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Western Samoa ReportNo. 11351-EMP PacificIsland Economies: 'TowardEfficient and SustainableGrowth (In Nine Volumes) Volume8: WesternSamoa - CountryEconomic Memorandum Public Disclosure Authorized March8, 1993 CountryDepartment III EastAsia and PacificRegion FOR OFFICIALUSE ONLY Public Disclosure Authorized yie i fri d . o ma . otherwise Public Disclosure Authorized Public Disclosure Authorized d_c withoutWord Bank auth rizat'on WESTERNVSAMOA CURRENCY EQUIVALENTS AJvNALAvjwmos 1981 WS$1.00 = $0.9649 1985 WS$1.0 = $0.4557 1989 WS$1.00 = $0.4408 1990 WS$1.00 = $0.4330 1991 WS$1.00 = $0.4171 1992 WS$1.00 = $0.4096 FISCAL YE4R July 1 - June 30 MAIN ABL . ATIONS AND ACRONYMS ADB - Asian DevelopmentBank DP7 - DevelopmentPlan 7 DLSE - Departme of Lands, Surveys, and Environment DTCI - Departmentof Trade, Commerce,and Industry EEC - European EconomicConmnunity EEZ - ExclusiveEconomic Zone EIEPA - EnterprisesIncenives & Export PromotionAct EPC - Electric Power Corporation FAO - (UN) Food and AgricultureOrganization GATT - General Agreementon Tariffs and Trade GDP - Gross DomesticProduct MCH - Maternal and child health NEMS - NationalEnvironmental Management Strategy NGO - Non-governmentorganization NPF - NationalProvident Fund NUS - National Universityof Samoa OECD - Organizationfor EconomicCooperation and Development PMD - Produce MarketingDivision PSIP - Public Sector InvestmentPolicy SCPL - Samoa CoconutProducts Ltd. SFP - Samoa Forest Products Ltd. SLC - Samoa Land Corporation SOE - State-ownedenterprise SPREP - SouthPacific RegionalEnvironment Programme UNDP - United NationsDevelopement Programme UNESCO - Umted NationsEducational, Scientifc and Cultural Organization USP - Universityof the SoutliPacific VAGST - Value Added General Sales Tax WHO - World Health Organization WSTEC - Western SamoaTrust Estates Corporation WSTI - Western SamoaTechnical Institute COUNTRY DATA Land Area: 2,934 sq km Sea Area: 130,000 sq kmn Population: 160,000 (1991) GNP per capita: US$930 (1991) Capital City: Apia Populationof Capital: 32,000 CONTENTS Page No. Executive Snmay ........... ....................... v 1 Recent EconomkDevelopmens .................. .... I A. Itroduction .......... ......................... 1 B. EconomicDevelopments, 1987-92 ..................... 2 2 Development Opporiinwies and Challenges .............. 9 A. Growth Prospects and Challenges ..................... 9 B. A Frameworkfor Private Sector Development .... ......... 11 3 Publc Sector Management .......................... 21 A. introduction ................................... 21 B. Public Service Refom ............................. 21 C. Public EnterpriseReform ........................... 22 D. Public Sector InvestmentProgram ..................... 23 4 Human Resource Development ........................ 27 A. Human ResourceRequirement for Growth ................ 27 B. The Labor Market for SkilledManpower in Western Samoa ..... 27 C. EducationSector Performanceand Finance ................ 29 Thisreport was preparedby a WorldBank mission which visited Westem Samoa in July 1992. The mission memberswere HilarianCodippily (Chief of Mission),Lily Hale, KariBookin, John Caldwell, Xan Vongsathom (IMP), DouglasAdkins (consultant), and PeterJohnston (consultant). A draft of the reportwas discussedwith Governmentofficials in February1993. i Volume8: WesternSauoa D). HumanResource Strategy and SomeIs ................sues 32 B. (Ot SelectedEducation Isues ....................... 33 F. HealthCare 33 G. HealthCare ReformPriorities 34 H. Womenin Development.35 S. Gowth andthe EnWronment.37 A. Improvingthe Sustainabilityof the GrowthProcess .37 B. EnvironmentalIssues and InternationalStrategies .37 C. EnvironmentalPlanning and Isitutional Development 39 6. Mediwn-Tem Povspects .. 41 A. A Medium-TermGrowth Scenario .41 B. ernal FinancingReqiements 44 Statasti Appendix . .49 map TABLE Iv ThxT 1.1 Growth,Investment and Savings,1987-1992. 3 1.2 Key MacroeconomicBalances, 1987-1992. 4 1.3 Summaryof Cental GovenmentFinance, 1987-1992. 5 1.4 Monetaryand Price Developments,1987-1992. 6 1.5 SummaryBalance of Payments,1987-1992. 7 2.1 InterestRates, 1990-1992 .17 3.1 Actualand ProjectedPublic Investment Prcoram, 1987-1994 24 3.2 SectoralAllocation of PlannedInvestment, 1992-1994 .25 3.3 Sourcesof FinancingRequirements for PSIP, 1992-1994 26 4.1 WesternSamoa: Labor Force Statistics, Censusesof 1976and 1986.28 4.2 Shortagesin SelectedPublic Service Specialties, 1992 .29 4.3 Enrollmentin RegularSchool Systems, 1991 .30 4.4 WesternSamoa: Government Current Education Expenditures1992-1993 .32 6.1 Medium-TermProjections, 1993-2000 .42 6.2 ExternalFinancing Requirements and Sources,1993-2000 44 Vol& Westen Samoa ii RIGuES iN TEXT 1.1 Structure of Production, 1992 .......................... 