Samoa Central Bank requested to continue easing monetary policy stance

The Samoa Bureau of Statistics is reporting a 0.7 per cent economic growth at the end of March 2020.

In its latest review, the Central Bank said the closure of borders due to the global coronavirus pandemic has had an adverse impact on the economy.

There were lower monthly tourist arrivals recorded for January to March of 2020 with zero arrivals since April as well as a slowdown in tourism related activities.

The Central Bank of Samoa will continue to closely monitor and manage international reserves as uncertainties around the coronavirus global pandemic remain.

According to the Central Bank, the economy will be facing challenging times especially the tourism sector and its related services.   

Gross official foreign reserves stand at $572.79 million in May 2020 or around 7.8 months of imports cover.

This figure is well above the CBS benchmark of 4 months of imports and 6.3 months in May 2019.

The high level of official reserves reflected the influx of government’s inflows of financial assistance that have been received in March and April of COVID-19 and project funds for targeted sectors from development partners.

According to CBS, the receipt of Sāmoa’s Rapid Credit Facility funds from the IMF in April has provided further support to the country’s official foreign reserve levels.

“However, with the uncertainty of the effects of the pandemic and the unpredictability of when a vaccine could be effective and mass produced, there are several factors that could dwindle foreign reserves going forward if not managed properly. Close monitoring and managing of international reserves by the Central Bank will continue especially at this time. Appropriate actions will be taken to ensure reserves are adequately invested in relevant currency compositions and maturities to cater for Samoa’s international trade and other foreign payment commitments.”

“Like the rest of the world, Sāmoa is in unchartered waters, with our domestic economy facing challenging times ahead. Given the current economic situation and outlook it is therefore vital that with fiscal consolidation being implemented, monetary policy remains accommodative to support economic recovery in the short term and sustainable economic growth over the medium term.”

Government ministries are also being urged to continue to implement their budgeted expenditures and program on time, as outlined in the 2020/21 Government Budget already approved by Parliament which cover the expenditures to minimize adverse impacts of COVID19.