Cook Islands Ministry of Finance News
The six new Cook Islands coins 10 cents, 20 cents, 50 cents, $1, $2 and $5 were launched by the Minister of Finance Honourable Mark Brown on 26 May 2015 and were available from the banks on 4 August 2015.
Initially, the last day for the old Cook Islands coins to be used as legal tender was 31 January 2016, however, this date has been extended to 30 April 2016. Therefore, as from 1 May 2016 only the new Cook Islands coins and the New Zealand coins will be the legal tender in the Cook Islands.
The public is encouraged to take their old coins to their banks and exchange for new coins by 30 April 2016.
27 January 2016
PRESS RELEASE: ELECTION OBSERVER MISSION TO VANUATU
The Pacific Islands Forum has accepted an invitation from Vanuatu to send an Observer Mission to observe and assess the Vanuatu Parliamentary elections on the 22nd of January. Cook Islands Chief Electoral Mrs Taggy Tangimetua will be part of the mission with Forum executives and delegates from Tonga. The team will be in Vanuatu next week until after the elections. The mission will monitor Vanuatu's electoral process not only to assess compliance but also to learn from and share any lessons with other member countries. Taggy has participated on other observer missions such as the UK Elections in May 2015. That mission was aimed to provide a snap-shot assessment of the UK elections with the report provided to the Commonwealth Parliamentary Association (CPA) UK. The request from the Pacific Islands Forum for Taggy to be part of the mission is a reflection of her esteem across the region and we are very proud of her.
[END] 8 January 2016
Minister for Finance, the Honourable Mark Brown released the 2016/17 Budget Policy Statement (BPS) outlining the intended focus for the development of the 2016/17 budget for 2016/17 and the 2015/16 Half Year Economic Update (HYEFU).
In releasing the statement Minister Brown pointed out the focus on the first of Government in the first six months of 2016 would be aimed at improving public financial management, economic governance and the public sector, these include:
• undertaking an independent economic review of the underwrite of Los Angeles and Sydney flights;
• further upgrading the Revenue Management System;
• scoping changes required to centralise the Cook Islands Government Financial Management Information Systems (FMIS);
• development and finalisation of the Cook Islands tourism strategy;
• reviewing the medium term infrastructure needs of the education sector and reviewing expenditure levels in the health sector;
• implementing a corrective action plan to meet ICAO universal safety oversight audit programme (USOAP) findings; and
• finalising a set of standard immigration operating procedures.
The 2016/17 BPS outlines base funding for core service delivery and economic growth activities will be maintained across the period of the budget and forward estimates (2016/17 to 2019/20). Any new initiatives will be focussed on strengthening the public sector through ongoing centralisation of corporate services functions and improving overall performance in infrastructure management.
Changes to Income Tax
As of 1 January 2016 the Government will reduce the income tax rate from 18.5 per cent to 17.5 per cent for earnings between $11,000 and $30,000. This rate will be further reduced from 17.5 per cent to 17 per cent from 1 January 2017. These initiatives have already been factored into revenue forecasts. The changes are expected to bring tax revenues as a proportion of GDP come down to around 26 per cent in 2017/18.
Current 1-Jan-16 1-Jan-17
0 - $11,000 exempt 0.0% 0.0% 0.0%
$11,001 - $30,000 18.5% 17.5% 17.0%
$30,001 - $80,000 27.5% 27.5% 27.5%
$80,001 & above 30.0% 30.0% 30.0%
In the 2015/16 budget the Government announced that pensions for those aged 70 and over will be increased by $10 from 1 July 2016 to $660 a month, these changes have already been factored into expenditure forecasts.
Changes to Estimates of Revenue and Expenditure
Tax revenue for 2015/16 has been revised upward by $0.3 million due to an increase in withholding tax being offset by lower collections of other taxes. Estimates of expenditure have increased by around $1.7 million in 2015/16, to accommodate costs incurred in 2015/16 for Te Maeva Nui transportation and the 50th celebrations.
The underlying net operating surplus 2015/16 is anticipated to be of $0.79 million. An underlying net operating deficit of $0.179 million is estimated for 2016/17 moving to a $2.698 million surplus in 2017/18 and $4.674 million surplus in 2018/19. Revenues from Maritime resources have not been updated at this stage but are expected to be higher than the budget estimate.
Seeding of the Sovereign Wealth Fund
The Government is drafting policy and legislation, in consultation with the community, to establish the Cook Islands Sovereign Wealth Fund (CISWF). The CISWF will invest any short-term gains from the natural capital endowments of the Cook Islands for the benefit of all future Cook Islanders. One of these sources of short-term revenue is from fishing penalties. In December 2015, the Cook Islands received $0.5 million in fishing fines. As the CISWF is not yet in operation, these revenues will be held in reserve, and transferred to the Fund as seed funding upon the passage of enacting legislation.