2 1.2 Real GDP Growth, 1987-1992 . ......................... 3 6.1 WesternSamoa: Extenal Assistance,1991/92 . ............... 46 il Vd1., & WesternSwea Western Samoa EXEcVT1VESUMMARY i. WestemrnSamoa comprises two maui 22 percent of GDP in 1989 to about 36 percent of islands-Upolu and Savai'i-and seven small GDP in 1991-92. Consequenly, the overall islands, widtha total land area of 2,934 square balance of thecentrl government moved from a kilomets. The country has an exclusive economic surplusof 1.0 percent of GDP in 1989 to a deficA zone (EEZ) of some 130,000 square kilometers. of 13.4 percentof GDP in 1992. The impactof the Western Samoa'spopulation is currendyestimated cycloneson the balanceof paymentswas equally at about 160,000, but an estimated 100,000 severe. The extemal current accountdeficit rose Samoans now live abroad in New Zealand, sharplyfrom the equivalentof 1.2 percentof GDP Austalia, and the UnitedStates. Agricultureis the in 1989to levels of 26.9 percentof GDP in 1991, mainstayof the economy,accounting for about 40 and 28.2 percent of GDP in 1992, reflecting a percentof GDP; the major cash crops are coconut, significantdrop in -port earnings (principaUy taro, and cocoa. The mamnfacatringsector is coconut based products and taro) and a sharp relaively small, accountingfor about I Ipercent of increase in imports of consumer goods and GDP. In the service sector, govemment constructionmaterials. The excessdemands arising dministrationaccounts for about 15 percent of from the effectsof the cyclonescaused inflation to GDP. Tourist-relatedservices have also begun to rise from 6 percentin 1989to 15 percent in 1990. developin recentyears. Although inflation fell by 1.3 percent in 1991 owing to tight monetary policy and increased Recent Econom lDevelopments avaflabilityof local agriculturalproduce, it rose againto an estimated8.5 percentin 1992following ii. Following the economic reforms the effectsof CycloneVal. implementedsince 1983-84,supported by external assistance, strong toist receipts and private iv. In Western Samoa, the major remiances, WesternSamoa's economy had begun challenge for the Government today is to to recover in 1989, with a real GDP growth of rehabilitateinfrastructure and the productionbase 2 percent. Cyclone Ofa hit Western Samoa in to levels sufficientto support recovery from the February 1990 and Cyclone Val, the most devastaingeffects of CyclonesOfa (1990)and Val destmcdvecyclone o hit Western Samoa in 100 (1991)and sustainableeconomic growth thereafter. years, stmck in December1991. It reversedthe A rehabilitationprogram, however, would only be rehilitation effortssince Ofa, and causedthe loss a preconditionfor tappingWestern Samoa's growth of several lives as well as damagesestimated at potential, which lies principally in agricultum, US$300million to infastucture and the country's tourism and small and medium-scaleindustry. productionbase. Mainly as a result of the two Even during the pre-cycloneyears 1987-89,GDP cyclones, as well as the economic recession in growth had averagedonly 1.0 percet per year, WesternSamoa's major tradingpartners, real GDP indicatinga numberof underlyingimpediments to (at factor cost) declined at an average rate of growth in each of these sectors. Realizing the 4.4 percentper year in 1990-92. growth poial in these sectors wil depend on improvingthe enablingenvironment for the private iii. Meanwhile, the sharp increase in sector to play a lead role in the economy,human goverment expenditu for cyclonerehaitation resourcedevelopment and a supportiverole by the caused public investmentto rise from a level of v Veo. & Vea.n Samoa public sector for sustainableeconomic growth and trade and paymentrestricdons, and price Instability preservingWestern Samoa's physical environment. will be crucial for attracting long-term commimentsof prtvateimnestment, boti local and DelopmentOpposuites awd Chalenges foreign. In this respect, the managementof the exchange rate regime, trade and payments V. Agriculture is the leading sectr in arrangements, and montary policy is enraly Western Samoa, widhproduction dominated by a sound. The main macroeconomicissues of concern combinationof semi-subsistencerootcrops (e.g. are the fiscal deficit before grants (18 percent of taro) and garden vegetables, together with GDP) and the extenal current account deficit productionof copra, cocoa and timberfor export. beforegrants (28 percentof GDP)arising primarily The sharp fall during the 1980s in the prices to from cyclone rehabilitationexpendiures. Such traditional Pacific Island export crops has tudes are unsustainableand would lead to stimulatedproducers to increaseproduction of non- large drawdownsof reserves,unless action is taken traditionalcommodities such as coconutcream for to: export markets.
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