safeguards) - Credit intermediation and PFIs: - Share of PFIs in total financial sector credit reached 45 percent in FY2024, up from 40 percent in FY2019. - Leverage in the economy remains relatively high amid strong lending by PFIs; a rise in interest rates could strain debt servicing for some households and firms. - Recommendation: revise prudential regulations for PFIs and ensure strict enforcement to ensure a level-playing field with commercial banks, improve governance frameworks, and clarify PFI lending mandates to minimize distortions. - Monitor exposures to other PFIs and SOEs closely. - Development Bank of Samoa (DBS): - Progress: significantly reduced its NPL ratio and re-oriented new lending toward MSMEs and agriculture. - Recommendation: reduce exposure to the tourism sector, improve cash flow, strengthen governance and enable more independent financial decision-making. - Reform priorities and financial inclusion: - Continue implementing 2015 FSAP recommendations; roll out national digital ID in FY2025-FY2026 to facilitate due diligence and service delivery. - National Financial Inclusion Strategy 2.0 introduced in FY2024 to improve access for the large unbanked population. - Key reform priorities: establish emergency liquidity assistance framework per Fund TA; review and enhance prudential standards (capital adequacy, liquidity, interest rate and credit risk management); establish an online credit registry; improve regulatory framework for money lenders, credit unions and micro-finance institutions. - Safeguards: - Update safeguards assessment completed in May 2021; recommendations mostly implemented. - Legal reforms in 2015 enhanced CBS autonomy and governance; financial reporting aligned with International Financial Reporting Standards. - CBS is developing emergency liquidity assistance framework and strengthening business continuity plan with IMF TA. - Authorities’ views: agreed financial risks declined relative to the pandemic; NPLs manageable, provisioning ample, bank profitability supported by FX income; committed to strengthening regulatory and supervisory framework, including credit registry and national digital ID; reviewing PFI governance and prudential guidelines, including for DBS. ### AML/CFT framework and correspondent banking relationships (CBRs) - CBR pressures and financial integrity concerns: - Two domestic banks lost their U.S. dollar CBRs in 2021; their AUD and NZD CBRs remain active. - Money Transfer Operators (MTOs), especially smaller ones, face challenges maintaining access to banking facilities abroad. - Key drivers of CBR pressures: low profitability, weaknesses in AML/CFT supervision, and ML/TF risks from the banking sector, MTOs, and trust and company service providers (TCSPS) in the offshore sector. - Recent developments: - Updated national ML/TF risk assessment (NRA) and national AML/CFT strategy approved by cabinet in May 2024. - In September 2024, the Asia Pacific Group on Money Laundering (APG) approved two FATF Recommendation upgrades, and one downgrade for Samoa, following amendments to the Money Laundering Prevention Act (MLPA) in 2018 and enactment of Trustees Company Act in 2017. - Samoa remains on the EU list of non-cooperative tax jurisdictions; authorities plan to amend laws to address EU concerns, including preferential tax treatment of companies in the offshore center with limited economic substance. - Key reform priorities to mitigate CBR pressures: - Legal framework reforms: amend the Money Laundering Prevention Act (MLPA) and regulations to cover all AML/CFT preventative measures in international standards; provide powers for AML/CFT supervisors including sanctioning powers; require FIs and DNFBPs to implement a risk-based approach; establish the FIU in law and protect its operational independence; broaden definitions including PEPs. - Improve supervision: implement risk-based supervision by the CBS, Samoa International Financial Authority, and Samoa Financial Intelligence Unit; focus on high-risk sectors identified in the 2024 NRA (banks, MTOs, TCSPs, international financial services sector, casinos); increase resources and capacity. - Digital assets: approach any initiatives to promote digital assets with extreme caution due to ML/TF concerns and potential macroeconomic and financial stability risks. - Other priorities: roll out the e-KYC facility and National Digital ID for more efficient customer due diligence; improve transparency of beneficial ownership for domestic legal persons, banks, MTOs, and the offshore sector. - Timing: the authorities have a window to improve their AML/CFT regime ahead of Samoa’s next APG mutual evaluation in 2027. *SAMOA — INTERNATIONAL MONETARY FUND* ### 39. Given low ML/TF risks from remittance payments, effort should be made to streamline ### 39. Given low ML/TF risks from remittance payments, effort should be made to streamline ### AML/CFT risks and remittances — findings and implications - Risk assessments published by the national and foreign authorities as well as international organizations highlight low domestic and foreign ML/TF risks from cross-border payments. - A targeted review of ML/TF risks pertaining to remittances confirms limited risks. - Implication: potential opportunities for supervisory guidance, simplified due diligence, and regulatory harmonization to apply from both sides of the main remittance corridors. - Recommendation: Authorities’ outreach on CBR pressures to key foreign regulatory authorities should leverage the understanding of low ML/TF risks from remittances and focus on streamlining AML/CFT controls in line with the identified risks. *SAMOA — Authorities’ related commitments and actions* - The authorities reaffirmed their strong commitment to further strengthen the legal and institutional AML/CFT framework and to demonstrate the effectiveness of their AML/CFT system ahead of an upcoming APG mutual evaluation. - Actions highlighted: - Ensuring beneficial ownership transparency in the offshore sector. - Implementing an economic substance requirement to aid removal from the EU list of non-cooperative jurisdictions for tax purposes. - Streamlining the AML/CFT requirements in the main remittance corridors in line with identified low ML/TF risks. - Continuing outreach to the key foreign regulatory authorities to address CBR and de-risking pressures. ### Structural challenges and policy measures to foster inclusive and sustainable growth - Key structural constraints: - Remoteness and small size limit economies of scale and external competitiveness. - Merchandise goods exports remain low at about 4 percent of GDP. - FDI inflows are low in Samoa compared to peers. - Weak public investment since the pandemic and growing migration of workers abroad have raised concerns about medium-term productive capacity. - Policy measures underway: - Establishment of the Samoa Export Authority. - Publication of an agriculture and fisheries sector plan. - Clarification of investment procedures in the National Investment Policy Statement. - Introduction of the Policy for Temporary Labour Migration under the Labour Mobility Schemes of Australia and New Zealand, including tightening recruitment processes and capping the number of workers that can be mobilized annually (non-binding). - Focus on improving labor market conditions: increasing minimum wages, improving educational outcomes and vocational and technical skills, and aligning labor standards with international best practices. ### Further policy actions recommended - Boosting trade and FDI: - Review foreign investment restrictions and regulations, including the restricted and reserve list. - Expedite customs clearance and streamline export procedures. - Consult with the private sector on trade-related regulations. - Mitigating effects of higher migration: - Encourage female labor force participation; measures could include increasing enrollment in early-childhood education, providing affordable childcare facilities, and promoting flexible work environments. - Improve domestic labor market conditions, promote private sector development, and strengthen social safety nets. - Provide upskilling and reskilling opportunities for returning seasonal workers to facilitate skill transfer and re-integration. - Enhance data on migration to inform labor market and migration policies. - Up-skilling the labor force: - Focus on industry-led training programs and skill development, particularly for tourism and affected sectors. - Strengthen the health and education system to build human capital. ### Staff appraisal — macro outlook, policy priorities, and specific recommendations - Near-term outlook: - GDP growth in FY2025 is projected to remain well above pre-pandemic levels, supported by preparations and hosting of CHOGM and the envisaged expansionary fiscal stance. - Inflation is expected to rise moderately as the economic recovery continues. - GDP growth is expected to converge towards the historical average of about 2 percent over the medium-term. - Risks: - Tilted to the downside, including from a slowdown in key trading partners amid heightened global uncertainty. - Upside risks to inflation