Tue. Oct 22nd, 2019

Future is economy not on compact dependence: Remengesau

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“Growing the economy is the future of Palau, not the dependence on the Compact”, expressed President Remengesau at this week’s press conference, reiterating his statements at the State of the Republic Address which calls for greater ownership and responsibility for Palau’s own development.

“Budget should not be contingent on the amount of money we receive from the Compact but on resourceful and innovative revenue generating policies to help private sector grow,” Remengesau said.

Last year,Palau generated over $73 million from local revenue and received $13.1 million in direct economic assistance from the Compact Agreement. Local revenue represented 85% of the total budget.

This year, budgeted local revenue also represents 85% of the total budget which far exceed GAO estimates which stated that domestic revenues should grow from 40 to 59% of total government revenues by 2024 and reliance on US assistance under the agreement should drop from 28% to 2% of overall government revenues.  In this year’s budget, Compact direct economic assistance represents 15% of the overall budget.

The FY 2019 proposed supplemental budget is expected to be signed by President Remengesau.  In his statements to the press regarding the supplemental budget, he said that he may not agree with everything in the proposed bill but it went through the process and passed unanimously in the House and also passed by 8 out of 13 Senators.

Five senators that voted against the bill went public with their concerns after the bill passed both houses of Congress, stating that the appropriation of the compact fund as source of fund for this budget was “irresponsible”.  They assert that use of Compact direct economic assistance now will cause shortfall in 2024 affecting the people.

In addition to strengthening private sector and increasing local revenue, Remengesau added that investment of the funds into Trust Fund ensures that more income will be available to Palau after 2024. (By L.N. Reklai)