Islanders struggle daily to survive

Dionisia Tabureguci



 
THE GLOBAL ECONOMIC CRISIS HAS BECOME AS much a cliché as it is a litmus test to the survival of modern day’s financial and economic paradigm, as it is known.
  Pacific governments have been struck, along with other countries in the world, with its dislocating impact. And if there ever were a time when much was expected from these governments to steer their nations and people out of grave uncertainty, it would arguably be now.
  Across the Pacific, families quietly suffer as the burden of financial transgression committed thousands of miles away weigh down on their daily struggle for survival.
  Even bare necessities—which these days also include education for children—have become so costly that some families are forced to go without.
  Parents have to think extra hard to find ways to stretch their dollar as purchasing power dwindle against rising costs of food and services.
  Children, in some cases, find their education cut short as they are heaped with the onus of earning income for their families.
  Such a human face to the economic crisis, said one observer is often overlooked when the focus is put on the recovery of Pacific islands nations.
  This human factor, said David Abbott, Regional Macroeconomic and Poverty Reduction Advisor at the Suva-based United Nations Development Programme, ought to be as much a concern for policymakers as the need to recognise that the region is now doubly challenged: how to recover from the crisis and even more importantly, how to deal with the economic difficulties already associated with each islands country.
 
  ‘Humanitarian crisis’
  “Basically, what I’m saying is most small Pacific islands were still having low economic growth in pre-crisis period. Their growth has become even lower as a consequence of the crisis.
  “But if you look at things at human level, one of the biggest concerns for us at UNDP is the possibility that many more people, many more families are falling below the national poverty line, largely because of the rises in basic food prices over the last 12 to 18 months,” Abbott told ISLANDS BUSINESS.
  “Prices of rice, flour, sugar, cabin crackers…all those basic food commodity items rose in price quite dramatically last year. They have come down quite a little bit but they haven’t come down very much.
  “This is still putting a great deal of pressure on household budgets, especially for those in the lower income bracket.
  “Many households at the lower income levels are struggling to meet their basic needs and that’s our real concern,” Abbott added.
  Abbott is among those preparing for a Pacific Conference on the Human Face of the Global Economic Crisis, to be held this month in Vanuatu.
  The conference—the first of its kind since the crisis and which expects to bring together more than 200 high level delegates from 16 Pacific islands countries—plans to discuss ways to mitigate the impact of the crisis on various categories of vulnerable groups, including women and children.
  Among its list of top-level speakers is former New Zealand Prime Minister, now UNDP administrator Helen Clark.
  “Beneath this global economic crisis lies a global humanitarian crisis in which the future of Pacific Islands children hangs in the balance,” said another observer Dr Isiye Ndombi, Pacific Representative of the United Nations Children’s Fund.
  UNICEF, like UNDP, has come out strongly advocating the need by Pacific islands governments not to forget the well-being of their people as they deal with the impact of the crisis.
  The Asian Development Bank, also a partner in the Vanuatu conference, highlighted in its Pacific Economic Monitor last November that an estimated 50,000 more people in the region will be joining those who already live below the poverty line—a direct result of the global economic crisis.
  The UN organisations fear that such a setback in progress already made to reduce poverty in the region could also hamper efforts made by Pacific countries to achieve the Millennium Development Goals.
 
  What can be done?
  With such social aspect to consider alongside old and new economic challenges, Pacific governments are undoubtedly dealing with a tricky recovery assignment.
  But, just what are the options if they are already limited, as some believe, in what they can really do?
  Easing the current sufferings of the Pacific’s poor and vulnerable would require some measure of economic recovery from the crisis, which advanced economies are doing through the use of financial stimulus packages.
  The general consensus in some quarters, however, is that Pacific governments may not be in a position to either fund their own stimulus packages or be able to borrow if they need to in order to fund one.
  After a recent Article IV mission to Fiji by the International Monetary Fund, team leader and division chief in the Asia and Pacific Department, Ray Brooks, told ISLANDS BUSINESS that a country like Fiji with a high public debt and stressed foreign exchange reserves may have little to go on with.
  If this is the case for Fiji as one of the region’s more advanced economies with lesser inherent challenges, the scenario is bleaker for the other economies.
  “Few governments around the region have the ability to finance these stimulus packages because their budgets were already in deficit or very finely balanced,” said UNDP’s Abbott.
  “Very few countries in the Pacific have the opportunity to borrow internationally because they don’t have credit ratings, so therefore, they have to finance any stimulus package either by raising their deficits or borrowing in their domestic market. But then again very few of the Pacific islands have well developed domestic financial markets so their ability to borrow is very limited. Therefore, it is very difficult for them to make stimulus package, so the question is how are they going to stimulate economic recovery.
  “That’s a big problem, and for many small countries, it is going to be extremely difficult for them to recover.
  “They weren’t growing very fast before the crisis, they are going to have much more trouble in the future now that global growth is going to be lower.
  “They are going to have much more trouble even then to actually raise their growth.”
  Both men agree the options are so limited for Pacific islands governments that perhaps the only sensible thing to do is to make better use of whatever resources there are at their disposal.
  “One thing that we have been saying consistently over the years is for Pacific governments to strengthen their own budget management and service delivery to raise productivity in their public services and therefore get better value for money for the tax dollar they spend,” said Abbott.
  “So if they can make their public services more efficient, they can then do more with the resources they have.
  “It’s very important to switch spending within the spending envelope to the priority areas,” said Brooks.
  “Shrink government down to its core functions of protecting health and education and other core functions and do away with or corporatise/outsource other areas where efficiencies can be made.”
  The advise that Pacific governments may be getting as members of the Pacific Islands Forum Secretariat could be a holistic approach to deal with both social and economic issues as Pacific Islands Forum Secretary-General Tuiloma Neroni Slade revealed in his keynote address to a Lowry Institute conference last August.
  “I would stress that the Pacific response [to the Global Economic Crisis] must be collective and embody a combination of actions, policies and initiatives that involve national governments, regional organisations and development partners,” Tuiloma told the conference.
  “In the short-term, I believe we must be especially mindful of the general social well-being, accentuated political pressures and the importance of partnership and reform. Over the medium term, we must focus on ensuring better food and energy security, which in many respects, are the two areas hardest hit by the crisis in the Pacific region,” he said.
  While no one is expecting Pacific governments to take their countries out of the doom alone, all eyes are on them to play a very important role: be responsible with scarce resources and make well informed policy choices that will ensure the well-being of their people during these trying times and into the future.