from external and domestic sources. - Fiscal and monetary policy observations and recommendations: - Large fiscal surpluses have improved debt dynamics; upgrade to Samoa’s debt distress rating from high to moderate in the IMF-WB DSA noted. - Low capital spending is undermining the economy’s productive capacity. - Near-term focus: overcoming capacity constraints to execute public investment, including climate-related projects. - Maintain PFM controls over the DDP, including through the election cycle. - Improve fiscal data and implement further PFM reforms. - Fully reverse pandemic-era utility tariff cuts, while implementing any support for low-income households transparently through the budget. - Monetary policy normalization should continue, aiming to guide interest rates higher. - The exchange rate peg remains the appropriate nominal anchor. - To guard against domestic inflation risks, monetary policy should aim to reduce excess liquidity to reasonable levels and push real short-term rates to positive territory. - Financial sector and CBR recommendations: - Further strengthen financial supervision and regulation, including for PFIs. - Priorities: operationalize the emergency liquidity assistance framework; enhance prudential standards; upgrade governance and prudential regulations for PFIs. - Establish an online credit registry to help advance financial inclusion. - Strengthen the AML/CFT legal framework and implement effective risk-based supervision to prepare for the APG mutual evaluation in 2027. - Ensure the timely rollout of the e-KYC facility and the National Digital ID to improve customer due diligence. - Given low ML/TF risks from remittance payments, effort should be made to streamline regulatory and supervisory requirements on both sides of main remittance corridors. *Source: IMF staff report excerpts for Samoa (content unit: 1wsmea2025001-print-pdf).* ### 52. It is recommended that the next Article IV consultation with Samoa take place on the ### 1wsmea2025001-print-pdf - 52. It is recommended that the next Article IV consultation with Samoa take place on the ### Surveillance recommendation - It is recommended that the next Article IV consultation with Samoa take place on the standard 12-month cycle. ### Growth and inflation developments - GDP developments: - Strong rebound in tourism and robust growth in net indirect taxes resulted in GDP exceeding pre-pandemic levels in FY2024. - Consumption remained resilient through the pandemic; net exports also supported the recovery. - Inflation developments: - Price pressures have eased more than in peers but have started to rise from the recent trough. - Food inflation declined in FY2024 before a small uptick in recent months. ### Fiscal sector developments - Revenue and expenditure: - Revenues have remained buoyant in FY2024, driven by strong income tax receipts. - Government expense has decreased from the pandemic highs. - Preliminary data suggests capital spending has been exceptionally low. - Fiscal balances and debt: - Continued fiscal surpluses have driven debt levels to new lows, in contrast to the experience of peers. ### Monetary and financial sector developments - Central Bank operations and liquidity: - The CBS has responded to strong FX reserve inflows and a subsequent rise of government deposits with higher OMOs, helping absorb some excess liquidity at banks. - Banking system and credit: - Subdued credit growth and strong deposit growth led to a significant decline in banks' loan-to-deposit ratio. - PFIs’ share in private sector credit has increased. - NPLs have remained slightly above pre-pandemic levels but loans remain well-provisioned. - The banking system has remained resilient with strong capital and liquidity ratios. ### External sector developments - Current account and reserves: - The current account position improved further, registering a surplus in FY2024. - FX reserves increased and coverage remained adequate at 9 months of prospective goods and services imports. - Trade and services: - Strong recovery in tourism earnings and still high remittance inflows in nominal terms supported the improvement. - Imports growth slowed as commodity prices moderated and one-off imports were unwound. - Capital and financial accounts remained positive, driven by official transfers and ‘other flows’. - The nominal effective exchange rate appreciated in FY2024, but depreciated marginally in recent months. ### Remittances - Remittance trends and channels: - Remittance inflows surged during the pandemic and remain high, providing a critical source of income to families. - Australia and New Zealand are the two main countries for remittance inflows to Samoa. - Remittances are primarily channeled through non-banks, although banks have increased their market share. - Costs: - While the average cost of remittance transfers has been falling, it remains above the G20 objective of 5 percent. - The cost of receiving remittances through banks is higher than through non-banks. ### Selected economic and financial indicators (high-level highlights from Table 1; fiscal year basis) - Output and inflation (real GDP and CPI): - Real GDP: 2020/21 -7.0; 2021/22 -5.4; 2022/23 9.2; 2023/24 9.4; 2024/25 5.5; 2025/26 2.8; 2026/27 .12.0; 2027/28 2.0 - Consumer price index (end of period): 4.1; 10.8; 10.7; 0.8; 3.5; 2.6; 3.0; 3.0; 3.0 - Central government finances (percent of GDP): - Revenue and grants: 36.5; 38.5; 34.1; 36.0; 33.0; 32.0; 31.5; 31.5; 31.4 - Expenditure: 34.7; 33.1; 31.0; 25.9; 33.1; 33.5; 33.4; 33.5; 33.6 - Overall balance: 1.7; 5.4; 3.0; 10.1; -0.1; -1.5; -1.9; -2.0; -2.2 - Gross debt outstanding: 46.3; 43.7; 33.3; 27.7; 22.5; 19.3; 20.4; 21.5; 22.6 - Money and credit aggregates (12-month percent change): - Broad money (M2): 8.1; 2.2; 16.3; 7.7; 7.5; 6.0; 6.0; 6.0; 6.0 - Private sector credit, commercial banks: 1.5; 0.2; -2.6; 3.5; 4.0; 5.; 5.; 5.; 5. - Balance of payments (percent of GDP; projections included): - Current account balance: -14.5; -11.3; -3.3; 4.0; -0.5; -1.2; -1.3; -1.6; -2.0 - Services (net): -3.9; -2.9; 10.8; 17.6; 16.4; 16.0; 16.0; 16.0; 16.0 - Of which: Tourism receipts (percent of GDP): 0.0; 0.0; 0.0; 16.4; 21.0; 21.9; 21.5; 21.5; 21.5 - Gross official reserves (million U.S. dollars): 288.5; 303.2; 401.7; 494.3; 503.8; 506.2; 523.9; 542.9; 557.5 - Reserves coverage (months of next year's imports): 7.9; 6.4; 8.3; 9.0; 8.8; 8.5; 8.5; 8.3; 8.2 ### Fiscal tables and projections (high-level highlights from Tables 3a/3b) - Central government nominal figures (millions of tala): - Total Revenue: 2020/21 791; 2021/22 835; 2022/23 873; 2023/24 1,060; 2024/25 1,056; 2025/26 1,085; 2026/27 1,122; 2027/28 1,179; 2028/29 1,237 - Total Expenditure: 753; 719; 795; 763; 1,059; 1,135; 1,190; 1,254; 1,322 - Overall balance (millions of tala): 38; 177; 82; 97; -3; -50; -67; -75; -85 - Fiscal ratios (percent of GDP): - Total Revenue: 36.5; 38.; 34.1; 36.0; 33.0; 32.0; 31.5; 31.5; 31.4 - Total Expenditure: 34.7; 33.1; 31.0; 25.9; 33.1; 33.5; 33.4; 33.5; 33.6 - Overall balance: 1.7; 5.4; 3.0; 10.1; -0.1; -1.5; -1.9; -2.0; -2.2 - Total central government debt: 46.3; 43.7; 33.3; 27.7; 22.5; 19.3; 20.4; 21.5; 22.6 - Stock of government deposits (percent of GDP): 14.8; 16.4; 14.1; 19.5; 15.4; 11.0; 10.4; 9.9; 9.5 ### Monetary and financial tables (high-level highlights) - Central Bank and depositary metrics (selected): - Broad money (end period, millions of Tala): 1,225; 1,325; 1,355; 1,575; 1,697 - Monetary base (12-month percent change): 7.3; 23.8; -2.0; 42.5; 0.2 - Credit to private sector, commercial banks (12-month percent change): 5.9; 1.5; 0.2; -2.6; 3.5 - Financial system and nonbank financial corporations: - Credit to private sector, other financial corporations (12-month % change): 9.9; -0.9; 4.9; 2.9; 8.2 - Credit to private sector, total financial system (12-month % change): 10.9; 2.0; 0.6; -0.1; 3.7 - Commercial bank soundness (selected ratios): - Regulatory capital to risk-weighted assets, ratio: 28.7; 28.1; 28.8; 33.2; 29.0 - Non-performing loans to total gross loans, ratio: 2.9; 3.7; 4.6; 4.6; 4.6 - Return on assets, ratio: 2.4; 2.8; 2.5; 2.8; 3.1 - Liquid assets to total assets, ratio: 16.8; 19.9; 17.7; 26.0; 27.5 - Total loans to total domestic deposits: 85.6; 79.8; 76.8; 63.5; 65.9 ### Integration of surveillance and capacity building (areas of engagement) - Areas listed include: Public Financial Management; Expenditure framework; Revenue policy and administration; Financial supervision and regulation; Financial market development; Correspondent Banking Relationships; Infrastructure; Private sector development; Governance; Poverty/Gender/Inequality; Climate change; Natural Disaster Management; Financial inclusion measures; Economic statistics; Macro frameworks and modeling. - Timeline indicators: activities noted as before 2023, 2023, and planned/ongoing for 2023 (calendar year) with participation from IMF, World Bank, Asian Development Bank. *Source: Samoa — IMF staff report and supporting tables and figures (text and tables as provided).