‘Stable’ credit outlook points to low likelihood of rate change for territory

Pago Pago, AMERICAN SAMOA — According to the latest Public Debt and Economic Outlook- 2025 Update, as of September 30, 2023, American Samoa's total public debt was $145.4 million. This is one of the highlights of the Update report released last month by the Government Accountability Office (GAO), which also included the observation that the government may consider refunding some 2015 bonds in 2025 to reduce debt service costs through lower interest rates.

Moody's has assigned a stable credit outlook rating to American Samoa, indicating a non-investment grade status with substantial credit risk due to its small, volatile economy, low income levels, and the dangers of sea-level rise.

The report observes that the strength of a territory's economy significantly influences its ability to repay debt and access capital markets.

For fiscal year 2023, American Samoa reported an overall surplus of $93.7 million, a significant increase from fiscal year 2021. The primary government had a surplus of $63.4 million, reversing a previous deficit, while component units reported a surplus of $30.3 million, both driven by rising revenues outpacing expenses.

According to the GAO report, in fiscal year 2023, American Samoa's total revenue reached approximately $855.7 million, marking a 43 percent increase from fiscal year 2021. 

The primary government revenue for American Samoa in fiscal year 2023 was about $607.5 million, which represents a 52 percent increase from fiscal year 2021.

The most significant growth in revenue during this period was attributed to grants and contributions specifically for education and culture programs. Territory officials noted that the revenue boost resulted from higher corporate tax revenues and federal stimulus funds related to the COVID-19 pandemic. 

Overall revenues topped the mark at $248.3 million, reflecting a 26 percent increase since fiscal year 2021.

Noted is that the American Samoa Power Authority (ASPA) experienced the most significant revenue growth between fiscal years 2021 and 2023.

Officials explained that this increase was primarily due to higher fuel prices used for electricity generation, which were passed on to customers through service charges. However, the increase in service charge revenue at ASPA slightly surpassed the overall rise in total expenses.

American Samoa’s total expenses amounted to $762 million in FY 2023, reflecting a 30 percent increase compared to fiscal year 2021.

The primary government expenses for American Samoa in fiscal year 2023 were $544.1 million, representing an approximate 34 percent increase from fiscal year 2021.

The most significant rise in primary government expenses during this period was in education and cultural programs, driven by an increase in grants and contributions.

The report noted that American Samoa's GDP was relatively stable, reaching $840.8 million in fiscal year 2022. When adjusted for inflation, this indicated an economic growth of approximately 1 percent compared to the previous year.

The GAO said that while American Samoa’s GDP has been relatively stable, its economy continues to face fiscal risks due to its dependence on the territorial government and tuna canning industry, as well as other factors, including challenges with economic diversification efforts and climate risks. 

According to the U.S. Bureau of Economic Analysis, fish exports from American Samoa declined by 29 percent in 2021 compared to 2020. However, in a more recent report, the Bureau announced that fish exports increased by 3 percent in 2022 relative to 2021. 

The GAO reported the following events affecting the Territory’s economy:

1— In April 2025, an executive order was issued that lifted restrictions on commercial fishing, which had been imposed to conserve marine species and ecosystems in a protected area near American Samoa. In response to this change, Governor Pulaalii N. Pula said that the reopening of commercial fishing would help maintain the operations and competitiveness of the tuna cannery.

2— In June 2020, the GAO reported that the government was investing in the development of a call center industry to diversify the territory’s economy.

As of March 2025, territory officials indicated that they are in the design phase for the call center building and have already selected a location and a construction company. 

3 — GAO noted that the high costs of broadband internet and electricity present challenges for businesses in American Samoa.

To tackle the issue of broadband costs and promote economic development, officials have created a broadband strategy outlining priorities and actions to improve internet access across the territory. They are working on enhancing high-speed broadband infrastructure to develop the technology sector in American Samoa further.

4 — The GAO noted a previous report that American Samoa is vulnerable to tsunamis and other coastal hazards. According to the U.S. Geological Survey, the territory is vulnerable to sea-level rise partly because of the steep terrain of its islands. Further, the agency reported that the territory’s islands are sinking because of the 2009 earthquakes. These events can directly affect the economy by, for example, damaging property and infrastructure and displacing individuals.

To address these risks, territory officials said they developed a resilience commission office and joined the Pacific Islands Forum. As new members of the Pacific Islands Forum, territory officials believe that they can learn best practices from other islands and coordinate to mitigate climate risks across the region.

OTHER ASPECTS OF THE REPORT

It was highlighted that American Samoa’s pension liabilities decreased from fiscal year 2021 to 2023. In fiscal year 2021, American Samoa’s primary government and component units reported having almost $262 million in net pension liabilities — about 35 percent of GDP. In January 2022, American Samoa passed legislation to increase contributions to the pension fund to avoid insolvency within the next decade.

As of September 30, 2023, American Samoa’s primary government and component units reported having over $168 million in net pension liabilities, a decrease of 32 percent from fiscal year 2022 and a decrease of 36 percent from fiscal year 2021. Officials attributed these decreases to a high return on investment for the territory’s pension plans and to increased contributions.

As previously mentioned, timely and reliable financial reporting is essential for territories to make informed decisions regarding debt management and to access capital markets if necessary. Since at least 2017, American Samoa has consistently submitted its yearly single audit reports on time.

According to the GAO, the audit opinion on the territory’s financial statements has recently improved.

The territory received an unmodified (clean) audit opinion on its most recent fiscal year 2023 financial statement, after several years of receiving qualified opinions. Additionally, American Samoa received a clean opinion on each of its major federal award programs, meaning auditors did not find any compliance issues that had a direct and material effect on those programs.

However, the GAO while noting that the territory’s financial statements are timely and reliable, weaknesses in internal control continue to exist.

The territory’s independent auditors identified a recurring material weakness in internal control over financial reporting related to its financial close and reporting process.

This weakness reduced the government’s ability to produce timely and reliable financial reports on a monthly, quarterly, and annual basis without significant adjustments after the books were closed.

Auditors have also reported that the territory has not established required quality control procedures for one of its federal award programs. As a result, American Samoa does not have any monitoring controls in place to ensure compliance with the federal award program’s requirements.