Government revenue exceeds spending despite economic crisis
Despite the economic crisis Vanuatu is going through, the Ministry of Finance says the Government revenue is still higher than its outgoing expenses.
The Director General of the Ministry, August Letlet, confirmed this during an Economic Recovery Post COVID-19 and Cyclone Harold Forum last week, that was organised to get up-to-date information from businesses on how they are managing with the Government’s economic stimulus package.
“Revenue is roughly 17.5 per cent of our Gross Domestic Product (GDP), not including revenue received from our development partners,” Director Letlet said.
“If we include revenue received from our development partners, [total revenue] is roughly 19.9 per cent of the GDP and outgoing expenses are roughly 14 per cent of GDP.”
Mr Letlet says the current fiscal position is in line with, but does not reach, the key economic and fiscal targets adopted by the Government for this year, 2020.
“One of the targets was that revenue would be around 21 per cent of the Gross Domestic Product in 2020,” he said. “And, we do have a net lending position, meaning there is more revenue than spending.”
Representatives from Vanuatu’s private sector including tourism operators and peak bodies such as the Vanuatu Hotels Association; the Public Land Transports Association and other small and medium businesses who attended the forum have raised concerns about the effectiveness of the Government’s response to the current economic crisis.
The results of a survey undertaken by the Vanuatu Chamber of Commerce and Industry on the impact of the Government’s Employment Stabilisation Package were released on 8 July. The results show the majority of Vanuatu’s businesses houses have reduced the number of their staff to four people and under; and that 38 per cent of Vanuatu’s businesses laid off staff without proper pay or benefits.
The survey also revealed that the majority of the businesses that qualified to receive the Employment Stabilisation Package , had not yet received their payments for the months of April, May and June, with some still waiting for their March payments.
In their report on the survey, the Vanuatu Chamber of Commerce and Industry has recommended a review of the Government’s payment processes to ensure businesses receive their outstanding payments from the Employment Stabilization Package without further delays.
The Chief Executive Officer for the Vanuatu Chamber of Commerce and Industry, Astrid Bulekone, raised other concerns on the adequacy of the Government’s Stimulus Package saying the Employment Stabilization Package needed to be extended.
Ms Bulekone says if the Government does not extend the package, 58 per cent of businesses that the chamber has surveyed, will lay off more staff.
The chamber says private sector businesses need capital investment so they can hold onto to their workers The chamber says businesses need access to low cost finance such as zero interest loans. It says as part of Government investment in the future prosperity of Vanuatu, an investment fund needs to be made available to the private sector to support the country’s next generation of business men and women.
The Finance Department noted the comments and concerns raised by the private sector at the forum and officials said the department will look at how it can address the recommendations and issues raised.