Over-indebted and unable to borrow, New Caledonia obtains a loan from the State

New Caledonia is over debt. him French Indo-Pacific Territory officially contracted a loan of 175 million euros from the State on Friday, after a previous loan in 2020, bringing the debt ratio of the community to a record level, which requires savings and reforms.

Most of the funds will be dedicated to partially compensate the deficits of the social systems, to an economic recovery plan, with in particular investments in electricity production, and also to the financing of expenses related to the Covid crisis, has indicated the government.

The archipelago depends heavily on its metallurgical factories to exploit nickel in particular. Already in deficit The Società Le Nickel (SLN) is the incumbent operator in which the provinces of New Caledonia are shareholders (34%), bearing the brunt of the increase in energy costs.

The local government can no longer borrow

On the other hand, while the public accounts and the social accounts of New Caledonia are in the red, and suffer from “structural deficiencies” as indicated by a recent report of the Chamber of Territorial Accounts, this envelope will allow to balance the budget 2022. of the community.

This is a 25-year loan, whose first payments will be paid in three years.

This PGE, guaranteed by the State and authorized in the 2022 finance law, was signed between the president of the collegial government, Louis Mapou, Patrice Faure, High Commissioner of the Republic in New Caledonia, and the representative of the Agency French Development Agency (AFD).

“New Caledonia no longer has a borrowing capacity because (…) its debt ratio is excessive. The debt/revenue ratio was 35% in 2012, today it is 255%,” said Mr. Faure, insisting on “the essential reforms” to be carried out.

Control of funds

In 2020, granting a first loan of 28.6 billion CFP (240 million euros), New Caledonia has undertaken a series of commitments to strengthen its finances and reduce its expenses, but do not keep them.

This time, a monitoring committee will oversee its implementation and the disbursements will only be “granted after the signing of the minutes of this committee” so that New Caledonia is able to honor the repayment schedule, said the state representative .

Second home tax

“When we come to help each other, we must be able to make an effort, to do our part,” committed Louis Mapou, separatist, whose government, installed a year ago, began a program of fiscal reforms in three years

The reduction of the debt level to 90%, the limitation to 1% of the evolution of the salary mass, or the creation of a tax on real estate capital gains from the second house and a micro-tax on the financial transactions are among the measures. included in the loan agreement.

(With AFP)

Nickel mines in New Caledonia: Eramet will invest 250 million euros from 2025 to relaunch