The Government has announced that it has ended its four years with an accumulated strong cash reserve position.
Minister of Finance and Economic Management, Gaetan Pikioune, was very pleased with the Government revenue performance over the last four years stating, “this current government (led by Prime Minister Charlot Salwai) has accumulated remarkable cash reserves, a level that will now remain in the history of all Government.
“I am very pleased to announce that the Government revenue, excluding donor funds, has increased by 62.9 per cent from 2016 to 2019 while Government expenditure has been carefully managed over the years since this government came to power.
“After consulting the Ministry’s Director General, Mr. Letlet August, I am pleased to announce that over the past four years, the Government has consistently run fiscal surpluses and accumulated strong cash reserves.
“These cash reserves have been used to address long outstanding government commitments, prepayment of public debts and for the first time in Vanuatu history, set aside funds for infrastructure developments,” Minister Pikioune said through a statement.
In 2016, Vanuatu held its general election costing Vt88.4 million. On that same year the Government started paying its long outdated severance.
By the end of 2016, the Government had collected Vt20,648,200,000 million in revenue, spent Vt17.808 billion on expenses.
This left a fiscal surplus of Vt2,243,800,000. Similarly in 2017, the country hosted the Pacific Mini Games, costing Vt947.8 million.
The Government collected Vt22,923,100,000 in revenue, spent Vt19,390,500,000 on expenses. This left a fiscal surplus of Vt2,812,900,000. In realising its strong financial position, the Government embarked on a journey of debt prepayments commencing with domestic bonds worth Vt1,623,300,000 were retired completely. The prepayment was also applied to external debts worth Vt1.5billion, according to the Ministry of Finance.
The practice continued in 2018, with VT1.5 billion prepaid and a further VT1.5 billion prepaid in 2019 and a further Vt2 billion planned for 2020. This has reduced the level of public debt drastically, Minister Pikioune confirms.
In 2018, the increase of the Value Added Tax (VAT) rate from 12.5 per cent to 15 per cent came into force, raising more revenue for the Government, while leaving consumer spending largely unaffected, according to the Finance Ministry’s statement.
The Government collected Vt30,508,200,000 in revenue, spent Vt21,925,600,000 on expenses, including the rolling out of the Government Remuneration Tribunal costs across the entire government.
Minister Pikioune highlighted that, “By December 31, 2018, the government had accumulated over Vt7 billion in cash reserves. This has brought about strong confidence in public finances resulting in the Government not relying on its overdraft facility with the Reserve Bank of Vanuatu”.
Donor funding was included in the Appropriation Bill for the first time in the 2018 budget and again in the 2019 and 2020 budgets.
Donor funding was included in the Budget book but not appropriated by Parliament in years prior to 2018, primarily due to delays in the confirmation of budget funding by donors during the finalisation of the appropriation bill. The Government received Vt8,586,800,000 worth of grants in 2018.
In 2019, the Government collected Vt33,752,800,000 in revenue and spent Vt25,543,500,000 million on expenses. This has left a fiscal surplus of Vt7,215,300,000.
“I can assure the citizens of Vanuatu that the Government has submitted all outstanding financial statements up to Financial Year 2018, which means that this public statement is now up to date, acknowledging that rebuilding after TC Pam is still ongoing,” said Minister Pikioune.
All new infrastructure being built must be resilient to climate change, so that it will continue to service the country for many years to come, the minister said.
“The current Government has created an infrastructure development fund in 2019, which will be used to build feeder roads, rehabilitate both the existing road networks and domestic airstrips to comply with the ATR standards and further invest in the future of Vanuatu,” Minister Pikioune continued.
It is during the current leadership of PM Salwai that the country passed the Tax Administration Act in 2019 that came into force on January 1 this year.
“This Act will modernise Vanuatu’s tax administration system and bring it in line with global peers’. While the country is been blacklisted by the EU Tax Jurisdiction, the Government has made very good progress on complying with the OECD Global Forum on Exchange of Information for Tax Purposes which resulted in Vanuatu now rated ‘partially compliant’.
“This was possible when Vanuatu signed the Multilateral Convention on Mutual Assistance in Tax Matters and Multilateral Competent Authority Agreement in June 2018,” the Finance Minister said.
He says Vanuatu has a system in place for the Automatic Exchange of Information for Tax Purposes, in line with OECD Common Reporting Standards.
“I also wish to underscore the veracity and quality of reforms put forward by the Government towards the removal of Vanuatu from the Asia Pacific Group on Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) black list.
“With the support of the Government; instilled through my leadership in public finance, the Government has ensured that public expenses were streamlined, contained and aligned with government priority policy objectives.
“The measures deployed to control public expenses included but not limited to public investments, quality and legal obligations acknowledging that government arrears continue to rebuild.
“It is my understanding that necessary measures have been installed to assist with settlement.
“It is with much hope that all outstanding public expenses, public liabilities must follow the right approval channels to avoid payment delays.
“With these challenges, I am very proud to announce that the 2019 fiscal year was another strong year of enhanced and applied governance to reforming of public finances seeing through the modernisation and standardisation of the Public Finance & Economic Management Act and the Government Contract and Tenders Act,” Mr Pikioune said.
Daily Post questioned whether the citizenship programme played any part in the revenues mentioned and surplus, and the answer given was that the programme did contribute to revenues mentioned and has been one of the ‘drivers’ of growth.