Debts Decreasing

Money

BY THE standards of the rest of the developing world, the Pacific Islands have sipped only sparingly from the sometimes intoxicating bottle of external debt with the exception of Papua New Guinea. This conclusion can be drawn from the latest tabulation of debt infor mation released for 1992 by the World Bank.

At the end of that year, the total (long - and short-term) debts of the six nations covered by the Bank were as follows, in millions of US$~ PNG $3736, Fiji $337, Western Samoa $llB, Solomons $9l, Tonga $43, Vanuatu $4O. Given PNG’s landmass and population one would expect a higher absolute debt than those recorded for smaller nations, but PNG’s debt is also the largest proportionally of the six. It displays the ratio between a nation’s total external debt and its gross national product or GNP (the sum total of all goods and services produced during the year). Low ratios, such as those of Fiji and Vanuatu, indicate that these nations have borrowed only modestly, as com pared to their GNP.

Five of the listed nations (but not PNG) had proportionally lower debts in 1992 that they did the previous year.

This means that either GNP increased, as it did in several countries, or that debt levels declined (as they did in Fiji, the Solomons, Tonga and particularly West ern Samoa), or both. In contrast, PNG went more than one billion dollars deeper in debt in 1992, while its GNP increased at a slower rate.

The most dramatic drops in external debt came in Western Samoa (from $l4l million to $llB million) and in Tonga (from $l3O to $9l million). In both cases long-term debt stayed nearly stationary, but short-term debt dropped to almost nothing. PNG’s massive increase in external debt was all in the private sector (presumably largely related to minerals) with the public debt actually dropping between 1991 and 1992. Public and publicly-guaranteed debt declined about $5O million, while private, non government-guaranteed debt declined about $5O million, while private, non government-guaranteed deby rose from $964 million to $1726 million.

But despite the increasing levels of debt in PNG’s private sector, none of the Pacific islands are close to the debt levels of some other island nations. The debts of Madagascar and Jamaica would both be off the accompanying chart— each has external debts at about the 150 per cent of the level of their GNP, about twice the ratio recorded for PNG. But the world champion island borrower of funds is Sao Tome and Principe, an ex-Portuguese colony off the West Coast of Africa.

These islands have managed to persuade someone to lend them more than five

times their GNP.

The World Bank, which loves to categorise things and build mathemat ical models, has divided the developing world into five debt classifications, four of which indicate some degree of World Bank concern. Sao Tome, for example, is in the most worrisome category “severely-indebted low-income nations.”

The lowest level of concern is expressed for “moderately-indebted middle

income countries,” which includes PNG.

The other five island nations tracked by PNG are in the World Bank’s not-to worry category, or, more formally “other developing nations.” Kiribati, Nauru, and Tuvalu are not tracked by the World Bank, nor are any of the less-than completely sovereign entities.

The data described above can be found in World Debt Tables 1993-1994, Volumes 1 and 2; if you want to go in debt yourself, you can buy them from the World Bank, Box 7427-8619, Philadel phia, Pa, 19170, USA. Volume 1, the overview, is (US) $16,95, while Volume 2, the detailed tables (with four pages for each nation) is $125.00. □