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Higher Tuna Revenues A Double Edged Sword

Tuna fishing license fees are raking in more revenue in small Pacific countries than was forecast at the beginning of the year, but it’s a double edged sword, as nations are advised that they need to use the earnings appropriately. 

The Vessel Day Scheme (VDS) implemented by the eight tropical tuna countries that are Parties to the Nauru Agreement (PNA) has meant a stronger financial performance for Kiribati, Marshall Islands, Nauru and Tuvalu for the second year in a row.

Radio Australia presenter Jemima Garrett spoke to Emma Veve, Principal Economist of the Pacific Department at the Asian Development Bank. Veve said: “This is a really positive thing for the countries but it is a double edged sword in that when countries have windfall gains in revenue they need to ensure they use them appropriately, perhaps put some aside for a rainy day rather than lifting expenditure to a new high level which can’t be sustained.

“These countries are heavily dependent on fisheries revenues to drive the government budget. The people in these countries also benefit from significant remittances which help people out at the grassroots level, but government does rely on these fisheries revenues for the basic provisions of social services, maintenance and infrastructure etc.”

She explained: “the Vessel Day Scheme provides a good framework for a heightened level of fees going forward but of course the vagaries of tuna and weather mean that this is a resource that moves across the Pacific and is in different regions in different years, so what a particular country might get in terms of revenue year on year, is quite difficult to project and it is something that the budget people in these countries have struggled with for years, to accurately project what their year on year revenues will be from fisheries.”

Veve outlined that economic pressures were expected to increase next year, some of which is due to country specific cases. She said: “We have had Samoa and even Fiji to some degree having to make significant public investments to recover from the cyclones they experienced in late 2012, so that has put expenditure pressure on their budget. PNG is planning to run another large deficit trying to counter the effects of the slowdown in its economic growth and that is something a lot of countries try to do when their growth starts to flow.”

She explained that a number of countries are starting to have to think about borrowing money very carefully as they are “getting into levels of debt that start to become a concern in terms of levels of sustainability.”