Understanding Public Debt Management in General

‍Debt is a tool the Government uses to support national development. When managed wisely and strategically, debt can expand the opportunity to build roads, hospitals, schools, and provide essential services that improve peoples’ lives. This section explains why the Government borrows, how debt is managed, and what it means for Samoa.

‍Why does the Government borrow money?

‍The Government borrows to finance major development projects and respond to emergencies. This supports economic growth and public service delivery when local revenue is not enough.

‍Why is managing debt important?

‍Proper debt management ensures that Samoa can repay its loans on time, avoid financial risks, and continue providing essential public services like healthcare, education, and infrastructure. 

‍About Public Debt Management in Samoa Our Objective
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‍“To ensure that the financing needs of the State are met at all times on a timely basis, and that the borrowing costs of the State are as low as possible over the medium term, within a prudent risk level.” (Public Finance Management Act 2001) 

‍‍Debt to GDP Ratio: The debt-to-GDP ratio shows how much the Government owes compared to the size of Samoa’s economy. It is a key indicator of whether our debt is sustainable. Samoa’s fiscal rule is to keep this ratio below 50%. As of December 2024, the debt level is 26% — well within the limit, reflecting strong fiscal discipline. 

‍Concessional Borrowing: Samoa benefits from concessional loans with low interest rates—0.75% to 1.5%—from the World Bank, ADB, and IFAD. These loans are repayable over long periods, up to50 years, with grace periods of 8 to 10 years. 

It is essential to conduct debt portfolio assessments, sustainability analysis and credit risk evaluations for new loan requests. We ensure compliance with public debt reporting requirements, including the annual debt report for Parliament, annual quarterly bulletins, and international reports for the IMF and World Bank.
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