The Government is looking at enforcing its Credit Risk Assessments Framework (C.R.A.F.) on all States Owned Enterprises' portfolios to monitor the risk exposure of contingent liabilities to the Government.

This framework is a key feature of Samoa's Government Guarantee policy that targets guarantees issued and approved by the Government to Public Trading Bodies only. 

The policy is guided by existing legislations and regulations that promote prudent management and efficient implementation of Government guarantees to mitigate costs and risks to Government. 

There are two main scopes of the first Government Guarantee policy to ensure the achievement of fiscal targets of the Government. 

This includes ensuring that the total Government Guarantee as percentage of the Gross Domestic Product (G.D.P.) is below 10 per cent and that the total debt to G.D.P. is below 50 per cent of G.D.P. 

The Government has already implemented this policy with Samoa Airways and the Development Bank of Samoa in Financial Year 2022/23 and will be expanded to cover the full SOE portfolio. 

According to the fiscal strategy statement on the Ministry of Finance for the FY2023/2024, the total public debt to GDP target remains within 50 per cent, reflecting the Government’s commitment to reduce the total debt, minimize associated risks, and strengthen its debt sustainability position. 

"The percent of total public debt to GDP is estimated to be at 34.4 percent and remain within the 50 percent threshold by the end of FY2022/23. 

"It will further decline over the medium term, to 32.1 per cent in FY2023/24, 26.9 per cent in FY2024/25, and 22.1 per cent in FY2025/26."

"This is a result of no new non-concessional borrowings planned for the medium term, coupled with the expected increase in GDP levels in the same years. 

"The level of contingent liabilities from SOE debt as percentage of GDP is also expected to follow suit; decreasing from 6 per cent in FY2022/23 to 5 per cent in FY2023/24, and 4 per cent in FY2024/25 and FY2025/26."

"The Government has further strengthened its monitoring responsibilities through credit risk assessments (CRA) conducted and assigning credit ratings for SOEs. 

"These assessments would assist in the monitoring of the risk exposure of contingent liabilities to the Government. 

"Similarly, the on-lending policy will continue to monitor the active on-lending arrangements in the portfolio."

The "on-lending" policy is when the Government on-lends to another body under a Subsidiary Loan Agreement (S.L.A.), for the purposes specified in the Principal Loan Agreement (P.L.A.) from foreign governments and international agencies; or from sources within Samoa. 

It is one of the financing mechanisms used by the Government to support development projects that are implemented by Government Public Bodies. 

The total debt servicing for FY2023/24 is estimated at $104 million tala, recording a slight increase of 0.6 percent compared to FY2022/23 levels, with the inclusion of the Samoa Airways defaulted debt.

The Official Public Debt for Samoa for the FY2022/2023 stood at $934 million tala while the official public debt as of percentage of G.D.P. was 34.4 percent. 

For the FY2023/2024, it is expected that the official public debt would drop to $844.4 million tala with more than a two (2) percent decrease for the official public debt as of percentage of G.D.P.