Graduation looks less likely

Friday January 12, 2018 Written by Published in Local
Finance minister Mark Brown, pictured in parliament with prime minister Henry Puna. 18011120 Finance minister Mark Brown, pictured in parliament with prime minister Henry Puna. 18011120

There is a possibility that the Cook Islands will not graduate to developed status as earlier announced.


In July last year, the Organisation for Economic Co-operation and Development (OECD) which decides on the Official Development Assistance (ODA) graduation agreed to provide the Cook Islands until the end of this year to develop its Gross National Income (GNI) data.

It is claimed that the OECD initially decided on Cook Islands’ graduation to developed status based on the gross domestic product (GDP).

However, the government argued the country’s GNI was the appropriate measure to decide on the graduation.

Finance minister Mark Brown said in order to be assessed as “graduated”, the country must produce three consecutive years of GNI above the OECD determined threshold.

Asked whether the country was ready for the graduation, Brown said, “it is not for the Cook Islands to determine our graduation. It is up to the DAC (Development Assistance Committee) of the OECD”.

The recently released quarterly financial report for 2017/18 financial year as of September last year stated revisions are being made to the country’s GDP.

It added economic growth may not have been as strong as initially thought.

The report also said flows out of the country have been picked up that suggest that GNI will be lower than GDP.

“Therefore, it is possible that the Cook Islands will not graduate,” the report said.

However, Natalie Cooke, Ministry of Finance and Economic Management’s economic policy advisor, said the ministry was not making any judgements at this stage as to whether GNI will be over or below the threshold.

GDP is a measure of what is produced in the country and GNI figures are calculated from GDP but will include flows of primary income into, and out of the country, she said.

“The Statistics Office is in the process of collecting and compiling the relevant data, however as you may appreciate this is a substantial amount of work as it requires survey data to be collected from companies in and outside of the Cook Islands, amongst other sources,” Cooke said.

She said the push to extend graduation was simply due to the fact that the government want the decision to be based on data that fully reflect the country’s development status, hence the use of GNI.

“For most countries there is little difference between GDP and GNI, since the difference between incomes received by the country versus payments made to the rest of the world tends not to be significant,” Cooke said.

“However GNI can be much higher than GDP if a country receives a large amount of foreign aid, or can be much lower if foreigners control a large proportion of a country’s production.”

Minister Brown said they were waiting to see what the new statistics calculations for GNI will provide for them.

He said the Cook Islands had always produced economic statistics based on GDP.

“Our statistics office now needs to compile additional data to enable accurate GNI figures to be calculated. This is just one step in the investment in statistics to enable for accurate economic statistics to be compiled,” Brown said.

Cooke said it was hoped that a preliminary Balance of Payment figure would be ready by last month, however difficulties in recruiting an economic statistician to work with the Statistics Office, and slow survey response times have held the project up.

Preliminary data on GNI should be released in the coming months, she said.

Graduation to developed status would mean the country lose out on the Official Development Assistance which for 2017/18 was appropriated an annual expenditure at the value of $78 million.

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