Afualo cautions Govt.

The Tautua Party ’s Shadow Minister of Finance, Afualo Dr. Wood Salele, has warned that the government needs to be more careful in dealing with its soft loans from China.

During an interview with the Samoa Observer yesterday, Afualo said Samoa’s foreign debt has hit the billion tala mark and he claimed that more than half of this is owed to China.

Asked for a comment, Prime Minister Tuilaepa Sa’ilele Malielegaoi’s response was blunt.

“That’s none of your business,” he told the Samoa Observer.

“It is the government’s business to borrow as much money from wherever we can get it from to develop the country. That’s not your business. There are people who plan such things; you have no knowledge about what needs to be done.”

He did not elaborate.

But according to Afualo, with the China loans made for infrastructural developments like buildings, this allows China to bring in their China-based project managers, construction companies, the workers and the materials.

In all, Afualo estimates that 70 percent of the amount loaned benefits China.

“What good does that do to us because it takes away the income that we are paying back from our people?

So where is justice when we look at it?

We cannot go on like this. We cannot go on!”

Afualo said this has led to a lot of dissatisfaction from local construction companies and left many of the local carpenters jobless.

Afualo also claims there is no transparency in the loan process.

“I don’t really see any transparency in this! I would rather have the loan like any other business from a bank.”

As such, the money is given to the client who chooses the project developer and so on.

“I don’t agree with them coming here. I would rather have that 100 million... then we can second that expertise from them, but we have almost everything in Samoa.”

These issues have bothered Afualo for a while.

“And to make things worse, they not only come and build, but they also come, build and stay.”

An additional problem that Afualo sees is that the construction companies end up staying in Samoa.

And should government change hands in the elections next year, Afualo reassured that Tautua would draw the line.

He would like to see more Samoans involved in construction. At present, the Samoans who are hired are done so at the bottom level of the scale.

“We cannot go on like this. With all due respect to China, we’ve got to make sure these things are done in the right way.”

He said that China finances loans that are not normally available from other donor countries. And although it has benefitted development, Samoa still needs to be very careful, he said.

“It’s a worry. History can answer to these kinds of things. China is a generous donor like Japan. For years, Japan was Samoa’s major financier of aid.”

But China stepped in with a different deal. Concessional loans.

On a larger scale, Afualo used Greece as an example which he believes embarked on extravagant projects and could not pay off their debts. Greece’s economy collapsed and was assisted by the European Union.

Afualo can only hope that China will forgive the loans and they are written off as gifts or grants.

“What I’m trying to look at, are these millions of dollars we have loaned, the disbursement of all that. Those guys [at Treasury], manage it for us [and we are] kept in the dark with this.

“At the end of the day, we have to make sure there is an income coming into the country through these projects. We also have trade, exports are slowly improving but the major external revenue into the country is remittances.”

IMPACT ON US

Long term, there are soft loans that will cost millions more to the public. Afualo says government is embarking on the rehabilitation of the airport on soft term loans. There are also plans for the new wharf and talk of the construction of a 15-storey government building at the current location of the flea market.

“These multi-million dollar buildings, the tax payers are paying more through electricity,” he said, with so much more money going into financing government ministries.

Afualo described the new buildings by Government as luxurious, as they are all air conditioned.

“Air conditioned, at the cost of who? The taxpayers! These kind of developmental projects don’t add up.”

The building of the Tupua Tamasese Meaole Hospital was good as after more than 30 years, there is something more comfortable for patients. But at the same time, Afualo said, it has all come at a cost. Services at the hospital also need to be addressed and will continue as such.

“At the end of the day, who will pay for it? Us!”

Meanwhile, soft term loans are being financed with low interest and Samoa now sits on a billion tala debt. The rate of the economy is expected to grow at two percent yet Afualo stressed that Samoa’s debt is growing faster than that.

“If you look at the jump of the debt, it’s not sustainable. It surpasses the rate at which the economy is growing!

For me, it’s a worry!

“What can we say? The Prime Minister is a billion dollar man. And I think that figure looms around in his head, looking into billion dollar projects with billion dollar debts.”

The expectations are that these projects are fruitful and will pay for themselves. Afualo is adamant that this is not the case. He said most of the State Owned Enterprises (S.O.E) are not functioning according to their expected objective. He predicted more debts in the next budget. He predicted that if H.R.P.P. wins the next elections, it would increase the V.A.G.S.T.

“This is the dire impact that is now lurking in the dark. How can you finance this? If the revenue is not collected, increase the G.S.T. We have a billion tala debt.”

This, he said, would retard growth and will worsen income inequalities.

“If H.R.P.P comes back and I guess you know they’re probably still flying high and saying they will come back, but that’s a mystery. Tautua is really pushing hard and I believe Tautua will.”

Meanwhile in Tonga, loans to China are at TOP 233.3 million and China has warned it will not forgive the debt.

This is according to a recent statement from the Ministry of Finance, which stated that as of January, Tonga’s total public debt was estimated at TOP$392.6 million. Of this total, TOP$233.3 million is owed to China’s Export-Import (EXIM) Bank.