Dear Editor, By letter of August 3, 2023 Covid Bank said “the taxpayers look forward to a full public report on these loans given out during Covid and before the election”. A totally reasonable request.

By letter published on 16 August 2023, the Financial Secretary attempted, but failed, to reassure readers that all was well with the BCCF loan scheme and the repayments.  Consider the figures he provided.  Total loans $6.9 million.  Repayments (principal and interest) to 30 June 2023 were $821,507.  According to my calculator that leaves $6,078,493 still owing.  But according to the Financial Secretary there were 123 loans with only a balance outstanding of $4,369,556.  So what happened to the difference of $$1,708,937?

But wait, the difference is greater than that.  Interest will have been added to the loans.  Loans repaid within the first year attracted interest of 1%, if not repaid in that period, a 3% interest rate applied.  Loans were made between July and September 2020.  So the majority of loans have had interest of 3% for over a year and a half.  Let’s ignore the penalty interest on overdue loans, that just makes the difference even worse.  One year for $6.9m at 3% is $207,000.  Add that to the unaccounted for $1.7m, and we now have over $1.9m to be explained.

In his letter to Cook Island News the Financial Secretary says “If readers wish to find more information, there will be a release on the MFEM website soon.”  The only information on the MFEM website is a release that sets out the figures he reported in his letter, highlighted above.  So we still have almost $2m unaccounted for.

There has been a wave of cash washing over business in the last three months.  Many that have borrowed under the BCCF scheme are in a position to repay their loans.  But why would they, the Government will probably write off the negligent loans like they wrote off outstanding tax a few years ago.  It doesn’t pay to prepay loans to Government.

The first thing you will read on the MFEM website is the following statement, “Our Vision - MFEM shall be a competent and professional organisation, inspiring public trust in managing public finances in pursuit of our national development aspirations”.  No wonder there is a long way to go before the public has trust in MFEM.

A Taxpayer.

Ministry of Finance and Economic Management Secretary Garth Henderson said he was just back in the office from some work in Suva, Fiji so needed to catch up with outstanding work, and would respond in due course once he had had a chance to digest the letter.