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Business and Economics > Finance: General

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Cover IMF Staff Country Reports
Samoa: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Samoa
International Monetary Fund. Asia and Pacific Dept
This 2023 Article IV Consultation highlights that the Samoan economy has begun recovering after a three-year recession driven by the coronavirus disease 2019 (COVID-19) pandemic. A rebound in economic activity has followed the lifting of domestic COVID-19restrictions in July and the pickup in visitor inflows when borders reopened in August. Economic growth is projected to remain above trend in FY2024 and FY2025 as tourism inflows and the domestic economy normalize. Higher tourism receipts and resilient remittances are also projected to narrow the current account deficit. The central government has maintained surpluses despite the pandemic, helped by buoyant tax revenue—including due to improvements in tax administration—and grant inflows. Credit growth has slowed after accelerating early in the pandemic, with lending to businesses declining and modest growth in household borrowing driven by the lending of public financial institutions. Private sector advantage has increased in recent years, with financial system credit to the private sector reaching 94.6 percent of gross domestic product.
Keywords:
APG follow-up assessment; policy area; U.S. dollar; inflation development; development opportunity; Natural disasters; Stress testing; Credit; Global; Asia and Pacific; Australia and New Zealand; Pacific Islands
Cover Departmental Papers
Strategy for Fintech Applications in the Pacific Island Countries
Sonja Davidovic
,
Ms. Elena Loukoianova
,
Cormac Sullivan
, and
Hervé Tourpe
The Bali Fintech Agenda highlights 12 principles for policymakers to consider when formulating their approaches to new financial technology (fintech). The agenda aims to harness the potential of fintech while managing associated risks. This paper looks at how some elements of the Bali Fintech Agenda could be used in Pacific island countries, which face significant financial-structural challenges.
Keywords:
DPPP; DP; private sector; payment system; data protection; Pacific island countries; big data; credit scoring; financial system; business model; transaction costs; due diligence; feasibility study; capital investment; utility payment record; solar-panel-enabled payment device; payment development; payment history; customer data; identity system; Fintech; Financial inclusion; Mobile banking; Pacific Islands; Australia and New Zealand
Cover Departmental Papers
Financial Inclusion in Asia-Pacific
Ms. Elena Loukoianova
,
Yongzheng Yang
,
Mr. Si Guo
,
Ms. Leni Hunter
,
Mrs. Sarwat Jahan
,
Mr. Fazurin Jamaludin
,
Umang Rawat
,
Johanna Schauer
,
Piyaporn Sodsriwiboon
, and
Mr. Yiqun Wu
Asia has made significant progress in financial inclusion, but both its across-country and intra-country disparities are among the highest in the world. The gaps between the rich and the poor, rural and urban populations, and men and women remain deep. Income is the main determinant of the level of financial inclusion; but other factors, such as geography, financial sector structure, and policies, also play important roles. While some countries in the Asia-Pacific region are leaders in fintech, on average the region lags behind others in several important areas such as online (internet) purchases, electronic payments, mobile money, and mobile government transfers. This Departmental Paper aims to take stock of the development and current state of financial inclusion and shed light on policies to advance financial inclusion in the region. The research focuses on the impact of financial inclusion on economic growth, poverty reduction, and inequality, linkages between financial inclusion and macroeconomic policies, as well as structural policies that are important for improving financial inclusion. Given the increasing importance of financial technologies (fintech), the paper also provides a snapshot of the fintech landscape in the Asia-Pacific.
Keywords:
DPPP; DP; Asia-Pacific country; fiscal policy; interest rate; Asia-Pacific region; central bank; Gini coefficient; per capita income; savings account; a number of Asia-Pacific EMDCs; adverse selection; fintech company; monetary policy shock; Fintech use; Financial inclusion; Fintech; Mobile banking; Income inequality; Pacific Islands; Asia and Pacific; Sub-Saharan Africa; Global
Cover IMF Staff Country Reports
Samoa: Financial Sector Assessment Program-Banking Supervision and Regulation-Technical Note
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note discusses the key findings and recommendations of assessment of Banking Supervision and Regulation for Samoa. Little progress has been achieved toward implementing the recommendations of the 2007 Basel Core Principles for Effective Banking Supervision assessment. Initiatives by the Central Bank of Samoa to deal with weaknesses identified in supervision and regulation of domestic banks in 2007 were disrupted by a series of natural disasters and the use of limited supervisory resources on other priorities. Progress was achieved, however, in issues related to Anti-Money Laundering and Combating Financing of Terrorism, with Samoa upgraded to a “normal reporting" regime by the Asia Pacific Group on Money Laundering in 2014, from its previous status of "enhanced reporting."