* ### Annex I. Implementation of Previous IMF Recommendations ### Annex I. Implementation of Previous IMF Recommendations ### Fiscal policy — implementation and outcomes - Recommendation: Maintain an expansionary fiscal stance in the near term, prioritizing timely execution of public investment. - Outcome: The fiscal stance remained contractionary in FY2024 and measured public expenditure remained low. - FY2025: The budget envisages an expansionary fiscal stance and an increase in capital spending to pre-pandemic levels. - Recommendation: Gradually reverse pandemic-related electricity tariff cuts to cover the EPC’s operational costs, with any subsidies channeled through the budget. Mitigate fiscal risks from SOEs. - Outcome: Electricity tariff cuts were reversed for public sector and commercial entities, but remain in place for residential entities. - SOE risk management: The SOE Health Check Tool has been implemented, and credit risk assessments are being conducted for government guaranteed loans. - Recommendation: Strengthen PFM, including by strengthening budget planning and execution and maintaining strict controls over the DDP. - Outcome: Self-assessment of the Public Expenditure and Financial Accountability (PEFA) framework is underway to identify reform priorities. Cash flow recording, monitoring, and forecasting are improving. Strict PFM controls on DDP continue to be enforced, reducing associated fiscal risks. - Recommendation: Gradual, revenue driven, fiscal consolidation in the medium term given high risk of debt distress. - Outcome: Large fiscal surpluses helped improve debt dynamics, resulting in an improvement in Samoa’s debt rating from high to moderate risk of debt distress. - Revenue: Revenue performance has remained strong due to improved revenue administration. The authorities updated the Compliance Improvement Plan to strengthen revenue administration and collection (particularly targeting tax arrears) and the TIMS has been more widely implemented. ### Monetary and financial sector — implementation and outcomes - Recommendation: Begin with gradual monetary policy normalization. - Outcome: In FY2024, the Central Bank of Samoa (CBS) began normalizing monetary policy by increasing the size and tenure of securities in Open Market Operations. However, interest rates remain low amid significant excess liquidity. - Recommendation: Establish a National Digital ID and a credit bureau to reduce credit risk and promote financial inclusion. - Outcome: The National Digital ID law was passed in FY2024, with rollout expected over the next two years. Work is in progress on the online credit registry legislation. - Recommendation: Strengthen risk-based AML/CFT supervision and enhance compliance with customer due diligence and suspicious transaction reporting obligations. - Outcome: An updated national AML/CFT risk assessment (NRA) and a national AML/CFT strategy have been approved. The National Digital ID law was passed in FY2024. Work towards an e-Know-Your-Customer facility is ongoing. - Recommendation: Improve credit intermediation and reduce fiscal risks by strengthening the DBS balance sheet and reorienting its operations. - Outcome: Capital injections have been made into DBS in recent years. NPLs have been restructured and operations are being reoriented away from large tourism projects toward small businesses and agriculture. - Recommendation: Improve the bank resolution framework and Emergency Liquidity Assistance (ELA) framework. - Outcome: The CBS is preparing draft amendments to the Financial Institutions Act and regulations to establish the ELA framework (based on Fund TA). ### Structural reforms and climate change — implementation and outcomes - Recommendation: Implement the priorities of Pathway for the Development of Samoa five-year plan, leverage PACER-PLUS, diversify exports, improve the business environment, promote private participation, and reduce trade facilitation costs. - Outcome: Samoa Export Authority has been established. The FY2022-2027 Agriculture and Fisheries Sector Plan focuses on improving production at the district level to raise exports. The FY2025-2029 Trade, Commerce and Manufacturing Sector Plan outlines policies to prioritize private sector growth, trade arrangements, and exports. Samoa continues to implement the WTO Trade Facilitation Agreement. - Investment facilitation: Government published the National Investment Policy Statement and the Samoa Investment Guide. - Recommendation: Expand training programs to rebuild skilled labor supply, especially among youth; in tourism, expand training and provide greater access to credit for renovations. - Outcome: Tourism recovered to pre-pandemic levels though some labor shortages persist. Government expanded Technical and Vocational Educational and Training (TVET) programs via partnerships with local universities and institutions such as the Australia Pacific Training Coalition (APTC). - Labor law: The Labor and Employment Relations Amendment Act 2023 aims to align with international labor standards, improve worker protection, and adjust the minimum wage every two years. - Recommendation: Increase climate-related investments through grants or highly concessional loans; strengthen natural disaster preparedness and response. - Outcome: Climate resilience projects are being implemented, though limited capacity is a key challenge. Efforts are being made to integrate climate risk considerations into planning and procurement of public investment projects. *Prepared from Annex I. Implementation of Previous IMF Recommendations — 1wsmea2025001-print-pdf* ### Annex IV. Risk Assessment Matrix ### Annex IV. Risk Assessment Matrix ### Risk Assessment Matrix (RAM) — Overview - The RAM shows events that could materially alter the baseline path (the most likely scenario to materialize in the view of IMF staff). - The relative likelihood of risks listed is the staff’s subjective assessment of the risks surrounding the baseline: - “low” indicates a probability below 10 percent, - “medium” indicates a probability between 10-30 percent, - “high” indicates a probability of 30 percent or more. - The RAM reflects staff views on source of risks and overall level of concern as of the time of discussions with the authors. - Non-mutually exclusive risks may interact and materialize jointly. ### Key procedural notes - The RAM conveys staff judgements about the relative likelihood and potential economic impact of risks around the baseline. - The characterizations of likelihood and concern are staff subjective assessments at the time of author discussions. --- ### Annex V. Managing Excess Liquidity in Samoa ### Historical and recent liquidity developments — Key findings - Banking system liquidity after 2009-2018: - Stayed around $100-$200 million tala during 2009-2018. - Began rising in 2019 and hovered around $250-$350 million tala during the pandemic. - Surged further in 2023 and peaked at over $500 million Tala in early-2024. - The increase in liquidity in recent years is largely driven by the significant rise in Net Foreign Assets (NFA). - FX reserve inflows contributing to NFA increase were fueled by: - A marked increase in government grants and budget support from bilateral and multilateral partners during the pandemic. - High FX purchases from banks owing to strong remittances and a robust recovery in tourism earnings in 2023-2024. - The liquidity impact of government-related FX inflows was somewhat mitigated by a corresponding increase in the government’s net position with the CBS, particularly since mid-2023, including: - Government deposits related to budget support received from abroad through the CBS. - Government external payment obligations processed through the CBS. - Footnotes: - Liquidity conditions are determined by autonomous factors on the central bank’s balance sheet not controlled by its monetary policy role. - The deposits are interest-bearing local-currency and foreign currency demand deposits. - The CBS has not extended any credit to the government during this period. ### Bank balance sheet developments and implications - Commercial bank deposits have seen a sharp increase in recent years, driven by: - Large expansion in household deposits relative to the historical norm. - Business deposits (including foreign-currency deposits), possibly reflecting strong remittances and tourism-related revenues. - More recently, government deposits have risen relative to the historical norm amid budget under-execution. - PFI deposits (e.g., SNPF and UTOS) have continued to grow steadily despite outward investment by PFIs. - Consequences: - Strong deposit growth together with subdued bank lending since the pandemic caused the bank loan-to-deposit ratio to fall below 80 percent from more than 100 percent in the pre-pandemic years. - These factors have kept bank liquidity elevated despite a notable increase in OMOs of CBS securities. - Footnote: - Due to a bank deposit rate cap introduced during the pandemic to improve monetary transmission and reduce competition for PFI deposits among banks, SNPF and UTOS increased outward investments given limited local investment opportunities. ### Near-term outlook and drivers - Going forward, slower FX reserve accumulation with a normalization in tourism earnings growth and