NORTHERN MARIANAS' DEFICIT CASTS GLOOM

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By Cookie B. Micaller

SAIPAN, Northern Mariana Islands (December 7, 1998 - Saipan Tribune)---The cash-strapped government could plunge into its worst financial trouble in history as Gov. Pedro P. Tenorio predicted Friday that the Northern Marianas' deficit would reach over $53 million in Fiscal 1998.

But independent estimates showed that the figure could swell to an all-time high of $100 million, almost double than that of the previous fiscal year.

The Governor told reporters in an interview that the multi-million dollars in unpaid accounts left by his predecessor and money spent to settle tax rebates paid for the previous tax year have combined to push the deficit to an unprecedented high.

FY 1998 covered the last three months in office of former governor Froilan C. Tenorio, whose term officially ended January 11.

"We have to assume (past obligations) and pay tax rebates...and we still have to count the last three months of the previous administration," Tenorio said, "So I assume that it's going to be more than $53 million."

Tenorio inherited some $27 million in unsettled bills incurred by the past administration for professional services, lease of vehicles, plane tickets and purchase of various office equipment, and had to raise some $28 million to replenish the special trust rebate account, which was found to be almost depleted. These two alone had cost the present government some $55 million in additional expenses.

In a previous interview, the Governor disclosed that an independent financial audit of the government by Deloitte & Touche indicated that the cumulative deficit under the past administration grew to a record of $53 million in FY 1997, from $32 million registered the previous fiscal year.

However, the former commonwealth leader said in past interviews that he was able to retire the $40 million deficit he assumed from his predecessor Larry Guerrero and that the deficit he left had amounted only to $16 million.

With plummeting revenues, faltering tourist arrivals and the continuing financial turmoil in Asia, Tenorio said he is worried that his administration would be unable to retire the budget deficit next year as provided for in the NMI Constitution.

Since assuming office early this year, Tenorio has ordered a stricter fiscal policy to deal with cash shortages, putting in place a wide-ranging austerity program that includes travel bans, a freeze on hiring and cutbacks in overtime, among other moves.

But with the anticipated revenue drop of as much as $32.5 million for the current fiscal year, the local chief executive is planning to widen the existing cost-cutting plan to stretch government resources.

The new package of recommendations, which is envisioned to ease the pain of the worst economic downturn to hit the island economy in years, proposes salary cuts, reduction of work hours and suspension of benefits provided to government employees.

For additional reports from The Saipan Tribune, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Saipan Tribune.

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