Little growth in short-term vision

FIGURES released by the Stat istics Office in Port Vila show that the Vanuatu economy grew by less than one per cent a year in the period 1985-89, largely due to the pincer effects of cyclones and falling world commodity prices (especially for copra).

This latter is further reflected in the part agriculture plays in the economy its share of Gross Domestic Product (GDP) dropped from 25 per cent in 1985 to 21 per cent in 1989, again primarily the result of falling copra receipts. The economy picked up in 1989 to record a GDP growth of 4.5 per cent, and in the past few years the industrial sector has been the fastest growing it grew at 14 per cent in 1988 and 10 per cent in 1989. Construction

and manufacturing showed significant

gains. But the mainstay of the Vanuatu economy continues to be the services sector, which now accounts for 66 per cent of activity.

The Statistics Office figures reveal that the income disparity between indigenous people and expatriates con tinued to widen: in the 1988-89 year, the former’s incomes rose 1.3 per cent in real terms, the latter 13.1 per cent.

In the agriculture sector, the main increases in Gross Added Value (GVA) occurred in cocoa and forest products.

There were also increases in coffee and subsistence farming, the latter due to kava becoming an important cash earner for Vanuatu farmers. Copra the country’s main export experi enced a reduction in output from 29,559 tonnes in 1988 to 24,905 tonnes in 1989, a situation exacerbated by the fall in world prices from SUS39B a tonne to

Sus34B.

Manufacturing’s rise was largely

helped by rising beef production and

higher export of shell products such as greensnail and trochus buttons and blanks. High value veneer timber ex ports are also responsible for improve ments in the industrial sector.

Hotels, restaurants, transport, storage and communications did well with the recovery of the tourism industry (visitor numbers were up from 17,544 in 1988 to 23,863 in 1989).

Meanwhile, Vanuatu’s acting Direc tor of Finance, Terry Fisher, warned a recent meeting in Port Vila that the country would not reach full economic independence if it allowed itself to be dominated by borrowed money. Al though his views were personal ones and not government policy, Fisher’s advice will carry considerable weight in Vanu atu.

He said the country’s main problem was the prevalence of short-term think ing, and each year the government faced the situation where spending exceeded revenue.

“This means brave decisions on whether or not to borrow money from outside the fund the services of the country have to be taken by the government,” he said.

If money had to be borrowed, then it was best spent on projects which generated revenue. While Vanuatu had been restrained in borrowing, loan charges now already swallowed 10 per cent of government spending his personal view being that this is as high as it should be allowed to go. Many African countries were now so deeply in debt that they could never achieve financial self-sufficiency. And as more money was taken up paying off loans, social unrest was generated. Vanuatu, however, still had the capability of

achieving financial self-sufficiency, and

this was targeted for 1995 in the third National Development Plan. □