MFEM’s new Director for Economic Planning Division, Dr. Willem Ysbrand Borren (Pim) Pim gave an economic update at the PACER Plus consultations held on Wednesday. 21022508.
Government’s Economic Response Plan (ERP) is a lifeline for the economy, says the Ministry of Finance and Economic Management (MFEM) economic analyst Dr. Willem Ysbrand Borren.
Dr Willem (Pim)
Borren is the new director for Economic Planning Division. He spoke on the
country’s current economic state at the PACER (Pacific Agreement on Closer
Economic Relations) Plus consultations on Wednesday last week.
government’s Economic Response Plan ERP started last March, and this financial
year alone it has a budget of $71 million. A significant amount of spending and
most of that money will be spent by the end of April.
reflecting on the Economic Response Plan, Borren said in his perspective, “it
has been incredibly well thought out and extraordinarily impressive”.
him, without the Plan, the economy would be in a far worse shape than it is,
“and we probably would have lost, not only our business community but an awful
lot of our people as well - worse than what we saw in 1996”.
now, Borren says is to consider what will happen if the two-way quarantine free
travel with New Zealand is not established by early April.
And if the
travel bubble is delayed, Borren said: “It will certainly be my advice as the
chief economist working out of MFEM, that we do continue the ERP.”
continuing with the Economic Response Plan will come with a significant
long-term debt to the country, he said.
financial deficit released in December is about $175 million – that deficit is
made up of the loss of Gross Domestic Product (GDP) caused by the loss of
income from inbound tourists – over $300 million a year.
Borren, the estimate in that half yearly fiscal update is that GDP will be down
in this current financial year around 19 per cent – “much better than you might
The 19 per
cent drop is a phenomenal achievement for a country which relies directly on
international tourism, representing 65 per cent of GDP, he said. “Indirectly
we’ve got that number closer to 85 per cent.”
had such a massive shock to your economy because you are so reliant on one
industry, it’s quite remarkable that we’ve managed still to keep the GDP so
high,” he said.
this was achieved “mostly through the ERP… through government expenditure”.
pandemic struck the private sector is unable to invest further in the country –
65 per cent of businesses are involved directly in international tourism.
economist, Borren is of the view that the country can’t afford “not to be
spending what we are doing currently, because the GDP would be less”.
that the Cook Islands have managed to protect the economy through the
government expenditure which has mostly been through the economic response plan
- “that’s how we protect this economy – and that’s crucial.
don’t reduce government spending at times of a recession.”
has also spent a huge amount of money particularly on the wage subsidy that is
keeping people in the country – “because they will be needed for when the
borders finally do open”.
people who actually create the outputs that make up the GDP, so we can’t have
people going offshore and not coming back – that will cause significant
long-term damage to our economy,” Borren said.
purpose of the wage subsidy is not only protecting some form of liability for
our business community and our employers, it’s largely to keep that
relationship between employees and employers which allows employees to remain
in the Cook Islands.”
And most of
that money is funded through debt funding.
explained that the country has received about $30 million in grants, $22
million from New Zealand alone. He said a vast amount of the money is being
used to prop up the economy and the deficit that is forecasted through debt
current situation of the borders being closed continues, Borren says additional
funds will be sought from donors and creditors.
economic perspective, Borren applauded the ERP that was already actioned prior
to his taking up employment.
conveyed credit to his predecessor Natalie Cooke for the Economic Development
Strategies (EDS) - 10-year strategy that was approved by Cabinet in December
fantastic piece of work, impressive for a country of this size, it is extremely
well written and far reaching in terms of vision.”
acknowledged and thanked the efforts of people who have contributed to it.
five objectives from the Economic Development Strategies (EDS): Improving
equity and access for all; Transforming the economy; Developing our people and
our culture; Investing in our islands and Greening our economy.
strategy is only a starting point…. it’s only successful as the
Ysbrand Borren (Pim) Pim has a comprehensive background in economics. He has a
Ph.D. in economics and has worked as a professional economist for much of his
life. Borren looks forward to supporting the MFEM team to assist the Government
through its economic recovery programme.