New Caledonia faces deepening debt crisis as 'economy has totally crashed'

Gaetan Babout, a French-born tour operator who moved to New Caledonia 14 years ago, watched his business lose 50 to 70 per cent of its income when tourism halted after the 2024 riots over proposed voting reforms. "2024 and last year were really, really hard," he said. "The economy has totally crashed."

David Guyenne, president of the territory's Chamber of Commerce, said around 12,000 people have left since 2024, leaving gaps in healthcare and essential services. His own shopping centre was burned down on the second day of the unrest, and he is still waiting for insurance to fund a rebuild two-and-a-half years later. "I personally lost 95 per cent of my businesses," he said.

The crisis extends beyond individual livelihoods. In his first speech to Congress in August, President Milakulo Tukumuli warned the territory's finances were on the "brink of total collapse." He said more than 40,000 New Caledonians could become "pensionless within a few months" if the ailing pension scheme is not salvaged, and that the healthcare system carries a cumulative debt of $578 million. "New Caledonia will not pass 2027 without fresh financial support from the French state," he said.

Last week, Tukumuli was in Paris to secure additional funding for the pension and health schemes. Loans from the French Development Agency already total about $1.2 billion.

Why This Matters

The economic collapse threatens the livelihood of tens of thousands of New Caledonians, particularly pensioners and healthcare recipients.
The population exodus is hollowing out essential services in the Pacific territory.
The crisis tests France's willingness to support its overseas territory amid ongoing independence tensions.

Background

New Caledonia is a French overseas territory in the South Pacific with a history of tension between the indigenous Kanak population and European settlers. The 2024 riots erupted after proposed voting reforms that indigenous groups argued would dilute their influence. The unrest caused at least $3 billion in damage and left deep scars in the economy.

Key Perspectives

Business owners: Gaetan Babout and David Guyenne represent the local business community that saw tourism vanish and physical assets destroyed, with insurance payments delayed by years. New Caledonia government: President Tukumuli is pleading for French financial intervention to prevent a collapse of the pension and health systems, which he says cannot survive without new funds. French authorities: The French state has already extended $1.2 billion in development loans and is being asked for more, but must balance support with demands for fiscal reform.

What to Watch

Outcome of President Tukumuli's meetings in Paris: whether France agrees to new funding and under what conditions.
The status of the pension scheme: if not rescued by early 2027, over 40,000 people could lose retirement income.
Continued population flight: if the exodus accelerates, services may degrade further.

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