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Accessing credit is difficult for businesses in the Pacific. While there’s enough liquidity in the banking system, the ratio of private sector credit to GDP is in most cases less than 50 percent—similar to the level in many South Asian and South American countries.
Reforms to state owned enterprises (SOEs) can unleash productivity and efficiencies in an economy. However, such reforms can bring pain and controversy—so-called “adjustment costs”.
This week, the Asian Development Bank (ADB) launched Finding Balance 2016: Benchmarking the Performance of SOEs in Island Economies.
Small and medium-sized enterprises in Pacific island states often find it difficult to get credit. Financial institutions in the region tend to view lending to smaller businesses as risky because, without land and buildings as collateral, the likelihood of repayment in case of default can appear low
This post was first published at devpolicy.org, the blog of the Development Policy Centre housed in the Crawford School of Public Policy at the Australian National University.