The New Zealand Government has proposed changes to the Student Loan Scheme in order to increase repayment rates and bring the overall loan balance to a more manageable figure.

“This in turn will make the scheme fairer for the vast majority of borrowers who do honour their loan obligations and for taxpayers more generally,” says Revenue Minister Peter Dunne.

However student advocate groups are opposing the move saying they will make it even harder for new graduates to find their feet as the repayments start too low and demand too much.

“New Zealand graduates already make payments from a level of income below any other income-contingent loans scheme in the world; the rate of payment proposed will now also be higher than is demanded anywhere else,” said Pete Hodkinson, President of the New Zealand Union of Students’ Associations (NZUSA).

Currently those with student loans who earn over $19,084 per year pay 10% of their income over the threshold. This will rise to 12%, an increase that the Massey University Extramural Students Society and NZUSA estimate will cost students and graduates between $15 and $30 per week.

The Green Party is also opposing the Government’s proposal, stating that a graduated rate would be fairer and more effective.

“A better alternative would be a progressive repayment rate that kicks in when graduates are actually earn[ing] higher incomes so that those who can afford to repay their loans do so, while those on lower incomes have a chance to find their feet first,” suggests Green Party student spokesperson Holly Walker.

The Government has also indicated it plans to make changes around student allowance eligibility and is considering a student allowance cap of four years.

The student allowance scheme allows students from low income families access to funding for living costs which is not added to their loan.

Student groups, including the New Zealand Medical Students Association, are also angered by these plans saying that it is unfair to those completing longer degrees and may discourage students from entering those degrees including medicine which is a minimum of eight years.

“We have grave concerns that the seven-year cap on student loans and now this four-year cap on access to student allowances may force students to take out high-interest bank loans to live, which will reduce access to tertiary education for many students and is unreasonable,” says NZMSA President Michael Chen-Xu.

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The Executive Board of the International Monetary Fund (IMF) has completed the third review under a three-year arrangement under the Extended Credit Facility (ECF) for Kenya. The completion of the review enables the disbursement of SDR 71.921 million (about US$ 110.9 million), which will bring the total disbursement under the arrangement to SDR 272.757 million (about US$420.7 million). The Executive Board’s decision was taken on a lapse of time basis.

Kenya’s economic reform program has started to yield results, as the authorities have taken decisive measures to address inflationary and external balance pressures. As a result, inflation is abating, the shilling has strengthened, international reserves are on the rise, the debt-to-GDP ratio is declining, and the government securities market is functioning more smoothly. More importantly, economic growth has held up in 2011, decelerating only slightly from 2010, despite the severe drought in the Horn of Africa and the higher food and fuel prices.

Performance under the program was favorable through end-2011. The fiscal outcome was in line with the program, thanks to strict expenditure control. International reserves exceeded the target, monetary policy remained appropriately tight, and government spending to protect the poor was above the program threshold. The authorities also made good progress with their structural reform efforts in the areas of public financial management and tax reform. Pension reform and the reform of the pay for civil servants have recently advanced.

Looking forward, stronger growth is expected in 2012 as the effects of the external shocks abate. Monetary policy will aim to achieve low and stable inflation, and the Central Bank of Kenya (CBK) will continue accumulating foreign reserves in order to build a buffer to cope with future external shocks.

Fiscal consolidation will continue and non-priority outlays will be limited to create space for infrastructure spending and for implementing fiscal decentralization as envisaged by the new Constitution. The new VAT law will help revenue mobilization. Policies for the financial sector will focus on banking supervision, close monitoring of credit risk, and moving forward with opening up the stock exchange.

The uncertain global environment outlook—in particular the European sovereign-debt crisis and the risk for further increases in oil prices—could affect Kenya by dampening growth and widening the deficit of the external current account. Thus, policies should continue to aim at ensuring that domestic demand grows in line with supply to reduce the external imbalance and keep inflationary pressures in check.

The three-year SDR 325.68 million (about US$ 502.4 million) ECF arrangement with Kenya was approved by the IMF’s Executive Board on January 31, 2011 (see Press Release No. 11/22). The Executive Board subsequently approved augmentation of financing under the ECF arrangement to SDR 488.52 million (about US$ 753.6 million) on December 9, 2011.

Image Courtesy of   ilri

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