Samoa’s narrow economy and limited resources create a difficult environment for business, and make the country highly vulnerable to global economic shocks.  Frequent natural calamities exacerbate this vulnerability, as demonstrated by the cascade of negative impacts on the country’s economy by the global financial crisis in 2008, a tsunami in 2009, and Tropical Cyclone Evan in 2012. The economy suffered further when a pillar of its automotive manufacturing industry closed in August 2017 and Cyclone Gita struck in February 2018.  Economic growth consequently just averaged 1.2% between financial year 2008 and 2015, well below the 4.3% average in 1999–2007. Growth has remained highly volatile until recent years, dropping from 2.7% in 2017 to a five-year low of 0.9% in 2018.

The government responded to each of the negative impacts with fiscal stimuli financed by grants and domestic and external debt accumulation, as well as a monetary stimulus through lower interest rates. The series of events raised fiscal deficits and escalated public debt.  Successive governments struggled to restructure the economy, reduce subsidies to public corporations, and improve the environment for private sector investment, trade, and commerce to secure a more diversified economy.

To assist the government in meeting its fiscal deficits, the Asian Development Bank (ADB) approved the programmatic policy-based Fiscal Resilience Improvement Program, which initially consisted of two subprograms. Subprogram 1 was approved in December 2016 for a grant of $5 million, while a loan of $5 million was scheduled to finance subprogram 2 upon approval.  Subprogram 2 did not push for three reasons.  First, following the change in the International Monetary Fund’s debt risk assessment methodology in 2017, Samoa’s rating slipped from moderate to high risk, allowing the government to access ADB financing on a 100% grant basis from January 2018.  The government chose to delay subprogram 2 to 2018 in recognition of its debt position. Second, with the delay in subprogram 2, ADB stepped back in its engagement with Samoa resulting in ADB not joining ongoing discussions around policy priorities and not closely tracking changes in the joint action policy matrix agreed between government and other participating development partners. As such, ADB did not recognize the implications of these changes until processing of subprogram 2 was initiated in late 2017. Third, ADB was unable to make significant changes in the program, as unlike the other development partners supporting the joint policy action matrix on public financial management policies and processes, it was not commencing a new phase of assistance.

Discontinuation of subprogram 2 left subprogram 1 to solely achieve the program’s envisaged impact to maintain Samoa’s macroeconomic stability and its intended outcome to strengthen the country’s fiscal resilience.  These higher-level results were consequently only partially achieved, even if all the policy actions included in subprogram 1 were successfully implemented.  Building on the gains from previous ADB-financed reform programs to further reduce the fiscal drain through reform of state-owned enterprises, subprogram 1 successfully supported (i) cabinet approval of at least of one public–private partnership, (ii) the complete privatization of the Agriculture Store Corporation, and (iii) cabinet approval of a privatization and divestment policy. 

Value-for-money in public spending and public services delivery were enhanced by establishing framework agreements and introducing pooled procurement to enable faster procurement and increase efficiency through economies of scale. These measures also promoted greater competition among suppliers, resulting in lower prices. Guidelines for the use of framework agreements, revised treasury instructions, and new standard templates for the procurement of major works were also prepared.  An assessment of the previous debt strategy was completed, and cabinet approval of a new medium-term one was realized.  A national monitoring and reporting framework for climate change was established, and climate risk and resilience indicators in incorporated into the updated Strategy for the Development of Samoa.

Because of incomplete implementation of the overall intended outputs, the program was rated less than successful by ADB’s Pacific Department.  It had the Ministry of Finance (MOF) as executing agency, and the MOF and Ministry of Public Enterprises as implementing agencies.