Money move alarms

“Never ever in a modern democratic system is a Prime Minister a Minister of Finance. We are talking about two top portfolios. It’s all new for us” – Aeau Dr. Peniamina Leavai

The Acting leader of the Opposition, Aeau Dr. Peniamina Leavai, has sounded the alarm bells about Prime Minister Tuilaepa Sa’ilele Malielegaoi’s decision to become the Minister of Finance.

While the move is yet another first for the Pacific, Aeau claims that the rearrangement of Cabinet portfolios reflects the seriousness of Samoa’s “poor financial position.”

Speaking to the Samoa Observer, Aeau described the reshuffle as an “emergency case” since Tuilaepa, he said, knows the seriousness of the issues.

“I don’t mind him (Tuilaepa) taking over as the Minister of Finance,” he said. “But you can never find that in Commonwealth countries where a Prime Minister is the Finance Minister.

“Never ever in a modern democratic system is a Prime Minister a Minister of Finance. We are talking about two top portfolios. It’s all new for us.”

According to Aeau, the new set up is telling.

“In this case, yes it’s an emergency one,” he said. “(He, Tuilaepa saw) there is something wrong with the financial position of the country.

“One would say the Prime Minister thinks (the country is in) a big mess with a lot of money lost so he had to step in with his two feet.”

A’eau might accept the situation that the Prime Minister has fashioned, but he said he believes that a Prime Minister being a Finance Minister “doesn’t go together.”

“A Prime Minister is a policy maker and development need not be guided with the financial situation of the country,” explained Aeau.

“Now that he’s Finance Minister, he’ll be dealing directly with money and he’ll be responsible for accepting loans.

“In other words, he’ll be guided by the financial situation.”

So he would have time for his new role in Parliament, Tuilaepa has decided to hand over several of his portfolios to Lautafi.

These include the Public Service Commission, Samoa Land Corporation, Samoa Bureau of Statistics, Samoa Housing Corporation and Samoa Sports Facilities Authority.

Although the Prime Minister’s choice for the new Minister of Public Enterprises Lautafi Fio Selafi Purcell “shocked,” Aeau, he said he was in support of his appointment.

He said “the man he chose has experience from overseas and it was a good choice.”

However, the Acting Leader believes such appointment means the new Minister would be “remote controlled” by the Prime Minister.

Prime Minister Tuilaepa was not immediately available for a comment yesterday.

During the swearing in ceremony last Friday, Tuilaepa said Lautafi is from Salafai and it was “appropriately righteous” for him to join Cabinet after the resignation of the former Finance Minister, Faumuina Tiatia Liuga, who is also from Savai’i.

Giving several of his portfolios to Lautafi “to keep him busy”, the Prime Minister said will mean him having enough time on his hands.

“Plenty of time for me to be the Minister of Finance,” he said then. “There is nothing new it’s all old stuff,” he added. “You just need to know how to add and take away.”

Prime Minister Tuilaepa will have a lot on his hands. The reshuffle is made not long after the latest warning from the International Monetary Fund (I.M.F.) about Samoa’s "rising debt."

The I.M.F has urged the government to curtail the accumulation of any more debt. The warning followed a visit by an I.M.F. delegation to Samoa, led by I.M.F’s senior economist, Geoffrey Bannister.

"The Samoan government has reacted appropriately to increase expenditure for recovery and reconstruction in the face of recent external shocks, including the global financial crisis, the tsunami and cyclone," Mr. Bannister says.

"However, public debt has risen rapidly in recent years, raising risks to sustainability and leaving little fiscal space to address future disasters.

"It is thus necessary to begin a process of gradual fiscal consolidation, once the recovery has taken hold."

But Tuilaepa has dismissed the warning. "We have brains too," he said, assuring that there is nothing to be alarmed about.

"There are times when we have to use our brains too," Tuilaepa said. "We don't have to just swallow (whatever advice) is given. We have to use our brains and make a decision that best suits our situation."

Prime Minister Tuilaepa said it was not unusual for major financial institutions to issue such warnings.

As a matter of fact, he recalled that between 2003 and 2004, the I.M.F. issued a similar warning.

It called on the government to stop four major projects at the time.

These projects included the construction of the SamoaTel headquarters at Maluafou, Virgin Samoa joint venture, the construction of Aggie Grey’s Resort at Mulifanua as well as the construction of Development Bank Building on Beach Road.

"I looked at it (the warning) and I said to Cabinet to go ahead (with the projects)," he said. "We have brains too."

The Prime Minister reiterated that it is not the amount of a country’s debt that its leaders should be worried about. Rather, it is a country’s ability to service the debt.

In Samoa’s case, he assured that Samoa’s debt service capacity is stable, saying the country is generating more than enough revenue to sustain the debt.

The latest warning from I.M.F follows a World Bank prediction that Samoa’s debt to Gross Domestic Product (G.D.P) ratio is expected to hit the 65 per cent mark in the next fiscal year.

According to the World Bank, public debt to G.D.P. ratio has increased from 34 per cent in 2007-2008 to 62 per cent in 2012-2013, shifting from moderate to high risk of debt distress.