American Samoa’s debts grew 42% in two years

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A report by the US Government Accountability Office says American Samoa’s total public debt outstanding grew by 42% from $85.9 million in Fiscal Year 2015 to $122.2 million in Fiscal Year 2017.

The report titled, “US Territories, Public Debt Outlook 2019 Update,” which was released Friday, gives a detailed accounting of public debts for the insular areas.
It’s a follow up to one that was issued by the GAO in October 2017.

The report states that total public debt outstanding as a share of GDP increased 13% in FY 2015 to 19% in FY 2017. Total public debt outstanding per capita increased from $1,482.20 in FY 2015 to $2,081.90 in FY 2017.

 

The increase in debt was attributed to a single bond issued in January 2016 for $23 million to fund various infrastructure projects, which remains the major driver of American Samoa’s public debt.

In December 2018, the territory issued a series of general revenue bonds totaling $50.3 million and the proceeds went to fund infrastructure projects, including a new Fono building and expanding broadband and telecommunications services in the territory.

Says the GAO, “Territory government officials told us the intent of this expansion is to diversify American Samoa’s economy by making the territory a regional telecommunications hub.”

Moody’s rating company affirmed American Samoa’s non-investment grade rating and assigned the same rating to its 2018 bond series, citing the territory’s reliance on substantial assistance from the federal government, low income levels and financial management challenges.

Regarding revenues, the GAO reported that the territory’s total revenues dropped 4% from $436.4 million in FY 2015 to $418.3 million in FY 2017.

And while total revenues declined, government expenses increased by 5% from $420.7 million to $442.4 million between FY 2015 and FY 2017.

The GAO says the territory’s public debt has grown and the territory continues to face fiscal risks that may affect repayment such as a reliance on a single industry and significant pension liabilities.

The report said in FY 2017 ASG reported a net pension liability for the primary government and component units of $213.1 million which was 33% of GDP that year. Meanwhile territory officials say the unfunded pension liability has decreased since reaching a low in 2016.

“When a pension is unfunded, it does not have enough assets to cover the liabilities,” cautions the GAO.

It says if the territory is unable to make annual contributions to the pension fund, then the fund’s condition may continue to deteriorate.

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