Former ASGERF Board of Trustees member urges caution over plans to issue new bond series

Pago Pago, AMERICAN SAMOA — Economic consultant Fuiavailili Keniseli Lafaele is urging caution over the American Samoa Economic Development Authority’s (ASEDA) plan to issue two new bond series totaling up to $65 million, citing the Territorial Audit Office’s FY2025 Local Budget Audit (Report 25-01, July 2025), which projects a 25 percent shortfall in local revenues — approximately $42 million below budget.

“When revenues are falling and expenditures already exceed income by $24 million, the government’s priority should be stabilization and fiscal reform — not expanding liabilities,” Lafaele said.

The proposed bond sales include a $50 million refunding bond (Series 2025A) to refinance existing ASEDA 2015A bonds, and a $15 million new-money bond (Series 2025B) to fund completion of the Fono building, construction of a new correctional facility, and ASTCA’s internet capacity and redundancy projects.

Lafaele noted that ASEDA’s bonds are secured by “100 percent of pledged taxes,” meaning that declining revenue streams are being further pledged to debt service obligations.

“Refinancing can be beneficial if it saves money — but without public disclosure of the savings, rates, or repayment schedule, we can’t tell whether this move lightens the load or merely reshuffles it,” he explained.

He added that financing operational expenses such as furniture, fixtures, and equipment through long-term debt contradicts the audit’s warnings about blurred boundaries between operating and capital expenditures.

Lafaele called for full disclosure and legislative oversight before any bond sale is finalized.

Specifically, he urged ASEDA and the administration to release:

1. Savings and repayment data for the 2015A refunding;

2. Repayment sources and coverage ratios for the 2025B bonds;

3. Impact on annual debt service relative to the General Fund;

4. The Governor’s required deficit-correction plan under Section 3 of the Budget Code; and

5. Assurance that all future capital spending follows lawful appropriations.

“Borrowing is not the enemy of progress,” Lafaele said. “Borrowing without balance, transparency, or accountability is.”

The Territorial Audit Office’s report can be accessed at www.asgaudit.com (Report 25-01, July 2025).