Keywords:
bank's liquidity profile; bank portfolio; asset quality; bank vulnerability; bank asset; Foreign banks; Commercial banks; Bank supervision; Basel Core Principles; Operational risk; Australia and New Zealand
Cover IMF Staff Country Reports
Samoa: Financial Sector Assessment Program - Banking Resolution, and Crisis Prevention and Management Frameworks—Technical Note
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note discusses key findings of the assessment of Banking Resolution, and Crisis Prevention and Management Frameworks for Samoa. It is recommended that the current regulatory framework to deal with financial institutions (FIs) should be reformed. The Central Bank of Samoa (CBS) has issued “Prudential Statements" containing some prudential rules, ratios, and limits applicable to FIs, but there are no general standards for their enforcement, which is done on a purely discretional case-by-case basis. The powers from the Central Bank Act are not strong enough to enable the CBS to take enforcement actions. A fully amended legal and regulatory banking resolution framework is needed for the CBS to be able to deal effectively with serious banking problems.
Keywords:
solvency support; FI problem; banking business; CBS' financial conditions; bank management; resolution framework; distressed FI; Bank resolution framework; Lender of last resort; Financial sector stability; Crisis management; Contingency planning
Cover IMF Staff Country Reports
Samoa: Financial Sector Assessment Program
International Monetary Fund. Monetary and Capital Markets Department
EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS The Samoan financial sector is dominated by commercial banks and Public Financial Institutions (PFIs). The four commercial banks provide almost 60 percent of credit to the economy, and the most important PFIs, the Samoa National Provident Fund, and the Development Bank of Samoa, account for around 30 percent. There is also a small and shrinking offshore banking sector without linkages to the domestic financial sector. Banks are liquid and report high capitalization, but close supervisory attention is required in light of high and rising non-performing loans (NPLs) and the results of the FSAP stress tests.1 Banks are still dealing with the effects from past natural disasters, and assessments of their health are impeded by the significant uncertainty surrounding the quality of balance sheet data, in particular on asset quality and provisioning. High loan concentration and exposure to natural disasters represent significant risks to the financial system. The stress tests illustrate that the local banks are relatively less resilient and could not withstand a severely adverse scenario. Thus, close monitoring, through on-site supervision and asset quality reviews, paired with prompt corrective action and a plan to address NPLs (including in PFIs) as needed, are top priorities. PFIs are particularly vulnerable to shocks due to low asset quality and strong linkages with state owned enterprises. This is largely the result of increased policy lending in response to the extraordinary economic stress from recent natural disasters. Significant stress in PFIs could have significant impact on other financial institutions (FIs) through the effect on the economy, and explicit and implicit government guarantees raise potential fiscal risks. The authorities, therefore, are encouraged to step up oversight of the PFIs, including through enhanced data collection and on-site reviews. Where substantial adjustments are needed, new lending should be restricted. The Central Bank of Samoa (CBS), as the main supervisor and regulator of domestic financial institutions, has made important efforts to strengthen its oversight in recent years. These efforts include conducting on-site inspections, introducing elements of risk-based supervision, expanding staff resources, initiating PFI supervision, submission of a new CBS Act (CBA) to reform governance and safeguards, promoting financial inclusion, and progress on Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT). Still, much remains to be done, including improving the quality and coverage of the financial sector data, upgrading legal, regulatory and supervisory frameworks, and building capacity and staff.