Updated economic and revenue forecasts
Nominal economic growth (which the majority of tax income is derived from) is estimated to be as follows:
• 1.8 per cent growth in 2014/15 (previously 0.5 per cent) due to the increase in public consumption and a fall in imports.
• 0.3 per cent decline in 2015/16 (previously 2.6 per cent growth) due to an increased proportion of government consumption of imported goods and services and a slippage in some capital projects, partially offset by a rebound in tourist arrivals which was evident in the first few months of 2015/16.
• 4.3 per cent growth in 2016/17 (previously 0.7 per cent) due to continued growth in tourism, and capital investments planned for 2015/16 that are likely to slip into 2016/17.
Re-evaluation of debt stocks based on updated exchange rate movements
Total Crown debt is denominated in a number of currencies. The NZD depreciated against all major exchange rates between the 2015/16 Budget at the time of this write up. It is worth noting that the NZD/RMB exchange rate depreciated the most (by 20 percent) followed by the NZD/USD exchange rate (with a 16.3 per cent depreciation), leading to a large unrealised foreign exchange loss on the overall loan portfolio.
Despite this, the net debt position of the Cook Islands remains healthy with net debt (gross debt less loan reserve monies) at 26.4 per cent in 2016/17.
New Zealand is still expected to remain as the largest market with 67 per cent of total arrivals in 2014/15, with Australia having a smaller, but significant share (17 per cent).
Tourist arrivals are forecast to return to solid growth of 1.6 per cent in 2015/16, continuing on at this rate in 2016/17. Growth over the later forecast years is anticipated to remain close to one per cent in each year.
Current calendar year-to-date arrivals (Jan-Oct) are 2.7 per cent higher than the similar period in 2014, and the first four months of 2015/16 (Jul-Oct) are 4.8 per cent higher than the same period last year. In large part, this reflects increased numbers of arrivals due to the 50th anniversary celebrations (which appears to have also increased arrivals in June.
The full statement can be found at this http://www.mfem.gov.ck/mfemdocs/treasury/half-year-updates/1221-20151215-half-year-economic-update-document-final.
15 December 2015
The quarterly financial statement for September 2015 is now available on the MFEM website.
For the September 2015 Quarter the net operating balance of the General Government Sector as at 31 September 2015 was a surplus of $4.3 million, made up of $36.4 million in operating revenue and $32.0 million in operating expenditure.
The overall fiscal balance which excludes the effects of depreciation, but includes capital expenditure was a surplus of $2.2 million.
Total revenue collections for the quarter ending September 2015 were higher than the Budget estimate and were mainly attributable to higher than estimated tax revenues, predominantly due to a large one off payment of withholding tax.
Total operating expenses for the quarter ending September 2015 were lower than the Budget estimate and were mainly attributable to lower levels of spending by agencies.
The underwrite of the long haul Sydney and Los Angeles was a total cost of $1.737 million in the September Quarter.
Welfare payments remain also below budget by 9 per cent.
In the September Quarter additional authority to incur expenditure in 2015/16 of $0.762 million was issued through Section 70 of the Constitution predominantly for activities around Te Maeva Nui and the 5oth celebrations. The final amounts issued and paid will be reported in the June 2016 preliminary outcome.
Gross borrowings of the Crown were $104.620 million, and the net borrowings of the General Government Sector (excluding loan reserves and borrowings by SOEs) were $61.376 million.
In a change from previous reporting on the net cash balances of the Crown the Quarterly report will now include an estimate of the general cash reserve. As at September 2015 the Crown had term deposits totalling $46.674 million (against which were held $28.042 million in commitments) and MFEM held operating reserves of $6.709 million, these amounts excludes cash which are held by agencies.
The general cash reserve for September was $25.431 million, consisting of net cash reserves of $18.632 million and operating cash reserves of $6.709 million.
10 December 2015
The Ministry of Finance and Economic Management (MFEM) as the agency managing the Rarotonga Water Tank Subsidy Project would like to inform the general public that new applications for new water tank subsidies will no longer be received.
Project applications up until the end of November 2015 have exceeded initial expectations.
All project funds available to date have been fully committed to complete processing of over 800 applications already received.
Initially the project was to be completed by 31 December 2015. Instead, Cabinet has approved the extension of current activities to 30 June 2016 specifically to close off this project and allow more time to process existing applications including the implementation of already approved work with contractors.
Work is also required for at least one application inspection visit to determine subsidy eligibility criteria for applications received but which have not yet been approved. For approved applications one more inspection visit is required to confirm installation of water tank before payment of subsidy.