remittances from their recent highs is expected to help contain further surges in liquidity. - Supporting factors: - Continued recovery in bank lending. - A decline in government deposits at banks owing to an expansionary fiscal stance and external debt repayments. - However: - At the current scale of OMOs, liquidity is likely to remain at elevated levels in the near-term, suggesting that additional liquidity management measures may be needed to absorb excess liquidity. ### Policy measures to address high excess liquidity — Recommendations and options - Operational constraints (context): - Samoa’s liquidity management is constrained by: a less active inter-bank market, absence of government and private securities markets, lack of adequate collateral, an inactive secondary market for CBS securities, only four banks (two foreign with headquarter limits), uneven distribution of liquidity among banks, and a less developed monetary policy framework. - Possible measures (detailed): - Increase the scale of OMOs with a greater focus on longer-term maturities to raise the outstanding stock of CBS securities relative to excess liquidity. - Note: Currently, OMOs remain small relative to outstanding excess liquidity and about two-thirds of the OMOs are undertaken for short-term maturities (14, 28 and 56 days). - CBS securities of 14-days, 28-days, 56-days, 91-days, 182-days and 365-days maturities are auctioned in OMOs. - Because CBS securities are not traded among banks and are held until maturity, the CBS could consider rolling over securities upon maturity to smooth liquidity operations. - Consider fixed-rate full-allotment OMOs (auctioned at a specified rate with full amounts demanded by banks provided by CBS) if temporary drivers of liquidity persist and steering interest rates to 2-3 percent becomes challenging. - Caveat: Such operations, on top of ongoing OMOs, would entail higher costs for the CBS with fiscal implications. - According to the FY2024 Monetary Policy Statement, the CBS aims to bring the weighted average yield for OMOs to 2-3 percent compared to 0.9 percent as of September 2024. - Increase the statutory reserve deposit (SRD) ratio (last raised in 2008 to 4.5 percent) because SRD deposits are not remunerated, to absorb some liquidity at low cost to CBS and reverse as needed; effectiveness may be reduced by uneven liquidity distribution across banks. - Increase outward investment by PFIs (UTOS and SNPF) to reduce liquidity driven by PFI deposits, subject to prudential limits and the need to strengthen risk management and capacity to manage external volatility. - Improve liquidity forecasting: - The CBS’s Reserve Money Program Committee meets monthly to discuss factors impacting liquidity and decide CBS securities issuance target. - Further efforts could improve the liquidity forecasting framework and strengthen high-frequency forecasting for autonomous drivers of liquidity, in particular government cash flow. - Develop and encourage a secondary market for CBS securities; in the absence of government securities, making CBS securities eligible as collateral could help promote inter-bank lending. - Improve the functioning of CBS lending facilities to help banks’ liquidity management and reduce precautionary liquidity holdings; align lending facilities with CBS monetary policy stance to improve monetary operations. - The CBS currently has four standing lending facilities: the rediscount facility, repurchase facility, SRD-linked borrowing, and SRD overnight credit facility. - Institutional/fiscal considerations: - According to the CBS Act (2015), a share of the CBS’s net profit is to be paid as dividend to the government; in case of a net loss, the entire amount would be absorbed by the CBS General Reserve Account. ### Box 1 — Recent policy measures in small states to manage liquidity (summary of practices) - Common challenges across small states and Pacific Island countries: - High liquidity driven by government-related inflows, remittances, private capital; uneven distribution of liquidity among banks; less-developed inter-bank and government bond markets; weak bank lending. - Examples of measures taken by other countries: - Barbados: exploring establishing a benchmark policy rate; daily liquidity forecasting framework. - Bhutan: new liquidity framework with overnight, weekly and 90-day operations; project account “sweeping” as sterilization. - Cabo Verde: issuing long-term sterilization instruments at fixed-rate tenders; targeting at least 8 percent sterilization compared to international reserves. - São Tomé and Príncipe: issuance of CDs at variable rates to reduce excess reserves and plan to maintain below STN 200 million until core inflation moving average declines below 3 percent. - Tonga: raised SRD ratio in 2023; introduced and later ceased a deposit facility for the public pension fund. - Papua New Guinea: adjusted Kina Facility Rate and cash reserve requirement; increased OMOs and started fixed-rate full-allotment auctions; implemented new tools in 2024 including overnight standing facilities and reserve averaging. - Vanuatu: raised SRD ratio in 2024 and conducted OMOs. - Solomon Islands: used cash reserve requirements and OMOs via central bank-backed bills and Treasury bills. --- ### Annex VI. Key 2015 FSAP Recommendations — Selected implementation status - Improve the quality and coverage of data: - Financial Soundness Indicators are being produced for commercial banks and PFIs broadly in line with international standards. - CBS is improving coverage and granularity of data with IMF TA support. - Upgrade regulatory and supervisory frameworks: - The CBS Act (1984) was amended in 2015 and commercial bank prudential guidelines were revised in January 2021. - CBS is working on draft amendments to the Financial Institutions Act (1996) to incorporate corrective actions, resolution options, enforcement, governor’s discretion, and to include cyber risk and green financing. - CBS capacity building: - Number of staff has increased gradually but capacity remains a challenge; continuous training on report forms, licensing, and onsite inspections. - Banking supervision and PFIs: - Regular on-site inspections and financial statement assessments for commercial banks are being conducted. - Financial Soundness Indicators for PFIs are produced; CBS analyzes PFI financial statements quarterly. - Prudential regulations for insurance companies and SHC issued in 2020; review of prudential standards for DBS and SNPF ongoing. - On-site inspections of PFIs have begun and are planned periodically. - Offshore bank supervision: - SIFA separated promotion and supervisory functions in October 2016; Cabinet approval in December 2020 to establish a separate company for promotion to allow SIFA to focus on supervision. - PFIs governance and mandates: - No reforms to PFIs’ mandates yet; government reviewing DBS mandate to reorient lending toward MSMEs and agriculture. - Crisis preparedness and stability: - CBS working on Financial Institutions Act amendments to provide enforcement and resolution instruments. - With IMF TA, CBS is working on regulations and policy framework to establish an Emergency Liquidity Assistance framework. - Financial Stability Committee created but only one meeting has taken place; regular meetings contingent on additional stress test results. - An in-house preliminary unofficial stress testing exercise was conducted by CBS staff in 2018; macro-financial mapping not yet undertaken. - Central bank policies and operations: - No new lending to DBS and SHC via the credit line facility since May 2018; DBS and SHC are making repayments on previous CLF loans. - Access to finance and infrastructure: - Work in progress on the credit registry bill; a personal property registry implemented in 2016. - Insurance supervision: CBS implemented several measures to establish a risk-based system and is working on draft amendments to the Insurance Act (2007). - Payment systems: Automated Transfer System (ATS) and Central Securities Depository (CSD) established in 2023 and being used by banks; CBS working to onboard Ministry of Finance and Ministry of Customs and Revenue and to activate the Immediate Funds Transfer (IFT). *Source: Annex IV–VI (including “Managing Excess Liquidity in Samoa”), as provided in the supplied content.