Tuesday 23 May 2023 | Written by Supplied | Published in Letters to the Editor, Opinion
On the front page of Monday 22 May’s edition of Cook Islands News, New Zealand prime minister Chris Hipkins, in giving us a handout of $15 million (for Covid recovery support), said how we have been managing our economy “impressively” despite suffering a” 41 per cent economic contraction”.
This was the same figure (41 per cent) which was quoted in an International Monetary Fund assessment on the contraction of the country’s economy (during the pandemic) in Cook Islands News (14 April 2023). In the same article, Cook Islands PM Mark Brown, who made the statement on the IMF’s assessment, said that it was “far greater than we expected it to be …”.
In Cook Islands News (5 May 2023), at the Asian Development Bank’s annual governors’ meeting, PM Brown said that the country had suffered the largest contraction (30 per cent) in the 2021 financial year.
Just over 12 months ago, the Asian Development Bank assessed the contraction in 2020/21 to be around 29.1 percent (CINews 23 April 2022) as opposed to Ministry of Finance and Economic Management’s estimate of 18.2 percent. The headline on this article was ‘Cook Islands suffers biggest GDP contraction in history’.
Re the 14 April 2023 article (which was headlined ‘$216m debt ‘modest’: PM’) Brown says that the debt ratio to gross domestic product (GDP) is 42 per cent. This is based on a forecast GDP of $546 million according to the 2022/23 half-yearly fiscal and economic update (HYFEU) issued in December 2022. (The GDP in the 2022/23 budget that was tabled in parliament in June 2022 was estimated at $484 million).
In a Cook Islands News (22 April 2023) article on labour shortage, the ADB’s public management economist said the debt-to-GDP figures was “hovering in the mid-thirties” at the beginning of this year. This was calculated on a government debt of $250 million – of which $120 million was lent from ADB.
GDP in 2019/20 was $531.2m (2019-20 Appropriation Amendment) so in theory, the country is now – in 2023 – just slightly down economically than when Covid ‘struck’ in 2020.
In Cook Islands News (3 April 2023), a leading economist predicted a “positive” 12 months for the economy. He based his prediction on 2022 visitor arrivals being two-thirds of pre-covid numbers.
So are we in dire straits as some would want us to believe? Or are we on the road to a speedy economic recovery?
When we stand on the international stage, we tell everyone how well we have bounced back. But when we go to New Zealand with the begging bowl, we tell them how bad things really are.
So what is it with the $15 million Covid recovery support? Is this going to fund the extras at the upcoming Pacific Forum?
I hope I haven’t confused your readers.
The upcoming budget should be interesting.