US Shutdown Expected To Affect Palau Compact Funds

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$13 million for Palau was being reviewed before crisis

By Aurea Gerundio-Dizon

KOROR, Palau (Island Times, Oct. 3, 2013) – The U.S. Government shutdown will affect Palau in several ways, Presidential Press Secretary Keobel Sakuma yesterday bared in a statement to the media.

According to Sakuma, the shutdown will first and foremost effectively delay any movement in the efforts to fund the Compact Agreement signed in 2010.

"As you know Palau and the U.S. have been working to identify a source of funding for the second round of the COFA (Compact of Free Association) and have been lobbying the U.S. Congress, the Departments of Interior, State, Defense, and President Obama to find a viable offset to fund the agreement. The shutdown of the U.S. Government means that nothing is getting funded, which includes our COFA," Sakuma said.

In September of 2010, the U.S. Executive Branch and Palau Executive Branch top officials signed Compact Review Agreement extending financial assistance to Palau for public safety, health, and education, building and maintaining infrastructure and payment of debts. It would also continue the United States’ health, education, airport, agriculture, employment, and other programs in Palau. The assistance would be provided until September 30, 2024.

Since FY2010, pending passage of the Compact legislation by U.S. Congress, Sakuma said Palau has been receiving operational funding from the U.S. Government at a rate of $13 million a year that has been included in multiple U.S. Continuing Resolutions (CR).

Sakuma said these CRs have been used by the U.S. to fund their operations due to their failure to pass an annual budget law. "The $13 million annual appropriation from the U.S. was going to be included in the CR that was going back and forth between the House and the Senate before everything shut down. A CR still has to be passed before the U.S. Gov’t can re-open and before funds can once again flow to Palau," Sakuma said.

Palau’s Fiscal Year 2014 budget included an anticipated USDOI-Office of Insular Affairs grant assistance to Palau amounting $12.5 million. Sakuma said that Palau has not yet received even a fraction of the $12.5 million. However, he said that this will not affect Palau’s government at the moment. The government reportedly has enough funding for now.

Sakuma said the shutdown may have more immediate effects to U.S. federally-funded projects and programs in the Ministries of Health and Education as well as at the Palau Community College. "The bottom line is that the U.S. would like to resolve this budget issue prior to the next major deadline issue, which is the setting of a new debt ceiling to allow payment of existing debt, which also has certain budget implications. This will occur on or about October 17th," he said.

Online news as of this writing revealed that President Obama and congressional leaders are still deadlocked on the shutdown.

The U.S. Government shut down beginning Tuesday after congress failed to pass a budget that should be signed by the president before October 1.

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