* ### 1. Samoa has one of the largest diasporas in the Pacific, with a significant share of the ### Samoa: Migration, Labor Mobility, and Economic Impacts ### Migration overview and demographics - Permanent emigration from Samoa increased from around 40 percent of the total population in 1990 to over 60 percent in 2020; only Tonga has a higher emigration share in the region. - The largest Samoan diaspora is in New Zealand; Australia and American Samoa also have large Samoan emigrant populations. - Majority of Samoans settled abroad are relatively young (less than 30 years old). - Slightly more Samoan females live abroad than males. ### Temporary labor mobility schemes and participation - Samoa participates in established bilateral schemes: Recognized Seasonal Employer (RSE) Scheme (New Zealand, officially began in 2007), Pacific Labour Scheme (PLS) and Seasonal Workers Program (SWP) of Australia, consolidated into the Pacific Australia Labour Mobility (PALM) scheme in 2022. - Additional pathways exist for New Zealand under an essential skills category; recruitment is allowed through a work-ready pool and directly by employers, facilitated by the Labor and Employment Export Program (LEEP) Division. - Samoa has been the third largest supplier to the labor mobility schemes in the Pacific, in absolute numbers and as a share of its own population, after Tonga and Vanuatu. - Participation trends: - Pre-COVID, participation reached about 1.5 percent of the population in 2019. - After a temporary decline in 2020-21, participation picked up significantly, exceeding 3 percent of Samoa’s population. - Sectoral composition: Samoan workers usually work in agriculture, fishing, tourism and meat processing sectors in Australia and New Zealand. - Gender composition: women constitute only around 5 percent of participants from Samoa (one of the lowest in the region). ### Economic benefits and costs - Remittances and compensation of employees are the main economic benefits supporting families and communities in Samoa. - Samoa is the second largest recipient of remittances in the Pacific after Tonga, with around 80 percent of Samoan households receiving remittances. - Remittances surged following the pandemic, in part due to increased participation in labor mobility schemes, and played a counter-cyclical role when tourism collapsed. - Earnings and income estimates: - Staff estimates indicate that seasonal workers earn between 3.5 to 4.5 times higher wages per hour than the average wage in Samoa. - For RSE, the average residual income for a Samoan fruit picker during 2017-2018 was $14,601 to $18,723 tala. - The average gross monthly income in Samoa for paid employment is around $1,444 tala (or on an annual basis of SAT$17,328). - Estimates suggest unskilled workers’ average residual income is comparable to the annual average earnings of formal sector workers in Samoa. - Remittances tend to be used for consumption as well as investment in human capital and housing. ### Labor market impacts and skills composition - Labor mobility schemes were traditionally targeted at low and unskilled workers but have expanded (PALM now targets more skilled workers in hospitality, aged care, and tourism). - Data from Samoa’s 2022 Labour Market Survey suggests significant proportions of skilled workers left jobs in key industries to work overseas. - Construction and tourism-related sectors saw significant resignations of workers who joined the labor mobility schemes. - Around 28 percent of returned migrant workers had tertiary levels of education or technical/vocational training. - The rise in emigration and scheme participation has implications for the domestic labor market and potential skills shortages. ### Government policy framework and recent reforms - In August 2023, Samoa released the “Policy for Temporary Labour Migration under the Labour Mobility Schemes of Australia and New Zealand.” - Key provisions of the policy: - Capping the number of workers mobilized annually to 6000 for New Zealand and another 6,000 for Australia. - Tightening selection to prioritize the most vulnerable communities (those unemployed and living below the basic needs poverty line of 55.80 tala per week). - Involvement of District Development Committees in the selection process. - Cost recovery measures: administration fee for workers ($50 tala) and participation fee for constituency committees ($1000 tala). - The cap on workers is currently not binding and should not significantly impact the migration scheme. - Accreditation and charging of fees for agents and approved employers is pending and under discussion. - The involvement of District Committees and other changes should be monitored to ensure smooth operations and protection of worker interests. ### Policy recommendations and capacity-building measures - Improve domestic labor market conditions to mitigate incentives for outward migration: - Implement labor and product market reforms focused on private sector development and diversification to create local investment and employment. - Review foreign investment restrictions and regulations to facilitate FDI inflows and diversification. - Strengthen social safety nets, education and training, and align training to sectors with significant labor shortages. - Encourage female labor force participation to offset labor force declines: - Increase enrollment in early-childhood education, childcare availability, and promote flexible work environments. - Consider replicating practices from Kiribati to increase women’s participation in labor mobility schemes. - Reintegration support: - Provide upskilling and re-skilling opportunities for returned seasonal workers to facilitate skills transfer and reintegration. - Financial literacy programs: - Increase financial literacy of seasonal workers and their families to improve decisions on income use, saving, and investing. - Enhance migration data collection: - Current data is limited (Samoa Bureau of Statistics only provides total departures and net migration); improved, detailed data would support better policy formulation. ### Box: Kiribati — good practice example for increasing women’s participation - Kiribati adopted a National Labour Migration Policy (NLMP) and Action Plan in 2015 to promote decent foreign employment and protect workers, with an explicit objective “to create equal opportunities for overseas employment for disadvantaged groups, including women.” - The action plan includes assessment of access by women to seasonal work schemes and the possibility of quotas if women are inadequately represented. - Between 2007-2022, women accounted for 37 percent of the total number of Kiribati recruits for the RSE scheme. - Higher female share credited to a dedicated Overseas Employment Unit and Ministry encouragement for accredited employers to provide more work opportunities for women. *Source: IMF staff analysis in the Samoa country report.* ### Annex X. Implementation of 2022 CMAP Recommendations ### Annex X. Implementation of 2022 CMAP Recommendations ### National Climate Strategy - Recommendation: Adaptation plans that include costs of adaptation investment should be included in the Public Sector Investment Plan (PSIP) or other suitable document. - Progress: Cost of adaptation investment is included in the PSIP but not explicitly detailed in the document or other materials. - Recommendation: Formalize a disaster risk financing strategy consistent with National Disaster Management Plan, improving availability of information on damages and losses. - Progress: The Disaster Risk Financing (DRF) Policy 2022-2025 has been approved by cabinet. The document assessed the DRF instruments, identified strategic priorities, and designed a three-year implementation plan. - Recommendation: Keep national and sectoral plans updated. - Progress: The Samoa national development plan and sector plans with mainstreamed climate and disaster resilience strategies has increased from ten in 2023 to eleven in 2024. ### Mitigation - Recommendation: Increase excise taxes on kerosene and LPG and adjust these excise taxes in line with annual inflation. - Progress: No change. - Recommendation: Tax electricity at the standard VAT rate of 15% and ensure the electricity tariff covers cost of provision. - Progress: The government reversed some electricity tariff cuts for all non-domestic consumers including commercial consumers and all Government agencies in 2023, although cuts for domestic consumers remain in place. No significant progress on VAT policy reform. - Recommendation: Consider recycling tax revenue from mitigation measures to strengthen the social safety net. - Progress: NA. - Recommendation: Use feebates to encourage the uptake of fuel-efficient vehicles and energy efficient appliances. - Progress: While not through feebates, the government has rolled out the energy sector plan with the aim of expanding renewable energy use and increasing the efficiency of non-renewable energy use. ### Disaster Risk Management - Recommendation: Develop and maintain a centralized registry of public fixed assets. - Progress: Samoa Assessment Management System has been upgraded to inform the maintenance needs of infrastructure and to build climate resilience. The approved Asset Management Policy Framework 2024 would assist in the implementation of this initiative. - Recommendation: Include disaster and climate risks in budget documents for a comprehensive contingent liability framework. - Progress: Building climate resilience has been listed as one of the key priorities in budget documents. However, the considerations are not from the perspective of contingent liabilities. - Recommendation: Strengthen social protection for vulnerable households in disaster response and by introducing digital ID. - Progress: Following the passage of legislation in FY2024, the national digital ID system is expected to be rolled out in FY2025-FY2026. The approved National Social Protection Policy Framework 2023 guides social