Financial Secretary Office News

Financial Secretary Office News

Public Release - Competition and Regulatory Authority Bill 2019 & Telecommunications Bill 2019

Market Competition Policy 2019 was released in May 2019. The draft policy sets out the Government’s plans to open up the Cook Islands telecommunications market to competition. The draft legislation that will give effect to the policy has now been released for public consultation. The Government is seeking industry and community feedback on the policy and legislation. The Government will also be holding two community meetings on this topic:

  • 6pm Wednesday 30th October 2019, Calvary Hall, Arorangi
  • 6pm Thursday 31st October, Titikaveka, Sunday School Hall. 

The draft legislation is available on MFEM’s website at http://www.mfem.gov.ck/economicplanning/telecommunications-reform-2019 or can be obtained by either contacting the MFEM Economic Planning Division on 29511 or via email at mfem.economics@cookislands.gov.ck. 

Submissions can be sent to MFEM by post at PO Box 120, Avarua; via e-mail at mfem.economics@cookislands.gov.ck; or lodged in person at Level 1, MFEM Building, Avarua.

21 October 2019
ENDS


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