The investigative arm of the US Congress, the Government Accountability Office (GAO), says American Samoa’s total public debt outstanding as a share of Gross Domestic Product (GDP) increased from 19 to 37 percent between fiscal years 2017 and 2019.
This increase was partially due to a series of general revenue bonds issued in late 2018 to fund infrastructure projects. During this period, American Samoa’s yearly total revenue fluctuated but was 24 percent higher in fiscal year 2019 compared to fiscal year 2017, and the territory had a surplus of $34.0 million in fiscal year 2019.
“Continued reliance on a single industry and significant pension liabilities remain fiscal risks in American Samoa,” says the GAO. The report on American Samoa is included in a GAO update on the US territories debt outlook for 2021 which was released last week.
American Samoa’s total revenues were $418.3 million in fiscal year 2017, declined to $411.4 million in fiscal year 2018, and increased to $517.3 million in fiscal year 2019. This represents an overall increase of 24 percent between fiscal years 2017 and 2019. In fiscal year 2019, $318.3 million in total revenue was generated by the primary government and $199.0 was generated by component units.
American Samoa’s total expenses were $442.4 million in fiscal year 2017 and increased to $483.3 million in fiscal year 2019, an increase of 9 percent. Of total expenses in fiscal year 2019, $316.3 million were incurred by the primary government, while $167.0 million were incurred by component units. In fiscal year 2019, American Samoa had a surplus of $34.0 million. In contrast, it had a deficit of $24.1 million in fiscal year 2017.
The GAO notes that American Samoa’s economy continues to rely heavily on the tuna processing and canning industry. Since the closure of a second cannery in late 2016, only one cannery is operating as of May 2021.
The COVID-19 pandemic had a positive impact on the territory’s tuna canning and processing industry—which comprised 14 percent of employment in American Samoa as of 2018—due to the increased demand for canned tuna during the early stages of the pandemic.
The cannery reported a 10 percent production increase and a 5 percent employment increase, as of September 2020.
According to territory officials, the cannery is considering expanding production in American Samoa, which could result in 200 to 300 new jobs.
However, the GAO observed that while the industry has fared well during the COVID-19 pandemic, potential future disruptions could hurt American Samoa’s fiscal condition and thereby hamper its future ability to repay growing public debt.
The American Samoa Government is continuing its efforts to diversify the economy by expanding the territory’s broadband and telecommunications infrastructure, including a $30 million investment in an international high-capacity underwater fiber optic cable.
The public debt that American Samoa issued in late 2018 was used in part to build its telecommunications and broadband industry. According to territory officials, American Samoa aspires to become a telecommunications hub through the sale of bandwidth to other countries in the region.
Territory officials also told GAO they are attempting to develop American Samoa’s tourism industry. As part of this effort, a hotel in Pago Pago Harbor is being redeveloped and the international airport and various tourist sites are being upgraded.
Regarding the Retirement Fund, the GAO report said that in Fiscal Year 2019, American Samoa reported a combined net pension liability for the primary government and components units of $140.5 million, which was 22 percent of GDP that year. “Officials told us they plan to allocate a portion of any profits from telecommunications operations to the pension system.”
In May 2021, Moody’s Investors Service revised American Samoa’s rating outlook to stable from negative, reflecting American Samoa’s improved financial position resulting from governance improvements, the government’s better financial discipline, and significant federal support received in response to the COVID-19 pandemic.
