New Caledonia is heavily indebted. The French Indo-Pacific Region The state formally contracted a 175 million euro loan on Friday, after a previous loan in 2020, raising the community’s debt ratio to a record level, which will force savings and reforms.
L’essentiel des fonds sera consacré au comblement partiel des déficits des régimes sociaux, à un plan de relance de l’économie, avec notamment des investissements dans la électrique, et également au financement de dépenses liises du production, à la crême du production, the government.
The archipelago relies heavily on mining factories for the exploitation of nickel in particular. Already in a deficit Société Le Nickel (SLN) and the current operator to which the provinces of New Caledonia (34%) contribute, bear the brunt of the rising energy costs.
The local government can no longer borrow
In addition, while New Caledonia’s public and social accounts are in red, and suffer from a “structural deficit” as noted by a recent report by the Regional Chamber of Accounts, this circumstance will enable the 2022 budget to be balanced by the community.
This is a 25-year loan, the first installments of which will be paid in three years.
The PGE, with state guarantee and authorized in the Finance Act 2022, was signed between the Head of the Collective Government, Louis Mabou, and Patrice Faure, High Commissioner of the Republic of New Caledonia, and a representative of the French Development Agency (AFD).
“New Caledonia no longer has the ability to borrow because (…) its debt ratio is excessive. The debt/revenue ratio was 35% in 2012 and today it is 255%, Mr. Faure declared, stressing the need to implement ‘fundamental reforms’.
In 2020, when granting the first loan of 28.6 billion Swiss francs (240 million euros), New Caledonia made a number of commitments to clean up its finances and reduce its expenditures, but did not keep them.
The state representative said that this time the monitoring committee would supervise its implementation and the expenses would be “granted as soon as the minutes of this committee were signed” so that New Caledonia would be in a position to comply with the payment schedule.
Tax on second homes
“When we come to our aid, we must be able to make an effort, to do our part,” committed Louis Mapu, a separatist whose government, installed a year ago, embarked on a three-year tax reform programme.
Among the measures are reducing the level of indebtedness to 90%, or limiting 1% of the development of the wage bill, or imposing a tax on real estate capital gains from second homes and a partial tax on financial transactions. included in the loan agreement.