Samoa Economic Crisis Recovery Support Credit

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The Economic Crisis Recovery Support Credit Program for Samoa aims to support the government's efforts to counter the impacts of the global economic crisis that have been exacerbated by the tsunami, and facilitate medium term recovery. Even in these challenging circumstances the government has stayed broadly on-track with its reform agenda, largely articulated in the Strategy for the Development of Samoa (SDS). The policy actions included in this operation will help maintain the reform momentum, while at the same time supporting the government's recovery measures. The operation selectively covers a small set of policy actions in four key areas: (i) assisting with economic recovery, particularly in the tourism sector; (ii) instituting mechanisms to protect the vulnerable; (iii) progressing on public financial management reforms to ensure that fiscal discipline is maintained at a time when public expenditure is increasing rapidly; and (iv) public enterprise reform to strengthen infrastructure service delivery to support medium term recovery. The Supplementary Budget passed in January 2010 increased allocations to protect the vulnerable and support private sector activity. Government of Samoa (GoS) requested all stakeholders including the development partners to assist in this effort. The operation carries a moderate risk on account of the limited institutional capacity of the GoS which is currently stretched due to the major crises that have occurred in the last two years. In addition the external economic environment, while improving, remains unsettled. Samoa's high vulnerability to external economic factors implies that the government's ability to maintain macroeconomic stability, restore growth and achieve fiscal consolidation in the medium term will continue to be tested.