Government to cut back spending as COVID impact hits
Vanuatu’s Public Service Commission says the Government is to cut back on its spending as the economic fall-out from the COVID-19 pandemic continues to impact Vanuatu.
The Chairman of the Public Service Commission, Simil Johnson, says the COVID crisis has seen the country’s Gross Domestic Product (GDP) – the value of goods produced and services provided over a year –– decline.
He says when Vanuatu’s borders closed in March to stop the spread of COVID-19 into Vanuatu, the Government stopped getting revenue from the private sector which is usually the main contributor to Vanuatu’s economy.
“Tax collection has declined. The Government’s half yearly fiscal report for 2020 shows a drop-in tax revenue collection of VT8billion which is 1.8 per cent lower than tax revenue collection for 2019,” Mr Johnson said.
He says the half yearly report shows that despite the COVID crisis, revenue collected in the first quarter of 2020, was higher than in the first quarter of 2019. This was because revenue collected from Vanuatu’s controversial Citizenship Program reached over VT7 billion in the first quarter of 2020.
Mr Johnson says while revenue collection has increased so far in 2020, the drop in tax money collected means the Government must cut back on its spending.
Mr Johnson says there is currently no clear view of when Vanuatu’s borders will reopen and Government revenue from the private sector to rise again.
“As a result, the Government will take some actions to cut down on its spending,” he said.
“There will be no new appointments of staff to positions in Government departments and agencies, we will suspend the use of rented vehicles and senior Government officials must pay for their own fuel for the vehicles they are using.
“This decision is in accordance with the Council of Ministers decision number 64 of 2020 that said there must be control of spending on public sector services.
Commenting on the impacts of COVID-19 the Minister of Finance and Economic Management, Johnny Koanapo, assured the people of Vanuatu that he will manage public monies properly, to ensure when the COVID-19 disaster is over, there’ll be no big losses or deficits left behind.
“We will make every effort to control our economic situation and budget,” he said.
“We are not at the red line yet. The country can still manage its resources and when this pandemic is over and when a cure is found in the coming times, I believe we will be one of the countries in the Pacific that will not be left with big financial losses.”
“We want to keep the economy growing.”
Minister Koanapo said the Government’s spending would continue to be managed in accordance with the law.
“And under the Public Finance and Economic Management Act, we will continue to protect our finance system’s integrity,” he said.