Page 17 - IB August 2020

Cover Cover

The old and the new guards: Founding father Walter Lini and a young ni-Vanuatu children celebrate independence Photo: MSG

MID-LIFE CRISIS?

HOW WILL VANUATU RIDE OUT COVID AND CYCLONES

By Samantha Magick and Len Garae tion’s development journey.” The paper says attaining funding
assistance will be based on maximising impact and leveraging
There was no social distancing evident as tens of thousands private sector investment.
of Vanuatu citizens marched through the capital to celebrate Pre-COVID and cyclone, Vanuatu’s economy was projected
the nation’s 40th Independence Anniversary at the end of last to grow by 3.4% but the forecast now is a contraction to
month. Vanuatu is one of just eleven countries (at the time 0.6%. In an update just released, the Ministry of Finance says
of writing) to record no coronavirus cases, so joyful celebra- growth is expected to remain positive because of Govern-
tions were unfettered by crowd limits or stringent sanitation ment’s TC Harold recovery efforts, the economic stimulus
protocols. package and donor support, plus implementation of infra-
Vanuatu gained its independence from Britain and France on structure projects and the 11th European Development Fund.
July 30, 1980. Reflecting on that time, independence figure Medium term projections are also robust, driven by agricul-
Pastor Sethy Regenvanu said 40 years ago there were many ture and industry.
factors that separated them, but that the people of Vanuatu Vanuatu’s strong fiscal position and successive years of bud-
had always been independent as “before white people came get surpluses means it should be able to fund its US$37 million
to Vanuatu we were…relying on our subsidence agriculture stimulus measures from its own reserves. While tax revenue
and our way of life, culture and customs.” for the first half of the year is down 1.8% on the same period
The 40th birthday celebrations began with the solemn hand- in 2019, revenue from the honorary citizenship program was
ing of the Vanuatu flag from the family of first Prime Minister, up 32.3% over the first six months of last year, netting Vt
Father Walter Lini, to successive Prime Ministers or their fami- 7,094.2 million (US$62,000). This means the 2020 target has
lies, in chronological order, ending with the recently-elected already been exceeded.
PM Bob Loughman. It offsets the hit to Vanuatu’s tourism industry. A proposed
Loughman takes the baton as the country meets the twin ‘TAMTAM’ travel bubble to enable quarantine-free travel for
challenges of COVID-19 and Cyclone Harold-induced economic people who meet strict health and contact tracing require-
trouble. ments seems some distance off. Prior to the pandemic, in-
Vanuatu is due to ‘graduate’ from Least Developed Country dustry figures were optimistic about the important industry’s
(LDC) status at the end of this year. Loughman is determined potential, particularly on Efate where new resort and hotels
to pursue the process (which has been delayed three times at all classes were planned.
already) despite the stresses of COVID and cyclones. LDC While lucrative, the citizenship scheme is not without
status is designed to support countries facing deep obstacles political or legal risks. Prior to his election, Loughman’s
to economic advancement. Graduation means that while they Vanua’aku party promised to review it, however it appears
may still receive aid, they should no longer need maximum the citizenship revenue is too important, particularly in this
concessionary treatment from development partners. environment, to forgo.
An ESCAP paper last year suggested Vanuatu’s successful This month, Australian media reported that iProsperity boss,
graduation is a significant achievement which would require Michael Gu, had fled that country after his company col-
a well-informed transition strategy, and “marks the start of lapsed, owing creditors A$325 million. The company allegedly
what will be a potentially more challenging phase of the na- Continued on page 29

Islands Business, August 2020 17