Pohiva says he was “astonished” by World Bank report on Games costs

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Prime Minister ‘Akilisi Pohiva said this afternoon he would have cancelled hosting the Pacific Games in 2019 if he had been aware of the World Bank report earlier. Photo/Kalino Lātū

Prime Minister ‘Akilisi Pohiva said this afternoon he would have cancelled hosting the Pacific Games in 2019 if he had  been aware of the World Bank report earlier.

As Kaniva News reported earlier today, the government has decided Tonga will not host the Games after Hon. Pohiva saw the report for the first time.

He said it appeared no feasibility studies were carried out before the previous government agreed to host the Pacific Games in 2019.

Speaking to Kaniva News at Atalanga this afternoon, the Prime Minister said he was “astonished” by the contents of the report.

Hon. Pohiva said he did not know when the report arrived in Tonga. It was sent to the Ministry of Finance and stayed there until last week when he saw it.

Pohiva said he had no doubt why former Finance Minister Lisiate ʻAkolo criticised the former government for bringing the Games to Tonga because it would ruin the country economically.

Pohiva said he believed ʻAkolo got a copy of the report.

Akolo was finally sacked because of his stance on the Games.

World Bank report

According to the World Bank report, which Hon. Pohiva provided to Kaniva News, the Games would cost US$70 million (TP$ 159,873,183/NZ$101,807,152).

The Bank said this would use up 60 percent of annual government revenue and represent 12% of gross domestic product.

In contrast, the London Olympics were estimated to have cost about 0.6 percent of the UK’s GDP and 1.5 percent of annual Government revenue.

“Additional public expenditure of USD$70 million is very difficult to finance or justify  given Tonga’s  current challenging fiscal and economic position,” the report said.

Government expenditure would have to be cut by up to a third to balance the budget.

Sporting events could lead to increased visitor numbers, which could contribute to economic growth, but the extent of economic growth was heavily dependent on the existing state of the economy.

“Most international studies have found that impact on employment and incomes  is  small  and the gains in government revenue much less  that the original expenditure, leaving fiscal conditions worse. “

The report said that visitors for the event might simply displace existing tourists, especially if capacity was limited.

Disruptions caused by sporting events could lead to economic losses.

Visitors might allocate a large proportion of their spending to imported goods, reducing any benefit to local suppliers.

This was likely to occur in Tonga, where many products were imported.

Foreign-owned tourism and hospitality businesses might repatriate profits, rather than re-injecting them into the local economy.

International evidence shows that specialized investments, such as stadia and aquatic centres, were poor investments, the report said.

They did not generate sufficient return to justify their existence during the  short period of events.

“Many countries, including in the Pacific, have underutilised sporting facilities left over from previous events which rapidly deteriorate with under-use and  lack of funding for  maintenance,”  the report said.

The main points

  • Prime Minister ‘Akilisi Pohiva said this afternoon he would have cancelled hosting the Pacific Games in 2019 if he had been aware of the World Bank report earlier.
  • As Kaniva News reported earlier today, the government has decided Tonga will not host the Games after Hon. Pohiva saw the report for the first time.
  • He said it appeared no feasibility studies were carried out before the previous government agreed to host the Pacific Games in 2019.
  • According to the World Bank report, which Hon. Pohiva provided to Kaniva News, the Games would cost US$70 million.

For more information

Tonga will not host 2019 Pacific Games; PM cites World Bank advice on costs

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