Pacific

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Business

Time to change tune

By Ulafale Aiavao

EVENING prayers have ended and the Bible is packed away as another ritual begins. Across Western Samoa (population 160,000) all ears are tuned to the national radio as the long list is read out of people who have received money transfers from overseas.

Money orders, foreign cash, bank drafts and other private transfers pumped a record SWS92 million into the local economy last year, equal to half the government budget. Major recipients were churches, businesses and individ uals.

The record figure disguises a troubling trend remittances are levelling off.

The SWS92 million was boosted by sympathy payments after a cyclone in February 1990. Without the cyclone, total payments would have been below the 1989 remittances level of SWSB6 million.

A decline in remittances over the next five years is forecast by the Central Bank’s deputy manager for research, Sefo Bourne. "Forty-three per cent of remit tances are from New Zealand and that economy is not doing so well at this time,” he said.

Cuts in welfare benefits by the New

Zealand government will have an effect as Samoans on the dole send some of it back to the islands.

Any hiccup in payments from Sam oans overseas concerns local officials because the other two legs propping up the Samoan economy, agriculture and foreign aid, are 1) also in decline, and 2) out of Western Samoa’s control.

Exports, never high, dropped from SWS3B million in 1985 to just SWS2O

The legs which propped up the Samoan economy are in decline

million last year. Imports are nine times the value of exports. The Central Bank estimates that 60 per cent of remittances is spent on imported goods while 40 per cent goes on local products).

Foreign aid levels (SWS3S million last year) are declining if one-off project fluctuations are discounted. Unless over seas commodity prices improve to en courage exports, the government will eat into its foreign reserves of SWSIS3 million, enough for eight months of imports, and impose stricter controls on spending.

What everyone wants to avoid is what happened 10 years ago when Samoans had 30 per cent inflation, no foreign reserves, and food shortages. The aus terity measures imposed then included quotas on money outflow, a move that

crippled many businesses importing

goods, and which scared away overseas suppliers who feared they would never get paid. The belt tightening led to a

crippling three-month strike by public

servants in 1981 which helped topple the then government at the 1982 elections.

Officials doubt whether such austerity measures will be needed unless economic conditions deteriorate seriously. All agree

however that agricultural production

must be boosted, and that new schemes such as tourism be given more priority.

Some say they would welcome a declining foreign aid and remittances level, as it would presumably force more people to farm Samoa’s rich system and the shortage of able-bodied manpower in many villages due to migration to the

capital, Apia, or overseas.

And tourism is still viewed with suspicion by conservative minds who fear its effects on Samoan culture a la Hawaii.

As one tourism official describes it, “People want tourist dollars without the tourists. It doesn’t work that way.”

Working out which way to prop up the economy is something that will test the ingenuity of whoever wins power at the

April elections.