Financial questions hang over decision to pull out of 2019 Games

    Commentary:

    Should Prime Minister ‘Akilisi Pohiva have cancelled the Tongan government’s commitment to hosting the 2019 Pacific Games because of a four year old report?

    The Prime Minister’s announcement last week came as a shock, with Pacific Games Council President Vidhya Lakhan telling the Fiji Sun the announcement was “an act of mischief.”

    Justin Tkatchenko, Sports Minister for Papua New Guinea, which hosted the last Games and which had pledged to help fund the 2019 event, told EMTV the Games Council should choose countries capable of holding the event.

    “It’s not just give it to some friends and hope for the best,” he said.

    The decision not to host the Games followed the Prime Minister’s discovery of a 2013 International Monetary Fund assessment of the costs of hosting the Games.

    The report appeared to have been provided to the Finance Ministry before Hon. Pohiva was elected.

    He has blamed the outgoing Minister of Finance, Dr Aisake Eke, of concealing the report.

    The IMF report said quite clearly that the Games could not be funded from existing domestic funding or aid sources without an unacceptable cut in government services.

    The IMF report said the government must accept that any commitment to host the Games must be based on water tight certainty that no domestic funds would be required or any aid funded projects rescheduled. All aid funding would have to come from new sources.

    It also said that preparations for the Games should begin by 2014.

    The government was also warned that large scale sporting facilities built for special events were a liability. The local population was often not large enough to use them and they rarely attracted international events that will fill them. As a result, many facilities fall into ruin and disrepair.

    Questions

    A number of questions about the decision to not host the Games need to be answered.

    Was the report still relevant when the decision was made?

    Had the government been able to find new sources of money for the Games the IMF said were needed?

    Was the decision to withdraw based on a careful analysis of the kingdom’s current economic prospects?

    What funding had been raised and targeted from local sources and what eternal promises of funding had been confirmed?

    Were any arrangements made for continued donor support to maintain the Games facilities?

    If there was no economic justification for the decision, then what other reasons were there?

    How long was the matter was debated?

    Why was a matter of such national importance apparently decided without any apparent reference to the country’s sporting bodies?

    Tongan economy

    The 2013 IMF report was written at a time when the Tongan economy was distressed, with almost half the kingdom’s GDP going to service debts. The government had been told it could not borrow any more money.

    However, since Hon. Pohiva’s government came to power it has introduced a series of widely praised financial measures, the economy appears to be steady with promises of financial growth and Tonga is now considered by the IMF as being at moderate risk of debt distress.

    Some of that growth was expected to flow from the construction of facilities for the Games, with increased wages, income from levies on imported goods and eventually from visitors arriving for the regional competition.

    According to the International Monetary Fund’s most recent report on the Tongan economy in March, Tonga’s economic outlook was favourable. Growth has been better than projected, supported by strong recovery in agriculture and construction sectors, increased remittances and higher domestic demand.

    The report said the Games would contribute to the kingdom’s economic growth.

    “Growth is expected to remain strong in the 2017 financial year, supported by continued credit growth and strong domestic demand,” the report said.

    “Real GDP is projected to grow at 3.6 percent in the 2017 financial year, driven by the agriculture and construction sectors, short-term fiscal expansion, as well as private consumption supported by growing remittances.

    “Growth in 2018 is expected to peak at about four percent, supported mainly by construction related to the preparation for the Pacific Games.”

    Funding

    In order to fund the Games, the government introduced a series of levies on financial exchanges and visitors to raise new funds and there were promises of a new golf course and other major projects.

    There was also been major commitments to funding from outside donors.

    China only recently committed to fund the construction of a $TP57 million stadium at Tonga High School.

    In 2014 the New Zealand government had committed to spend about $NZ2 million towards redeveloping the Teufaiva stadium.

    Australia had pledged to offer financial support to the Games, although at the same time it had committed $Aus250,000 to send its own athletes to compete in Nuku’alofa.

    Japan had pledged funding for sporting equipment.

    Papua New Guinea was expected to contribute TP$50 million towards to the cost of hosting the Games. However, after Hon. Pohiva’s announcement last week, PNG’s Sports Minister appeared to be backpedalling on the promise, saying nothing had been signed or formalised.

    It is not clear how many of the promises of aid had been turned into firm commitments.

    Last year Radio Australia quoted the Pacific Games Council’s Executive Director, Andrew Minogue as saying those pledges had to be turned into binding contracts as quickly as possible.

    Pacific Games Council chief executive Lord Sevele said that without government support, the Games still should have enough money to be proceed. After outside donations were counted, the Tongan government only needed to contribute 30 percent of the budget.

    Lord Sevele told Matangi Tonga the power to cancel the Games did not come from the government. He said only the Tonga Association of Sports and National Olympic Committee and Pacific Games Council could make that decision.

    “He may withdraw government support, but it is up to us, the sporting bodies and patriotic Tongans who want to see these facilities for our children and the future of Tonga,” Sevele said. “If we don’t do it now we will never be able to do it!”

    Sevele said that without government support, the Games still should have enough money to be funded. The organizing committee already has received support from Australia, China, and New Zealand through memorandums of understanding. The remaining Tongan contribution was estimated to be only 30 percent of the budget, Sevele said.

    Running the Games without the government acting as host may be technically possible, but it would be deeply embarrassing for Hon. Pohiva.

    The main points

    • Should Prime Minister ‘Akilisi Pohiva have cancelled the Tongan government’s commitment to hosting the 2019 Pacific Games because of a four year old report?
    • The decision not to host the Games followed the Prime Minister’s discovery of a 2013 International Monetary Fund assessment of the costs of hosting the Games.
    • The IMF report was written at a time when the Tongan economy was in crisis and the government had been told it could not borrow any more money.
    • However, since Hon. Pohiva came to power the economy has improved and the IMF says the Games could be a factor in the kingdom’s economic growth.

    For more information

    Programs and funding guidelines (Australian Olympic Committee)

    Sports Minister says No Funds given to Tonga to Assist with 2019 Pacific Games (EMTV PNG)

    Tonga pressed to ensure 2019 Pacific Games finance pledges become binding contracts

    Conflicting Messaging Over 2019 Pacific Games

    Pacific Games funding in disarray (The Economist, August 5, 2015)

    CISNOC happy with 2019 Pacific Games progress

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