Financial Secretary Office News

Financial Secretary Office News

Cook Islands Government Quarterly Financial Reports - June 2019

The Cook Islands Government (CIG) preliminary financial outcome for June 2019 quarter is now available.

Net Operating Balance and Fiscal Balance of General Government

June 2019 Quarter

Budget

(‘000)

Actual

(‘000)

Variance

(‘000)

Operating Revenue $185,152 $209,937 $24,785
Operating Expenditure $166,077 $154,283 $11,794
Net Operating Balance $19,075 $55,654 $36,579
       
Add Depreciation $11,978 $8,487 $3,491
Less Capital Expenditure -$47,530 -$36,318 -$11,212
Fiscal Balance -$16,477 $27,823 $44,300

The net operating balance for the period ended 30 June 2019 was a surplus of $55.65 million, which represents a $36.58 million higher compared to the surplus estimated for the quarter.

The favourable result was driven mainly by;

  1. Savings in overall operating expenditure of $11.79 million. The first three months of the financial year evidenced greater control of operating expenditure due to the delayed tabling of the Appropriation Bill as a result of the 2018 general election. Administered Payments and Ministry and Pa was the main contributor followed by Other Expenses Expenditures
  2. Crown Revenue collected was $24.78 million above Budget Estimates. Taxation Revenue and Fishing Licenses was the main contributor to the above budget estimates, due to end of the calendar year rush to purchase bilateral purse seine days. This was due to the high presence of Skip Jack Tuna in our EEZ in November and December.

Fiscal Balance

The overall fiscal balance for the reporting period was $27.82 million, after taking into account spending on Capital expenditure of $36.32 million and adding back depreciation funding of $8.49 million.

Compared to budget, spending on Capital projects were below estimates by $11.21 million. The variance was mainly due to timing of spending related to a number of projects especially projects administered by Cook Islands Investment Corporation.

Official Development Assistance (ODA)

Official Development Assistance was appropriated at the total value of $61.18 million in the 2018/19 Appropriation. This value includes the Core Sector Support Grant Funding Arrangement with New Zealand for Education, Health and Tourism.

The last quarter for the financial year 2018/19 reported a total spend of $27.32 million. The low spend for ODA in the first quarter of the financial year result in the delay of the appropriation bill being passed in parliament as well as the NZ triennium funding envelope not being confirmed due to ongoing negotiations on priorities and the design of the individual grant funding agreements.

Financial Position

Overall cash position at the end of the reporting period was $171.64 million. This includes $64.90 million of funds that are committed and set aside for specific purposes. This leaves $99.66 million of unencumbered cash reserve which Government can draw upon to fund future investments.

The CIG reported a gross debt of $94.88 million.This amount represents actual disbursed loans adjusted for debt service repayments. Other committed loans that have not being disbursed, like the Te Manatua Cable loan, are not included.

Net Debt was reported at $51.45 million at the end of the reporting period. Net debt adjusts the Gross Debt for the effect of the LRF held against those loans and the loans held on behalf of SOE’s.

(END)

 


Cook Islands - ODA graduation – October 2019

On 10 July 2019, the Organisation for Economic Cooperation and Development (OECD) graduated the Cook Islands to the category of High Income Country, ending eligibility for Overseas Development Assistance (ODA) from 1 January 2020. This is a significant achievement as the Cook Islands becomes the first Pacific Island to achieve this status.

“Graduation is an important milestone in our country’s development, and serves as evidence of effective Government strategies, fiscal discipline and good governance”, Financial Secretary Garth Henderson, said.

Following notification of potential graduation in 2016, the Cook Islands Government requested an extension on the decision in order to develop the appropriate statistical data and eliminate the possibility of the country’s premature graduation. The National Statistics Office, with assistance of partners, refined the existing data and developed previously unavailable data on Gross National Income (GNI), the OECD’s standard measure for determining economic development.

The revised data indicates that the Cook Islands GNI per capita is well above the threshold set by the OECD in each of the years from 2015-2017, serving as a signal to OECD countries that the economy is strong enough to allow for financial independence and self-sustainability.

The Cook Islands’ aid expenditure was estimated at 5 per cent of Gross Domestic Product (GDP) in 2018/19. This is a significant fall from nearly 50 per cent in the 1970s. New Zealand contributed approximately 67 per cent of ODA in 2018/19, with the Green Climate Fund contributing a further 7 per cent. These partners are not expected to cease providing support to the Cook Islands following graduation. In addition, the OECD has recently amended their rules to allow a country to re-enter the list of ODA-eligible nations in the case of GNI falling below the eligibility threshold.

To further prepare for ODA graduation, the Cook Islands Government developed and released the Medium-term Fiscal Strategy (MTFS) for the period 2019/20 - 2022/23. The MTFS outlines the Government’s fiscal responsibilities, and introduces the Stabilisation Account allowing for smooth expenditure over the course of the economic cycle, thus bolstering fiscal sustainability. The Government has also shifted its focus to ensure that it can be self-reliant by rationalising expenditure, while having access to the necessary skills to deliver public services effectively.

As it stands, the Cook Islands is well equipped to take on the status of ‘high income country’ and will continue to overcome new and unique challenges on the path to further economic growth and prosperity.

October 2019
ENDS

Cook Islands Economic Development Strategy – August 2019

The Ministry of Finance and Economic Management (MFEM) is commencing the first round of
consultation on the Economic Development Strategy (EDS) in the Pa Enua this week. A major focus of the
strategy will be on driving sustainable economic development in the Pa Enua by addressing economic
challenges or constraints on the one hand, and identifying realistic economic opportunities or prospects
that are worth pursuing, on the other.

Consultation commences in Mangaia on 29th August. This will be followed by Mitiaro, Mauke and Atiu
during the week of 2nd September, and Pukapuka, Rakahanga, Manihiki and Penryhn during the week of
9th September. The aim of the consultation is to listen to community and business views to better inform
the EDS.

Following the Pa Enua consultation, MFEM will undertake public and private consultations in Aitutaki and
Rarotonga during September and October.

A second round of consultation will commence on 22nd October 2019 with an Economic Development
Conference to take place at the National Auditorium. Stakeholders from business, community groups,
government and the Pa Enua will have the opportunity to come together to discuss economic
opportunities and challenges in an open national forum.

Financial Secretary Garth Henderson said ‘While economic development strategies have been attempted
in the past, we are now operating in a very different economic context; one where we have experienced
strong economic growth in recent years, so much so that we will be graduating to developed economy
status in 2020. This status requires us to place a greater emphasis on forward economic planning to ensure
that our growth is maintained at a sustainable rate.’

Queries regarding the Economic Development Strategy (EDS) can be directed to the Economic Planning
Division at mfem.economics@cookislands.gov.ck. Further information is available at
www.mfem.gov.ck/economic-planning/economic-development-strategy.

27 August 2019
ENDS