TUVALU’S FALEKAUPULE TRUST FUND INVESTED IN AUSTRALIA

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GOVERNMENT OF TUVALU

MINISTER FOR INTERNAL AFFAIRS, RURAL AND URBAN DEVELOPMENT

PRESS RELEASE

March 14, 2000

TUVALU’S FALEKAUPULE TRUST FUND INVESTED IN AUSTRALIA

The Minister of Internal Affairs, Rural and Urban Development announced today that the Falekaupule Trust Fund has been successfully consolidated and invested with fund managers in Australia.

The Falekaupule Trust Fund (FTF) is a development trust fund set up between the Government and the Falekaupule, or island communities, of Tuvalu.

The Minister, who is also President of the Board of Trustees of the Fund said, "The purpose of the Fund is to provide additional financial resources to support development of our island communities. For a long time the outer-islands of Tuvalu have been neglected and have failed to enjoy the recent progress that Tuvalu has experienced. This is one way we can give something back.

"The Fund is just one component, a major component, of a complex decentralization process that the Government has been undertaking in recent years. We have passed a Falekaupule Act to replace the outdated Local Government Act, and the new Act gives much greater decision making powers and responsibilities to the Falekaupule.

Representatives of each Falekaupule signed the FTF Deed in July 1999. At that time, the Falekaupule of each island had raised funds to form the basis of the FTF and the Government had agreed to match these contributions. Around the same time the Government received approval for a loan from the Asian Development Bank (ADB) of US$ 4.0 million, which the Government also agreed to match in order to build up the capital of the Fund. The Falekaupule Trust Fund Act passed the Tuvalu Parliament in August 1999.

The Minister continued, "In December the Board of the Fund agreed an investment strategy for the Fund. We also appointed three professional fund managers to manage the Fund - Credit Suisse Asset Management (48% of the Fund), Salomon Smith Barney Asset Management (48%) and Westpac Investment Management (4%). The company William M. Mercer, the fund monitor for the Tuvalu Trust Fund, was appointed to monitor the investments. The initial investment is around A$ 11.25 million and was invested in early February. Later this year, when we receive the second tranche of the ADB loan, to be matched by the Government of Tuvalu, the value of the Fund will rise to around A$ 15.0 million. The fund will be exempt from Australian tax thanks to an exemption granted by the Australian Tax Office."

The capital of the Fund will be maintained according to inflation, with earnings above the inflation rate being distributed to the Kaupule (local governments) to fund community projects. The distributions to the Kaupule will be in proportion to each islands' original contributions to the Fund.

The Minister concluded by saying, "It is early days but we are very enthusiastic about this Fund and its potential. Like the Tuvalu Trust Fund, it is a long-term commitment and its full potential may not be obvious for some years. We understand from experience that we need to work hard and be patient."

For further details please contact:

Seve Lausaveve Secretary of Internal Affairs, Rural and Urban Development Tel: (688) 20172 E-mail: miarud@tuvalu.tv 

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