Pacific
p. 33 · Read in the full issue
Islands
Monthly
Business
Gold star from World Bank
By Robin Bromby
SIX Pacific Island nations have received high marks in the World Bank’s report card on the relative standings of the nations of the world.
The recent report covers external debt.
Within two heavy volumes ominously entitled World Debt Tables: 1990-91 , the diligent reader can find that none of the six island nations fall into the World Bank’s category of “severely indebted countries” or even in the “moderately indebted” category.
Fiji, Papua New Guinea, the Sol omons, Tonga, Vanuatu and Western Samoa fall in the best category — “other
developing nations.”
The World Bank calculates the ratio of total debt to total value of a year’s worth of exports. To take a grim example,
Madagascar has
an export-debt ra tio of 785.5 per cent; if all of Mad agascar’s exports were devoted to the repayment of external debt, it would take eight years to break even. In happy contrast, the most
recent debt ratios of the South Pacific nations range from 31.7 per cent for Vanuatu up to 163.7 per cent for Western Samoa (see table). The reason why Western Samoa’s ratio climbed so swiftly between 1988 and 1989 was not a sudden increase in the nation’s external debt, it was because that nation’s exports fell sharply, by almost 50 per cent, in 1989, dipping to about $45 million the lowest total in seven years.
Although Vanuatu’s debt-ratio is low by world standards, it is climbing sharply as it borrows to improve its infrastructure and to expand its export capacity. Fiji, with a somewhat more mature economy (and a good year in 1989) appears in the graph to have had a declining debt burden.
The World Bank classifies Third World nations into low and middle
income categories, with the breaking point being a gross national product (GNP) per capital of SSBO. The Sol omons dropped into the low-income category in 1989, while Vanuatu crossed the SSBO mark in the other direction, joining the middle-income nations. The other four South Pacific nations were in the middle-income bracket in both 1988 and 1989.
The World Bank report provides four pages of detailed, historical financial data on each of the six South Pacific nations, and on scores of others. What the report does not do, however, is to cover any of the financial activity in the other South Pacific jurisdictions. There is no data on either Nauru’s GNP, said to be one of the highest in the world, nor on her overseas investments; similarly there is nothing on the heavy subsidies that Paris and Washington direct towards many of their island territories. Finally, there is nothing on the creative financing of Palau (which has yet to pay a cent for one of the finest, most expensive oower
plants in the islands) nor on the election-time gen erosity of Guam’s politi-cians, who choose to give money to tax payers (and vo ters) rather than pay off its external debts. □
Nation Total Debt Export-Debt 1988 1989 (1980), in USS Ratio* 1987 W. Samoa $74,000,000 119.3% 93.5% 163.7%
Png
$2,496,000,000 158.5% 130.5% 161.5% Solomons Tonga $101,800,000 $45,200,000 110.3% 93.3% 89.2% 86.2% 93.7% Fiji Vanuatu $398,200,000 $31,800,000 84.6% 71.1% 27.2% 31.7% 50.3% * ratio of 100 means total external debt equals one year's exports. Source: World Bank