protection measures for Samoa. ### Adaptation - Recommendation: Strengthen planning through risk zoning, resource mapping, and risk monitoring. - Progress: The Multi Hazard Early Warning System are established and operating since May 2024. The hazards observational network is improving. - Recommendation: Conduct climate risk assessment consistently as part of adaptation planning, particularly at the sector level. - Progress: No significant progress has been observed. - Recommendation: Use a common methodology for the cost-benefit analysis of adaptation projects, obtaining information from consistent project monitoring & evaluation. - Progress: Cost-benefits analysis has been used in some adaptation projects and ongoing efforts are underway to enhance capacity for conducting the cost-benefit analysis. - Recommendation: Incentivize adaptation in the private sector by enforcing regulations and improving financial inclusion for farmers and small businesses. - Progress: The government is committed to promote sustainable use of the natural resources and explore ways to support eco-tourism. Petrol stations that comply with the government’s environment standards increased from 70 percent in 2022 to 92 percent in 2023. ### Financing Climate Policies - Recommendation: Scale up ex-ante investments in climate adaptation by pursuing additional grant financing. - Progress: The government has gained more access to grants and funds from the World Bank and Asian Development Bank for building and upgrading climate-resilient infrastructure. - Recommendation: Take a strategic view in matching climate project proposals to those financing sources that can be accessed with reasonable effort and at acceptable cost. - Progress: Several World Bank and Asian Development Bank-funded projects align with Samoa’s need to build climate resilience. - Recommendation: Complete costing of adaptation and mitigation policies to enable accurate estimation and communication of financing gaps. - Progress: No significant progress has been observed. ### Public Investment and Financial Management - Recommendation: Update project preparation and Environmental Impact Assessments guidelines to include explicit requirements for climate impact analysis and define standard methodologies for this analysis. - Progress: Building climate resilience is now being considered in assessing public investment projects. - Recommendation: Improve transparency of climate-related spending by including PSIP in budget documents, defining climate-related selection criteria in prioritizing projects, and develop climate tagging over time. - Progress: PSIP is included in budget documents (Fiscal Strategy). Climate-related spending is not clearly highlighted but aggregated at the Environment Sector level. On project prioritization, there is an existing climate-related selection criteria which is linked to the PDS Key Priority Area of Secured Environment and Climate Change. - Recommendation: Strengthen climate-sensitive budgeting, through an updated budget circular, appropriate maintenance allocations, rigorous project monitoring, climate spending reviews and systematic ex-post audit and review of climate investment. - Progress: No significant progress has been observed. *Annex X. Implementation of 2022 CMAP Recommendations* ### 3. Central government debt (referred to hereafter as public debt) was 27.7 percent of GDP in ### 3. Central government debt (referred to hereafter as public debt) was 27.7 percent of GDP in FY2024 ### Public debt levels and composition - Central government debt (public debt) was 27.7 percent of GDP in FY2024, a decrease of 5.6 percent of GDP from FY2023. - Public and publicly guaranteed (PPG) debt totaled 31.3 percent of GDP in FY2024, of which guarantees were 3.4 percent of GDP. - External public debt was US$277.5 million (25.9 percent of GDP) at the end of FY2024, a decrease of 7.4 percentage points of GDP compared to FY2023. - Over half (57.6 percent) of outstanding public external debt at end-FY2024 was from multilateral creditors; the rest was from bilateral creditors (China and Japan). - Domestic debt increased by WST 52.3 million to reach 1.8 percent of GDP following the government’s assumption of the defaulted Samoa Airways loan. - Government guarantees were reduced by 2.9 percent of GDP compared to FY2023, primarily due to the government’s assumption of Samoa Airways’ loans (converted from guarantees to public debt) and improvements in the Development Bank of Samoa's balance sheet. ### Fiscal outcomes and drivers - The overall balance recorded a surplus of 10.1 percent of GDP in FY2024, an improvement from a surplus of 3.0 percent of GDP in FY2023. - Drivers of the strong fiscal outturn: - Buoyant revenues supported by robust grant inflows, strong economic recovery, and improved revenue administration. - Restrained spending, notably a low level of measured capital expenditure (under-execution). - The FY2025 budget envisages a deficit of 2.1 percent of GDP; staff projections suggest a narrower deficit of 0.1 percent of GDP based on more optimistic revenue assumptions. - Government deposits increased to more than 19 percent of GDP in FY2024 from 14.1 percent of GDP in FY2023. ### External debt structure and creditors - By creditor type (In percent of external debt): Multilateral creditors accounted for 57.6 percent of external debt in FY2024. - Multilateral composition (in percent of GDP): Multilateral total 14.9 percent of GDP; IDA 8.9 percent of GDP; ADB 5.5 percent of GDP; OPEC 0.4 percent of GDP; Other 0.1 percent of GDP. - Bilateral composition (in percent of GDP): Bilateral total 11.0 percent of GDP; Exim Bank (China) 9.3 percent of GDP; Japan 1.7 percent of GDP. - Memorandum items, FY2024: - Nominal GDP (millions of SAT) 2943.5 - Market rate (tala/U.S. dollar, end period) 2.75 ### Macroeconomic background, assumptions, and projections - Recent outturns: - Real GDP growth accelerated from 9.2 percent in FY2023 to 9.4 percent in FY2024. - Current account recorded a surplus of 4.0 percent of GDP in FY2024 (from a deficit of 3.3 percent of GDP in FY2023). - Inflation has eased from its 2023 peak and is approaching the 3 percent target. - Baseline assumptions and projections: - Discount rate used to calculate NPV of external debt: 5 percent. - Baseline incorporates assumed long-term effects of frequent and severe natural disasters. - From FY2031 onward, baseline reduces annual real GDP growth by 1.3 percentage points to 0.7 percent and increases the current account deficit by 0.5 percent each year from FY2031–37 (cumulative increase of 3.5 percent of GDP). The fiscal deficit rises by 0.5 percent each year over FY2031–37 (accumulating to 3.5 percent of GDP). - Key projected macro figures (as presented in the source): - Real GDP growth (in percent change) — FY2025–30: 2.7; FY2031–35: 0.7; FY2036–45: 0.7; FY2031–45: 0.7; FY2023–28: 3.3; FY2029–33: 1.0; FY2034–43: 1.0; FY2029–43: 1.0 - Inflation (in percent change) — FY2025–30: 3.0; FY2031–35: 3.0; FY2036–45: 3.0; FY2031–45: 3.0; FY2023–28: 4.7; FY2029–33: 3.0; FY2034–43: 3.0; FY2029–43: 3.0 - Current account deficit (percent of GDP) — FY2025–30: 1.4; FY2031–35: 3.5; FY2036–45: 5.3; FY2031–45: 4.7; FY2023–28: 3.0; FY2029–33: 2.7; FY2034–43: 4.6; FY2029–43: 4.0 - Overall fiscal deficit (percent of GDP) — FY2025–30: 1.6; FY2031–35: 3.8; FY2036–45: 6.2; FY2031–45: 5.4; FY2023–28: 2.4; FY2029–33: 4.1; FY2034–43: 6.2; FY2029–43: 5.6 - Additional projections and assumptions: - FY2025 growth projected at 5.5 percent, reflecting envisaged expansionary fiscal stance and hosting of CHOGM. - Headline inflation projected to rise to 3.5 percent by end-FY2025, and to stabilize around the CBS's indicative target of 3.0 percent over the medium term. - Staff projects the current account to record a deficit of 0.5 percent of GDP in FY2025. - Reserve coverage will remain at over 7 months. ### Financing mix, debt management assumptions, and contingent liabilities - Financing assumptions: - Short-term: drawdown of government deposits over next two years. - Medium-term (from FY2027 onward): concessional external financing largely in line with current debt profile; contributions assumed to increase in equal proportion with current shares of each creditor; grant element of all new loans is 43 percent on average. - Non-firmly committed financing assumed on full credit terms. - Domestic debt (predominantly Samoa Airways' liability) is projected to be repaid gradually financed by external borrowing. - Government guarantees are assumed to be rolled over at prevailing domestic interest rates. - Contingent liabilities and other public sector elements noted in coverage: - SOE debt (not guaranteed by government) 1/2 percent of GDP. - PPP 35 percent of PPP stock 0. - Financial market (default value 5 percent of GDP minimum) 5 percent of GDP. - Total of other elements (2+3+4+5) 7. ### Stress tests, tailored shocks, and debt sustainability assessment - Composite Indicator (CI) score and rating: - CI Score 3.31; CI rating Strong (CI score was 3.28 in March 2023 DSA). - Relevant indicative thresholds for Strong CI rating: - PV of PPG external debt-to-GDP ratio: 55 