FSM GETS $833,000 GRANT FOR FISCAL MANAGEMENT

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By Stella F. Arnaldo

SAIPAN, CNMI (Marianas Variety, Mar. 11) - The Asian Development has approved a financing package for the Federated States of Micronesia aimed at helping the region achieve economic-self-sufficiency.

In a press statement, the ADB said it was extending $833,000 in technical assistance to the FSM and administer a $333,000-cofinancing grant from the United States. The FSM government, in turn, will put up $250,000 in counterpart funds for the technical assistance to be carried out in two phases up to July 2005.

Specifically, the technical assistance will provide FSM policy advice and help strenghthen the government’s ability to manage its fiscal resources under the amended Compact of Free Associated States with the U.S. The Compact-Impact funds have been FSM’s major source of external assistance since 1986.

Under the renegotiated Compact, a trust fund will be set up with the U.S. contributing $800,000 annually, to reach $16 million by 2023. But the Compact grant will be reduced annually by a similar amount.

The trust funds cannot be touched until 2023, when these would be expected to produce an annual income that could replace the annual Compact contributions to FSM’s budget.

ADB senior country programs specialist Hideta Kawada said: "The step-by-step reductions in the Compact (grants) will require a long period of structural adjustments, economic reforms and sound fiscal management."

As such, ADB’s technical assistance will help the Micronesian government prepare an economic transition plan that will review revenues and expenditures, examine possible tax reforms and strenghthen government’s financial planning, controlling and reporting.

The TA will also draw up a roadmap to improve government’s ecnomic planning, financial management, auditing, law enforcement, immigration control, judiciary and statistical analysis.

"The roadmap will enable the government to effectively use funds from the Compact and other external assistance to undertake its planned capacity building in a coordinated manner," Kawada said.

March 11, 2004

Marianas Variety: www.mvariety.com

 

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