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go through Paresh Narayan and Bernard Eck360 Information
RSE workers in Hawke’s Bay orchards.
photo: RNZ/Johnny Blaze
analyze – Pacific Islanders have always been passionate about travel. They first arrived in the New World more than 5,000 years ago in ocean-going canoes, creating new prosperity.
Today, they are still moving forward.
2022-2023, Approximately 47,807 The number of Islanders travelling to New Zealand or Australia to work through various labour mobility schemes such as the Pacific Labour Mobility (PALM) scheme and the Pacific Employment Visa (PEV) has increased significantly compared to previous years.
Pacific island countries rely on remittances. Seven of the top ten remittance recipients money transferRemittances (as a share of GDP) are concentrated in the Pacific. Far from being a problem, they play an important role in maintaining sustainable debt levels in Pacific countries.
If Pacific island countries negotiate with their major trading partners (Australia, New Zealand and China) to facilitate the movement of skilled labour, they could gain increased skills, incomes and government revenues.
Globally, we have witnessed a rapid growth in debt over the past three years, driven by the need to Supporting the economy During the COVID-19 pandemic, the global debt accumulation rate hurry up The impact of the epidemic on the global economy is greater than during the early days of the Great Depression and the global financial crisis of 2007/2008. Global debt levels remain high in the post-epidemic era, posing major challenges to economic recovery and fiscal sustainability.
almost 60% Many developing countries, including Pacific island nations, are now either in trouble or at risk of falling into trouble.
Papua New Guinea’s total financing needs (the sum of the primary fiscal deficit and maturing debt) are projected to be 13.4% The GDP is 6.4% higher than before the pandemic. The Pacific Island countries have seen a significant increase in debt, exposing them to debt problems that are expected to worsen in the coming years.
Recent reports indicate Six Pacific island nations face high risk of debt distressThese are Kiribati, the Marshall Islands, the Federated States of Micronesia, Samoa, Tonga and Tuvalu. Other countries in the region, such as Vanuatu, are rated at medium risk of debt distress, while Palau and Nauru have more sustainable debt levels.
The average debt-to-GDP ratio of Pacific island countries has risen from From 32.9% in 2019 to 42.2% in 2021and continued to rise after the COVID-19 pandemic.
After the COVID-19 restrictions were lifted, Fiji’s debt as a percentage of GDP The rate soared to more than 70%, tied with Palau as one of the highest in the Pacific.
Historically, remittances from overseas workers have played an important role in keeping fiscal deficits sustainable in the Pacific. Remittances increase government revenues through increased household consumption of local goods and services and their associated taxes.
The World Bank has called on New Zealand and Australia to provide more employment opportunities for women under their respective Pacific labour mobility schemes.
photo: RNZ Pacific/Chloe Hawkins
Remittances increase deposits in the financial system, which support government debt through bank purchases of Treasury bonds. In addition, remittances increase the demand for money (and the demand for banking sector liabilities), thereby increasing the revenue the government generates through the issuance of money. This is called seigniorage revenue.
In Samoa and Tonga, for example, remittances account for one-sixth and two-fifths of GDP respectively.
However, these countries have seen a decline in remittances during the pandemic. The World Bank estimates that remittances to the Pacific region will fall 4.3% Palau is expected to see the largest decline in remittances in 2020, to 29%.
In contrast, some Pacific Island countries have seen record remittances. For example, Tonga had the highest remittance inflows in 2020, accounting for about 38% of its GDP. Similarly, Fiji’s personal remittances grew by 14.6% in 2021 to a new high of $842.2 million.
The latest data shows that the economic recovery is strong. In 2023, despite an initial decline due to the pandemic, remittances to low- and middle-income countries, including in the Pacific, grew by 3.8%. Remittances to the Pacific and East Asia are expected to surge 3% in 2023 to $133 billion.
While the road ahead for Pacific island countries’ debt is not smooth, the performance of remittances during and after the COVID-19 pandemic suggests that policymakers could better use these funds to strengthen countries’ debt positions.
To assist with labour mobility, Pacific island countries could negotiate special visa arrangements and immigration schemes with wealthier trading partners.
These countries could lower visa requirements, encourage businesses to hire Pacific Island workers, promote equal workplace rights for these workers, and extend the maximum residency period for these workers.
This will increase the number of workers the Pacific can send to its trading partners. These workers can develop skills, earn income, support their families, and support community development, thereby increasing remittances and government revenues in Pacific island countries.
*Professor Paresh Narayan He is a Highly Cited Researcher at Monash Business School, Monash University, a consultant to many governments, central banks and financial institutions, and a commissioner of the Fiji Higher Education Commission.
*Dr. Bernard Ngindan Iyke is a lecturer at La Trobe Business School, La Trobe University. He also acts as an advisor and consultant to various organisations, including central banks and international research institutes.
-Originally published by 360info™ under Creative Commons
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