percent. - PV of PPG external debt-to-exports ratio: 240 percent. - PPG external debt service-to-exports ratio: 21 percent. - External debt service-to-revenue ratio: 23 percent. - Benchmark for PV of total public debt under strong capacity: 70 percent. - Standardized stress tests: - Six standardized stress tests applied to external and public DSA: shocks to real GDP growth, primary fiscal balance, exports, other external flows, exchange rate depreciation, and combination shocks. - Standardized post-shock values: baseline projection minus one standard deviation (or historical average minus one standard deviation if historical average is less favorable). - Tailored natural disaster stress test: - Default settings modified to capture Samoa’s historical experience. - Assumed new debt contracted to finance disaster damages increases public debt-to-GDP ratio by 21 percent in FY2026 (median historical damage). - Real GDP declines by 3 percent in FY2026 vs baseline. - Exports decline by 6 percent in FY2026 vs baseline. - Debt sustainability assessment: - Risks to debt sustainability assessed to be moderate. - Mechanical risk rating over a ten-year horizon is moderate for both external and overall debt. - External debt remains below thresholds in the long run; public debt stays well below indicative benchmark throughout projection period under baseline. - Certain stress scenarios push external and public debt above thresholds, often in outer years; staff considers likelihood of large and prolonged breaches to be moderate. - Final risk rating: moderate risk for external and overall debt distress. *Sources: Samoan authorities; and staff estimates.* ### 13. Under the baseline scenario, Samoa’s external debt is projected to remain below the ### Under the baseline scenario, Samoa’s external debt is projected to remain below the threshold through 2045 ### External debt — baseline projections - The PV of external debt-to-GDP ratio is expected to increase gradually from 15.6 percent of GDP in FY2025 to 51.6 percent of GDP in FY2045. - The projected increase is driven by increased external borrowing to meet financing needs, in particular spending related to natural disasters and climate change. - Despite the upward trajectory, the PV of external debt stays below the threshold of 55 percent. - Given the large share of concessional loans in external debt, the debt service-to-revenue ratio does not breach the indicative threshold. ### Stress tests and scenario outcomes - Standard stress tests: - The PV of the external debt-to-GDP ratio breaches the threshold in all standard stress tests. - For most shocks, breaches occur only in the long term (after 10 years). - The export shock triggers an earlier breach in FY2033 for the PV of the external debt-to-GDP ratio, and even earlier for the PV of debt-to-exports and the debt-service-to-exports ratio. - Historical export volatility (pandemic-related, driving the export shock): - Exports contracted by 20.6 percent in FY2020 and 61.3 percent in FY2021. - Exports expanded by 168.1 percent in FY2023 and 32.6 percent in FY2024. - Staff views these fluctuations as temporary with limited likelihood of recurrence. - Customized stress scenario (excluding export growth in FY2023-24 from historical standard deviation): - Breaches to the threshold of various debt burden indicators are delayed significantly. - In the customized scenario, the PV of debt-to-GDP breaches the threshold only from FY2042. - Tailored shocks: - A natural disaster has the largest negative impact on the debt trajectory, causing a large breach to the PV of the external debt-to-GDP ratio commencing in FY2039. - The contingent liability shock breaches the PV of the external debt-to-GDP ratio threshold slightly in FY2045. ### Public sector debt projections and stresses - The projected path of public sector debt broadly parallels that of external debt. - Under the baseline scenario, the PV of the public debt-to-GDP ratio remains below the benchmark. - Stress test outcomes for public debt: - GDP growth stress scenario leads to a breach in FY2035. - A combined stress (with all five standard stresses but with only half of the magnitude) leads to a breach in FY2044. - The natural disaster shock results in a benchmark breach in FY2042 that grows substantially thereafter. ### Drivers of debt dynamics and comparative trajectory - Primary drivers: - The primary deficits and real economic growth projected in the baseline are expected to return to being the main drivers of debt dynamics. - Comparison with the 2023 DSA: - The external and public debt trajectory in the current DSA is lower than that of the 2023 DSA. - The difference over the medium term is largely explained by a lower starting point for debt as a result of sizable fiscal surpluses in FY2023 and FY2024, and the projected use of accumulated government deposits for financing the deficit and amortization needs in FY2025 and FY2026. - Current account and domestic debt: - The current account deficit contributed largely to the accumulation of external debt during the pandemic but is projected to stabilize going forward. - Total domestic debt, including both public debt and government guarantees, is expected to continue declining as a percentage of GDP, in line with the authorities' domestic debt repayment plans. - Net domestic debt issuance remains negative in the projection period. ### Risk rating and vulnerabilities - Overall assessment: - Samoa faces moderate risk of debt distress, although with limited space to absorb shocks. - Under the baseline scenario incorporating an extended projection horizon and negative effects of climate change, none of the PPG external debt burden indicators breach their threshold at the standard 10-year horizon. - The PV of total public debt-to-GDP also remains below the estimated indicative benchmark in the baseline. - Horizon sensitivity: - Although the PV of external PPG debt-to-GDP remains well below the threshold under the baseline (with climate-related costs included) at the standard 10-year horizon, it comes close to the threshold when the projection period is extended to 20 years. - After the application of judgment, Samoa is assessed to have limited space to absorb shocks. ### Policy actions, buffers, and fiscal management - Debt composition and cash buffers: - Almost all debt is on concessional terms, which helps keep cash flow pressures manageable even if debt levels rise. - Samoa accumulated sizeable cash reserves, reaching more than 19 percent of GDP in FY2024; these reserves are expected to be used to amortize external debt over the next two years, further reducing debt burdens and increasing buffers to future shocks. - Fiscal policy stance and strategies: - The government has emphasized its policy of zero non-concessional borrowing in the budget since FY2021 and in its Medium-Term Debt Management Strategy FY2021/22-FY 2025/26 (MTDS). - Fiscal risk management and reforms: - Data on debt, public guarantees, contingent liabilities, and associated cost and risk indicators have been regularly published in the government’s quarterly debt bulletin. - Samoa has implemented reforms to better manage fiscal risks from contingent liabilities, including as part of a programmatic reform agenda under the World Bank’s Sustainable Development Finance Policy (SDFP). - Initiatives include the initiation of mandatory credit risk assessment for government guarantees and utilization of SOE Health Check Tool with the help of IMF Technical Assistance. *Source: Public Sector Debt Sustainability Analysis (text excerpt).* ### 19. Further effort to enhance resilience to natural disasters and climate change, improve PFM, ### 19. Further effort to enhance resilience to natural disasters and climate change, improve PFM, and boost long-term growth can help ensure that the improvements to debt dynamics seen in recent years is maintained ### Fiscal and debt outlook: key findings - The DSA shows that the high frequency and potentially severe damage from natural disasters and climate change is a significant risk for Samoa’s fiscal outlook. - Recent improvements in debt dynamics are recognized; staff assessment rates Samoa’s debt as sustainable with risk rating “moderate” (an upgrade from “high”). - Public sector debt (baseline): - Public sector debt: 2022 = 51.3; 2023 = 39.6; 2024 = 31.1; 2025 = 26.4; 2026 = 23.2; 2027 = 24.2; 2028 = 25.4; 2029 = 26.4; 2030 = 27.6; 2035 = 41.8; 2045 = 51.2; (Table 2 sequence exact as presented). - PV of PPG external debt-to-GDP ratio (selected projection): - 2025 = 19.0; 2026 = 15.6; 2027 = 13.1; 2028 = 13.2; 2029 = 13.5; 2030 = 13.8; 2035 = 22.9; 2045 = 51.6 (Table 1 exact entries). - Nominal external debt (selected values from Table 1): - 2022 = 43.6; 2023 = 33.3; 2024 = 25.9; 2025 = 21.5; 2026 = 18.2; 2027 = 19.4; 2028 = 20.7; 2029 = 21.9; 2030 = 23.2; 2035 = 37.7; 2045 = 81.5 (values as presented). - Gross external financing need (Million of U.S. dollars) (selected): - 2022 = 109.6; 2023 = 55.9; 2024 = -12.9; 2025 = 28.1; 2026 = 34.5; 2027 = 37.2; 2028 = 38.1; 2029 = 42.2; 2030 = 41.7; 2035 = 82.9; 2045 = 159.9. ### Climate resilience, disaster risk, and financing - Government action and donor support: - Use of contingent financing facilities from the World Bank and Asian Development Bank. - Participation in assessments of climate-related aspects of PFM and overall macroeconomic policy (PEFA Assessment of Climate Responsive Public Financial Management, 2021; CMAP, 2022). - Establishment of a standalone Debt Management Division in FY24 supported by the World Bank (SDFP). - Financing needs and recommendations: - Timely execution of high-quality public investment is essential for climate change adaptation. - Given the substantial funding gap, authorities should seek grants and highly concessional lending to finance climate adaptation projects. - Adopt grants and highly concessional lending as priority instruments for climate adaptation financing. - Consider adoption of the World Bank’s Climate Resilient Debt Clauses (CRDCs) to defer loan repayments when natural disasters occur and free resources for disaster response. - Integration and planning: - Better integration of climate considerations into the government’s budgeting and project planning processes is required. - Overcoming capacity constraints, including labor shortages that have hampered execution of public investment since the pandemic, remains a priority. ### Public financial management (PFM) and debt management measures - PFM improvements and compliance: - Government complied with the SDFP Performance and Policy Actions (PPAs), including ongoing compliance with the non-concessional borrowing policy and enforcement of on-lending and government guarantee policies. - World Bank supported preparation of on-lending and government guarantee policies, approved by Cabinet in 2020 and 2022. - For FY2023, the Ministry of Finance applied the credit risk assessment framework to Samoa Airways and Development Bank of Samoa, presented outcomes and recommendations, which were endorsed by Cabinet. - Ministry of Finance expanded reporting of government guarantees with detailed breakdowns (including by creditor and borrower) in the Quarterly Debt Bulletin. - Institutional strengthening: - FY24 support through SDFP established a standalone Debt Management Division to underpin the debt management function of the Ministry of Finance. - PFM priorities: - Enhancing PFM, including cash and debt management, can improve fiscal policy effectiveness (see ¶19-23 of IMF Country Report No. 24/312 for detailed discussion of PFM reform priorities referenced in the source). ### Growth, structural reforms, and revenue - Growth challenges and policy direction: - The government’s five-year plan Pathway for the Development of Samoa FY2021/22-FY205-26 sets out a significant structural reform agenda. - Given challenges to growth potential, authorities should explore strategies to support more sustainable and inclusive long-term growth, including measures to boost trade and FDI, and labor market policies to mitigate negative effects of higher migration while upskilling the labor force (see ¶41-43 of IMF Country Report No. 24/312 referenced). - Revenue and fiscal stance: - Continued strong revenue mobilization will remain critical given the need for expenditure on climate-resilient infrastructure and to strengthen the social safety net. - Authorities envisaged a near-term shift to an expansionary fiscal stance, focusing on executing public investment programs, including climate-resilient infrastructure. - Government reiterated commitment to sustainable fiscal management and their Medium-Term Debt Strategy, including avoiding new non-concessional borrowings and maintaining public debt below the targeted threshold of 50 percent of GDP. ### Authorities’ views and policy commitments - Authorities agreed with staff that debt is sustainable and noted preparedness for the “moderate” risk rating upgrade, including improvements in debt management capacity. - Emphasized need for grant support and access to concessional loans to finance substantial climate adaptation needs. - Ongoing efforts highlighted: - Continue improving revenue administration. - Strengthen monitoring of fiscal risks associated with SOEs. - Enhance risk management of contingent liabilities and on-lending arrangements. *Source: IMF staff report content from the provided PDF excerpt.* ### 2. Primary balance10998876656667788910101112 ### 2. Primary balance ### Sensitivity Analysis for Key Indicators of Public Debt, 2025-2045 (table headings and notes) - Table title: Table 4. Samoa: Sensitivity Analysis for Key Indicators of Public Debt, 2025-2045 - Projections time horizon in table columns: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 - Sources: Country authorities; and staff estimates and projections. - Notes: - 1/ A bold value indicates a breach of the threshold. - 2/ Variables include real GDP growth, GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows. - 3/ Includes official and private transfers and FDI. ### Key input sequences and thresholds (as presented) - Row labels and sequences from the top block: - 2. Primary balance10998876656667788910101112 - B3. Exports10101212119988111514151516161718181920 - B4. Other flows 3/109987665568788991010111213 - B5. Depreciation101111987655544566789101112 - B6. Combination of B1-B5101011109876699991011111213131415 - C. Tailored Tests - C1. Combined contingent liabilities109977655555556677891011 - C2. Natural disaster1099876665565677899101112 - Threshold232323232323232323232323232323232323232323 ### Baseline path for indicator series (presented numeric rows) - Baseline (first numeric sequence): 211818181819202123252730333538414447505255 - Baseline (percent series shown later): 62 56 57 58 58 60 63 67 73 79 86 95 104 113 122 132 141 150 158 167 176 ### Alternative Scenarios (A) — shown numeric sequences - A. Alternative Scenarios (first sequence): 2116131196420000000000000 - A. Alternative Scenarios (second percent-like sequence): 62 50 42 35 27 20 13 6 - - - - - - - - - - A. Alternative Scenarios (additional sequence): 10 11 10 9 9 8 7 7 7 7 7 7 7 7 8 8 8 8 8 8 9 ### Bound Tests (B1–B6) — each scenario sequence as presented - B. Bound Tests (headings and numeric sequences): - B1. Real GDP growth2122293338434854616875829098106114121129136144151 - B2. Primary balance212126262627282931333537404346495254576062 - B3. Exports212945454545464850515254555759606264656768 - B4. Other flows 3/212429292929303234353739424446495154565860 - B5. Depreciation212119171614141313131314151617181920212122 - B6. Combination of B1-B5211921222425272932353842465054576165697276 - B. Bound Tests (percent/path outcomes shown): - B1. Real GDP growth62 69 89 103 117 132 149 168 188 210 232 255 280 304 328 352 376 400 423 446 469 - B2. Primary balance62 65 83 84 84 85 88 93 98 104 111 119 128 137 146 155 164 173 182 190 199 - B3. Exports62 91 142 142 142 143 147 152 158 163 166 171 176 182 187 192 198 203 208 213 218 - B4. Other flows 3/62 74 91 92 92 93 97 101 107 113 118 125 133 140 148 156 163 171 178 185 193 - B5. Depreciation62 68 61 56 50 46 44 42 41 42 43 45 48 51 54 57 60 63 66 69 72 - B6. Combination of B1-B562 60 67 71 75 79 86 93 102 112 122 134 146 158 171 183 195 206 218 229 240 ### Tailored Tests (C1–C2) — sequences and outcomes - C. Tailored Tests (numeric sequences): - C1. Combined contingent liabilities212323232323242627293234374043464952555860 - C2. Natural disaster213434353536384042454851555862667073778084 - C. Tailored Tests (percent/path outcomes shown): - C1. Combined contingent liabilities62 71 73 73 73 75 78 82 88 94 101 110 119 128 138 147 156 165 174 183 192 - C2. Natural disaster62 105 108 110 112 115 120 126 134 142 152 162 174 186 198 209 221 233 244 255 267 ### Public debt benchmark and other ratio series (as presented) - TOTAL public debt benchmark707070707070707070707070707070707070707070 - PV of debt-to-GDP ratio (label present; numeric series appear elsewhere in table) - PV of Debt-to-Revenue Ratio (label present) - Debt Service-to-Revenue Ratio (label present) - Debt service-to-exports ratio (label present) - Debt service-to-revenue ratio (label present) - PV of debt-to-exports ratio (label present) ### Additional numeric rows (shorter series shown) - Shorter percent-like baseline series: 10 9 9 8 7 6 6 6 6 6 6 6 6 7 8 8 9 9 10 11 11 - Alternative scenarios short series: 10 9 9 7 7 6 5 5 4 4 3 2 2 2 2 1 1 1 0 - - - Bound tests short outcome rows (examples preserved exactly as shown): - B1. Real GDP growth10 10 11 10 11 11 12 12 13 14 16 18 19 21 23 25 27 29 31 33 35 - B2. Primary balance10 9 9 10 9 8 8 8 8 8 9 9 9 9 10 10 11 12 12 13 14 - B3. Exports10 9 9 10 9 8 8 8 7 9 13 12 13 13 13 14 14 15 15 16 16 - B4. Other flows 3/10 9 9 9 8 7 7 6 6 7 9 8 9 9 10 10 11 12 12 13 13 - B5. Depreciation10 10 11 9 9 7 7 6 6 6 6 5 6 6 6 7 7 8 8 9 9 - B6. Combination of B1-B510 9 11 11 10 9 9 9 9 10 10 10 10 11 12 12 13 13 14 14 15 - Tailored tests short outcome rows: - C1. Combined contingent liabilities10 9 9 9 8 8 7 7 7 7 7 7 7 8 8 9 9 10 11 11 12 - C2. Natural disaster10 9 11 12 11 10 10 10 10 10 11 10 10 10 11 11 12 13 14 14 15 *Sources: Country authorities; and staff estimates and projections.* --- _Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1wsmea2025001-print-pdf.pdf_