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12 Tropical Cyclone Pam, March 2015 Fiscal position after Cyclone Pam A fiscal scenario incorporating all currently available, relevant post-cyclone information presents a large forecasted net operating deficit for the GoV of VT 123.7 million in 2015, VT 940.7 million in 2016 and VT 812.0 million in 2017. Including donor financing, the forecasted net operating surplus would amount to a total of VT 18.1 million in 2015, VT 940.7 million in 2016 and VT 812.0 million in 2017. However, taking into account that the reconstruction efforts will require substantial investment in fixed assets, this fiscal scenario shows an estimated net borrowing (or fiscal deficit) for the GoV of VT 5,548.5 million in 2015, VT 8,090.8 million in 2016 and VT 6,264.9 million in 2017. Considering donor financing, the combined net borrowing (or fiscal deficit) is now estimated at VT 11,296.7 million in 2015, VT 14,918.9 million in 2016 and VT 13,956.0 million in 2017. Amore detailed picture of this fiscal scenario is provided in Annex 4. Revenues As of May 2015, Tropical Cyclone Pam had a number of effects on GoV revenues. While negative impacts on revenues manifest themselves in the form of revenues forgone under tax exemptions and losses in revenues due to the cyclone’s negative effect on GDP, the GoV also received an insurance pay-out from the Pacific Catastrophe Risk Insurance Pilot and donor grant funding from foreign governments and other organisations for relief operations. As mentioned above, on 14 th of March, the GoV granted VAT and duty exemptions on construction materials and gardening tools, in order to support the country’s reconstruction efforts. The revenues thus forgone will however also further aggravate the difficult fiscal and cash flow position of the GoV. These exemptions will stay in place until 12th June, i.e. for a total of 3 months. The effect of these exemptions on revenues from VAT and duties is hard to determine at this point, as several distinct forces are at play. Firstly, VAT is forgone due to the exemptions. Secondly, imports on both construction tools and gardening materials would be higher than usual after the cyclone due to increased demand for such goods. Thirdly, individuals may have spent money on the purchase of these reconstruction goods that they would have otherwise used to buy other consumption goods that are not currently VAT exempted. Finally, members of the Vanuatu National Provident Fund (VNPF) were authorised to withdraw 20% of their contributions and commercial banks deferred repayments of debt until three months. These measures increased household’s disposable income that could have led to higher spending on both reconstruction related materials and consumption goods. The long-term impact of the cyclone on revenues collected from VAT, duties and other revenues has yet to be estimated. Given the uncertainty surrounding the post-cyclone situation, it is currently too early to produce accurate forward projections. To date, the GoV has received grants worth VT 473.0 million. These financial resources are specifically intended to fund emergency relief operations and will be used, to the extent possible, to fund minor reconstruction or recovery operations. The GoV also received an insurance pay-out of VT 202.0 million from the Pacific Catastrophe Risk Insurance Pilot (PCRIP) administered by the World Bank.
Vanuatu | Post-Disaster Needs Assessment 13 Expenditures Due to the cyclone, the GoV has incurred a total of around VT 309.9 million of unexpected expenditures to date, made up both of spending by line agencies and centred through the Declared State of Emergency Budget. In addition, initial costing as part of this PDNA indicates that VT 34.1 billion will be required for recovery and reconstruction. In the aftermath of the cyclone, the Council of Ministers approved a Declared State of Emergency Budget of VT 248.0 million under the Ministry of Finance and Economic Management (MFEM). This supplementary budget was financed in part through the PCRIP pay-out of VT 202.0 million and the rest was sourced from within the GoV’s recurrent budget. As of 6th May 2015, VT 258.3 million had been spent on relief operations. As the cost of these operations are higher than originally anticipated, the GoV had to draw down on the annual budget allocated for emergencies to finance these. As of 6 th May, 2015, spending on emergency relief operations from Ministries’ recurrent budgets totalled VT 51.6 million. It is possible that there are further cyclone expenditures that were made by line agencies, which are not reflected in this figures. Total cyclone related damages and losses have been estimated at VT 29.2 billion and VT 19.3 billion respectively. 69% of these disaster effects fall within private ownership and the remaining 31% of effects are within public ownership. This breakdown provides guidance on the sharing of responsibilities during the reconstruction and recovery process. Furthermore, the recovery and reconstruction needs are estimated at VT 34.1 billion, 52% of which will come under the public domain. Applying the same reasoning as for post-cyclone GDP forecasts in the PDNA, it is assumed that 30% of these expenditures will be incurred in 2015, 40% in 2016 and 30% in 2017.
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152 Tropical Cyclone Pam, March 201
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Between March 12 and 14, 2015, Trop
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