W Samoa

DESPITE the fact that last year Western Samoa managed to balance its current ac count and ended the year with a histori cally high overall surplus, all is not as well as it seems. Even though the Government salted away almost 54 million tala in for eign reserves, the balance of payments has serious structural problems. The only rea son Western Samoa was able to balance its books was because imports dropped to match the slump in its exports.

The country is categorised as “Subsist ence Affluence”, that is, enough natural wealth to support the population well above minimum subsistence level, but not at the level to which it aspires. Exports were down by tala 10 million, largely due to the fall in coconut oil prices. The Government responded by tightening its credit policy and reducing development expenditure in order to bring imports down. In the 1987 Budget, the Minister for Finance an nounced more fees would be introduced to compensate for the expected further de cline in export revenue.

While the vegetable oil price has rallied I

◄ slightly, Western Samoa’s coconut indus try is beset by problems. Even the price improvement has not made its coconut oil mill a viable economic proposition it operates at a heavy loss. Many of the is lands have to come to terms with the fact that the resources they depend on are worth progressively less. In 1985 coconut oil comprised almost half the country’s to tal exports but the price they receive is now around half the 1985 levels and about one fifth the 1984 price.

Western Samoa is keen to build up its fledgling tourist industry, which now makes up 20 per cent of export revenue.

Government expenditure is expected to be lower in the coming year than last, and despite the high foreign exchange re serves, it appears that Samoa will be forced to take out a national development loan of tala 2.5 million to pay for the Govern ment’s expenditure program.

Samoa’s 161,000 people share land area of almost 3000 square km. Their GNP of $ A 170 m gives them a per capita income of $llOO.