Debt crisis threatens New Caledonia two years on from riots

President Milakulo Tukumuli has travelled to France to secure fresh funding to prevent 40,000 New Caledonians from becoming 'pensionless' within a few months. But the new assistance comes on the condition the territory would undertake 'urgent reforms' to reduce spending. "2024 and last year were really, really hard," he said. His tour company lost 50 to 70 per cent of its business when tourism ground to a halt after clashes between Kanak protesters and French security forces caused more than $3 billion in damage across the territory. Supplied: Gaetan BaboutPresident of New Caledonia's Chamber of Commerce David Guyenne said around 12,000 people have fled the territory since 2024, an exodus that left crucial gaps in healthcare and essential services. His own shopping centre was among the many businesses lost after it was burned down on the second day of the riots. "It's a very painful process. I personally lost 95 per cent of my businesses," he said. )His experience reflects a broader crisis — one that newly elected President Milakulo Tukumuli highlighted in his first speech to New Caledonia's CongressHe said if nothing was done to salvage the territory's ailing pension scheme, more than 40,000 New Caledonians could find themselves "pensionless within a few months". "New Caledonia will not pass 2027 without fresh financial support from the French state,"Last week, Mr Tukumuli was in Paris to secure more funding assistance to rescue the territory's financially embattled pension and health schemes. Loans arranged through the French Development Agency to support New Caledonia's recovery already stand at about $1.2 billion. French Prime Minister Sébastien Lecornu agreed to provide a further $600 million to $900 million, plus an extra $96 million to conclude New Caledonia's 2026 financial year and balance its 2027 budget. New Caledonia's Congress president Virginie Ruffenach, who was part of Mr Tukumuli's delegation, said the figure met about 90 per cent of the delegation's $870 million plea. New Caledonia's new President Milakulo Tukumuli outlined his six-month economic recovery road map before Congress in August. But the money still requires approval by the French Parliament. Mr Tukumuli earlier stressed that more loans for the French Pacific territory was "untenable". The new assistance also comes on the condition New Caledonia would undertake "urgent reforms" to reduce spending. Ms Ruffenach said New Caledonia had already passed a significant number of reforms resulting in savings of almost $600 million. Reuters: Ludovic MarinMr Guyenne said additional reforms would likely involve austerity measures and were necessary, even if they meant higher taxes for people and businesses. "I think New Caledonia is bankrupt and if we didn't have the financial help of France then the whole social system would collapse," he said. Although the 2024 crisis was centred on the capital city Nouméa, two years on the fallout has spread throughout the territory. Earlier this year, domestic carrier Air Calédonie announced it would relocate all flight operations from an airport in Nouméa, to a larger facility 50 kilometres away in La Tontouta. The move effectively doubled the travel time for people travelling from the outer islands to the capital, and sparked a protest movement throughout March which saw regional airports blockaded and flights grounded. Milakulo Tukumuli meets with protesters and Loyalty Island government officials at the airport blockade in Lifou. The blockades still continue intermittently, amid a stalemate over the essential flight route. But 170 kilometres east of the mainland on the island of Lifou, locals say their community has been relatively insulated from the territory's economic trouble. That's despite being essentially cut off from the mainland during the flight blockade and only accessible by a five-hour ferry. "Life in Lifou is better than Nouméa. There's no pollution, we have fields to work in and the sea provides us with fish to eat," Andréa Gaze from the local Mou community said. For Lifou resident Andréa Gaze, working in the tourism sector provides the chance to work and live close to her community. Much like Nouméa, Lifou's tourism industry took a major hit following the pandemic and the 2024 unrest. But its fortunes appear to be turning, due in part to a new 50-room hotel and the 144,000 cruise passengers who visited the island's shores last year. Among the newly-employed staff at the hotel is Sadia Citre, originally from nearby Maré Island, part of the Loyalty Islands group. ABC News: Giulio Saggin, file photoShe said the recovery of tourism in Lifou and a focus on lifestyles guided by Indigenous knowledge and crop cultivation has positioned the community as self-reliant. "It's really an opportunity for me to continue living on the islands, especially compared to Nouméa, with its big city noise and everything," she said. Lifou's tourism industry is slowly recovering from an economic downturn. There isn't as much optimism on the mainland, where visitation numbers remain well below pre-riot levels. Recent figures show 58,000 international tourists stayed in New Caledonia in 2025, compared with 125,000 in 2023 — the lowest number recorded in 30 years. "It's very difficult to have a vision of the future,"