Resilience in the face of the new normal: Minister of Finance, Hon Seve Paeniu

Government News

Issue No. 10/2020 – Wednesday, 16 December 2020 (Kitiona Tausi)

The Minister of Finance, Hon Seve Paeniu delivered his 2021 Budget Speech with the theme “Resilience in the face of the new normal” saying. “ He said, “In these uncertain and challenging times, it is important that we continue to equip and assist our people and our nation face these challenges head on while at the same time build their resilience to be able to deal with with any future shocks.

“It is therefore important that the Government  drives targeted policy reforms to address the underlying structural economic challenges to unlock Tuvalu’s potential to realize sustained economic growth and to provide the  necessary social support for the vulnerable.

In his budget overview, Hon Paeniu explained that this is the second national budget  for this government which involves paving the way for a more secure Tuvalu in this era of the new normal.

“This unprecendented time as a result of of the continuing impacts of COVID-19 on our economy and people, has required a more targeted response for our economy and budget for 2021. With compteing priorities in these uncertain times, it is very important that Government embeds its vision of resiliency to ensure our national aspirations of a peaceful, resilient and prosperous Tuvalu are achieved.

This 2021 national budget will be the first time that the National Budget exceeds $100 million and it is also a balanced budget, meaning we also expect to collect domestic revenues and general budget support totalling $108 million in theyear 2021.

On the issue of the National Strategy for Sustainable Development (NSDD) that has recently been concluded , he explained that it comprises of five Strategic Priority Areas including the Enabling environment, Economic Development, Social Development, Islands and culture development, and Infrastructure development.

Hon Paeniu explained to Parliament that the final version of this new NSSD which called “Te Kete” will be table t Parliament during this meeting. It is a long term 10 year Plan that will take through from 2021 to the year 2030.

Hon Paeniu said one of the key priorities in the Enabling environment is our Constitution which work on it is progressing well on finalising the constitutional review through the Parliament select committee. A new High Curt Judge has been appointed and reforms to our Judiciary System including the Islands and Lands Court are also prioritised . Government is also about to complete the process for the appointment of new Governor general, and with the appointment of the new Auditor General to be approved by parliament in this sitting.

The total expenditure for 2021 is estimated to be $108 million which is an increase of $25.3 million from this year’s budget. This total expenditure includes $72.8 million in current expenditure, $11.6 millionnallocated for one off Special Development Expenditure (SDE), $22.3 million for Special Capital Investments or special Infrastructure and $1.5 million in Statutory Expenditure. Of the $22.3 million for Special Investments, $1.3 million is for the establishment of Air Tuvalu.

On the COVID-19 response, Hon Paeniu explained that is almost a year now since COVID-19 was declared a global pandemic and Tuvalu has remained covid free because Government has remained determined in outting in place protection meassures to ensure the safety of the people.

Most of this year’s efforts and financial resources were targetted towards dealing with the impacts of Covid-19. Since the declaration of the COVID-19 Pandemic on March 11th 2020, the Government offered citizens through Government’s Economic Stumulus Package to cushin the impacts of COVID-19 on their livelihoods and to equip them to be prepared and respond to uncertainties.

To date, Hon Paeniu said, Government in conjuction with our donor partners, including Australia, New Zealand, Taiwan, ADB and the World Bank have sent a combined $6.7 millionon Covid-19 related expenses. These include the economic relief relief packages, Risk Allowances for front line and border security officers, Repatiriation flights, quarantined facilities, covid-19 tests for returning citizens and medical equipment and supplies.

Under the 2021 budget an allocation of $1.1 million is under the Ministry of Finance to cater for any Covid-19 related expenditures. Under the Ministry of Health is a new allocation of $92,000 for infection and diseas prevention programs, including covid-19 prevention: $50,000 for the health IT department to futher enhance the health information systems.