Keywords:
ISCR; CR; bank; enterprise; PFIs Thus; lending; upgraded bank resolution regime; CBS supervision; asset quality; financial system; CBS securities; shore bank regulation; CBS policy rate; Commercial banks; Financial sector stability; Financial sector; Credit; Australia and New Zealand
Cover IMF Working Papers
The Pacific Speed of Growth: How Fast Can It Be and What Determines It?
Yongzheng Yang
,
Hong Chen
,
Shiu raj Singh
, and
Baljeet Singh
This study aims to test within a relatively homogeneous group of small states what differentiates the growth performance of Pacific island countries (PICs) from their peers. We find that PICs are disadvantaged by distance and hampered by lower investment and exports compared with other small island states, but greater political stability, catch-up effects from lower initial incomes, and slower population growth have helped offset some of these disadvantages. On balance, policy-related factors, together with geography-related disadvantages, have led to growth rates in PICs that are much lower than in other small states. We also examine how real exchange rate appreciation, unfavorable developments in the external trade environment, and rising international transport costs may have contributed to PICs’ slower growth over the past decade.
Keywords:
WP; financial crisis; PIC economy; economic recovery; PIC government; small states; Pacific island countries; growth; convergence; remoteness; volatility; aid; investment exports; trade pattern; growth rebound; growth performance; PIC growth rebound; PIC export; visitor arrival; Exports; Transportation; Real exchange rates; Imports; Competition; Global; Australia and New Zealand; Pacific Islands; Asia and Pacific
Cover IMF Staff Country Reports
Samoa: Detailed Assessment of Compliance with the Basel Core Principles for Effective Banking Supervision
International Monetary Fund
This Detailed Assessment of Compliance with the Basel Core Principles for Samoa highlights general preconditions for effective banking supervision. The Central Bank of Samoa (CBS) should consider introducing some straightforward specific capital charges for market price risk and foreign exchange risk. The CBS should require banks to have in place mechanisms for regularly valuing collateral and assessing the strength of guarantees. Several recommendations to further improve the regulatory role of the CBS in accordance with current international standards have been noted and future efforts shall focus on incorporating and developing these as appropriate.
Keywords:
ISCR; CR; international bank; risk management; banking group accounting policy; country risk; financial condition; parent bank supervisor; credit policy; domestic bank; asset quality; risk profile; chief executive; ownership interest; bank supervisor; Foreign banks; Internal controls; Capital adequacy requirements; Basel Core Principles; Market risk; Global; Asia and Pacific
Cover IMF Staff Country Reports
Samoa: Selected Issues and Statistical Appendix
International Monetary Fund
This Selected Issues paper on Samoa reviews limitations to the existing framework of monetary policy, and suggests ways to improve its effectiveness. It examines current instruments at the disposal of the central bank to conduct monetary policy, before showing why monetary policy execution can be sometimes difficult. It also shows that such problems are not uncommon in economies with shallow financial markets. The paper also takes stock of developments since the early 1990s, and asks what major impediments to sustained private development remain.
Keywords:
ISCR; CR; interest rate; Samoa; cost; credit; financing cost; return; reform priority; credit information; guide market expectation; CBS securities; monetary policy execution; community service obligation cost; liquidity forecasting framework; RBV note; liquidity condition; Interbank markets; Securities; Foreign direct investment; Securities markets; Money markets; Pacific Islands; Australia and New Zealand
Cover IMF Staff Country Reports
Vanuatu: Background Paper
International Monetary Fund
This Background Paper on Vanuatu reviews the development of monetary control instruments in five small island economies in the South Pacific (Fiji, Solomon Islands, Tonga, Vanuatu, and Western Samoa) and draws some lessons from their experience. The paper highlights that, except Solomon Islands which have extraordinarily high credit demand from the government, these economies have large structural excess liquidity in the banking system. The paper describes the financial sector in the five economies and analyzes the background for large excess liquidity. It also reviews the developments of monetary instruments in these economies from a comparative perspective.
Keywords:
ISCR; CR; central bank securities; broad money; money bank; balance sheet; foreign currency; operating income; liquid asset ratio; central bank profit; excess liquidity; deposit-credit gap; Central bank bills; Bank deposits; Excess liquidity; Liquidity; Deposit rates; Pacific Islands