By Fuiavailili Keniseli Lafaele, Economic Consultant
The American Samoa Economic Development Authority (ASEDA) has announced its intent to issue two new bond series — the 2025A and 2025B — with a combined value of up to $65 million. The first, a refinancing bond of $50 million, is meant to retire the 2015A bonds; the second, $15 million, is to finance the completion of the Fono building, a new correctional facility, and ASTCA’s internet capacity and redundancy.
The announcement comes only three months after the Territorial Audit Office released its FY 2025 Local Budget Audit (Report 25-01, July 2025) — a sobering assessment that
projects a 25 percent shortfall in local revenues, or roughly $42 million below budget. The audit warns that under Section 3 of the Budget Code (A.S.C.A. § 10.0503, Budget Execution and Control), this magnitude of deficit requires the Governor to notify the Fono and submit a corrective plan. Yet no such plan has been presented publicly.
When revenues are falling and expenditures already exceed income by $24 million, the government’s focus should be on stabilization and reform, not on expanding liabilities. ASEDA’s bonds are secured by “100 percent of pledged taxes,” meaning that every dollar of future tax revenue already underperforming expectations is now further pledged to debt service. Refinancing may make sense if it lowers interest costs or shortens maturities — but without public disclosure of savings calculations, debt-service schedules, or interest-rate assumptions, taxpayers cannot tell whether this deal lightens the load or simply reshuffles it.
The new-money Series 2025B is even harder to justify. Financing furniture, fixtures, and internet infrastructure through long-term debt contradicts the audit’s warnings about blurred boundaries between operating and capital spending. Without a detailed repayment plan, new borrowing secured by the same underperforming tax base risks deepening fiscal imbalance and undermining legislative appropriation authority.
ASEDA’s enabling law allows flexibility to leverage local revenues for development, but that flexibility carries a fiduciary duty. The agency’s credibility — and by extension, the government’s — depends on strict transparency, disciplined debt management, and compliance with the audit’s recommendations. Public confidence will erode if deficit financing proceeds while legal safeguards and reporting requirements remain unmet.
Before any bond sale closes, the people of American Samoa deserve clarity on five points:
(1) the net savings, if any, from the 2015A refunding;
(2) the repayment source and coverage ratio for the 2025B bonds;
(3) the effect on annual debt service relative to the General Fund;
(4) the government’s plan to correct the revenue shortfall identified by the audit; and
(5) confirmation that future capital spending will follow lawful appropriations.
Borrowing, in itself, is not the enemy of progress — but borrowing without balance, transparency, or accountability is. Until the deficit plan required by law is in place and the numbers prove these bonds reduce rather than increase the burden, American Samoa should pause and ask: Are we financing growth, or postponing reckoning?
