Lemanu: Inflation and the challenges of the global economy during COVID

Pago Pago, AMERICAN SAMOA — American Samoa’s public health emergency in late 2019 in response to the measles outbreak, followed by the Coronavirus pandemic in 2020, has taken a toll on the local economy, which has now reached unprecedented heights due to the global impact of COVID-19.

This according to the Governor’s prepared English speech that was distributed during the opening of the Fono session last week.

Federal financial resources were injected into the local economy through direct federal benefits to local residents including stimulus funds, food stamps, rental assistance, cash assistance, capital assistance for businesses, just to name a few.

According to the governor, American Samoa has endured the debilitating impacts of COVID-19, and has adapted to the changing demands of the global pandemic.

The availability of federal financial assistance through CARES and ARPA in addition to the Territory’s entitlement and competitive grant awards have sustained the economic needs of the Territory in preparation for, in response to and recovery from the pandemic.

Federal grant dollars are among the largest contributors to American Samoa’s Gross Domestic Product (GDP) rate, hence the uptick by four percent (4%) in 2020.

“We also anticipate an increase for the 2021 GDP given the continuing increase of federal awards, consumer spending and exports,” the governor’s written statement said.

“The high output in consumer spending has also had its unintended consequences with high inflation and the list of global challenges beyond our control. Such global challenges include high shipping costs and supply chain disruptions on top of high fuel costs as a result of the Russian invasion of Ukraine.

Given the challenges at hand, ASG moved to implement a list of key economic recovery programs since its first COVID-19 community spread in late February 2022. These economic recovery programs focus on the following:

•           more access to capital through low-interest rate small business loans;

•           a line of credit program with maximum value of half a million per eligible business applicant;

•           a business recovery capital grant program with a maximum value of $25,000 per an approved business applicant;

*          and cash assistance up to $10,000 per approved applicant to subsidize shipping, commercial rent, utilities (internet, water and electricity), propane gas, fuel, and tools/supplies for commercial fishing and farming.

These programs were specifically designed for local business recovery and resiliency across the territory.

As an example the governor explained that 8 small businesses were encouraged through these economic recovery programs to ensure preparation and readiness for unforeseeable emergency shutdowns.

He further wrote that American Samoa is lined up to receive more federal funding assistance for broadband connectivity and infrastructure. “Frankly, we are heading towards a digital economy with broadband industry expansion. This means progress and development in the 21st century for American Samoa.” (See separate story in today’s issue.)

In addition, the governor mentioned efforts underway to prepare a long-term plan to sustain the local economy after CARES, ARPA and Bipartisan Infrastructure Law (BIL) opportunities expire and he said the administration is considering new revenue streams for local economic sustainability achieved through tax reform and foreign direct investments to diversify the economy.

American Samoa’s participation at the Select USA Investment Summit in Washington DC last month was a first-time opportunity for the territory to engage directly with US Secretary of Commerce Gina Raimondo. “During our meetings, meaningful discussions to attract new investments and to remove investment barriers in rural and underserved communities were a priority for Secretary Raimondo. This was encouraging in my roundtable discussion with other Governors to ensure we align education, workforce and the economy.

He also announced that the local Department of Commerce is pursuing the establishment of a Minority Business Development Agency (MBDA) Center for American Samoa in the near future.

“As we tread carefully through these tough times. American Samoa’s economic prosperity requires collaboration through public private sector partnerships. It means building new relationships to secure new opportunities for the improvement of the quality of life in American Samoa,” the governor concluded.