With the increasing demand on internet connectivity to accommodate demand for virtual meetings and related modalities, there is a $250,000 allocation under the Ministry of Communications to provide for the establishment of a project management unit for the submarine cable connectivity. In addition there is a $380,000 allocation within the same ministry for increasing satellite bandwidth to meet part of this  increased demand. Besides the paradigm shift capability of technology and connectivity, it will allow us to be on a par with advanced countries in remaining connected despite birder closures due to the pandemic.

On the issue of health, Hon Paeniu said, the urgent need to invest in our health system remains a priority despite the already sustain spending on health response to COVID-19. The Government has committed to utilise part of the World Bank funding IDA19 towards a comprehensive Health program with the aim that we will derive long lasting health system improvements and more importantly a healthy nation. The immediate health needs of our people cannot be ignored and thus, Government will maintain an allocation of $5.5 million for the Tuvalu Medical Treatment Scheme (TMTS) which is in line with Government’s priority to provide good health care services and improve the well being of its people through better access to proper medical facilities.

In Education, he said Government will invest heavily in the next financial year and beyond. There is currently an ongoing review of the schools curriculum that will hopefully result in  harmonised education system and should ensure we are providing targeted education programs that will equip our future generations to reach their highest educational potential.

Having the right education is not enough as we ned to invest also in school facilities” buildings and equipment. The 2021 budget allocates a further $2 million for the Nanumea classroom and an additional $300, 000 for the completion of the Nukufetau classroom whici is on top of the existing Special Infrastructure balances for these education infrastructure projects.

There is also a feasibility study undertaken to assess the need and viability of establishing a junior high school in Tuvalu, to be located in the northern islands. Once established it will increase the educational opportunities for Tuvalu children.

The Government is also committed to achieving quality and holistic educationoutcomes for all children though the renovation of the Sporting Complex on Funafuti and the constuction of sporting facilities on all outer islands as highlighted in the revised TISIP and ‘Te Kete’. Government has allocated an amount of $843,700 for these activities in the 2021 budget. This should lead to some of our future sports men and women choosing the pursuit of legitimate professional career.

On the New Foreign Policy and mission restructures, Government has decided to close down our EU mission in Brussels and open up a new mission in the UAE based in Abu Dubai. This development will signal a new direction in our foreign rellations and engagement with the international community. The business opportnities in Abu Dubai and the potential collaboration on renewable energy and building artificial islands with the UAE government promises to yield tremendous economi returns for Tuvalu.

The mission in Suva is being upsclaed given its role as Tuvalu’s maindiplomatic hub with the addition of an additional first secretary and the uograding of an existing position to undertake a liaison and protocol role.

The budget for the New Zealand mission in Wellington will also receive additinal funding to cater for providing more regular consular services to our diaspora in Auckland and $52,000 has been budgeted  in travel costs for this purpose.

As a new initiative, Government will launch a Citizenship by Investment (CBI) program next year that will invite foreign nationals to obatain Tuvalu passports in exchange for investing in our development. This initiative will commence with a consultation process.

There is also a new initiative to introduce e-passports for facilitating ease of travel for Tuvaluans as well as providing advanced security features. A budget of $500,000 has been allocated towards these initiatives. These initiatives have the potential to yield US$5 million in its first year and US$19 million each year after that for ten years.

On Falekaupule Development, Govrrnment has approved anther $500,000 for all Falekaupule in the 2021 Financial Year for economic activities in theouter islands. The 500K is now changed to recurrent expenses and while the aim remains that of boostig island economies, the way it will be implemented wil change. Each member of Parliament will have to initiate development projects, to the value of $250,000 each, in consultation with the Falekaupule and Kaupule. Tis should provide impetus for its utilization.

The current support for Falekaupulee through Special Infrastructure and the Vessel Day Scheme (VDS) will remain, bringing a total of potential development projects per island per year to almost $1 million. The funding assistance is in line with the vision of self reliance and creating a domestic market to support our locals and their livelihoods.

(Tuvalu Paradise Daily will bring more coverages from the House of Parliament session in the upcoming issues).

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