Thu. Dec 12th, 2019

Palau’s economic future options

October 10, two American economists were invited to address and present to high officials of Palau’s government the potential scenarios of Palau’s economic development in the years to come.

Both Jason Aubuchon and Kevin O Keefe specialize in economic and statistical issues of the freely associated states. They presented three potential future scenarios for Palau’s economy such as a severe case, base case, and a coordinated action case.

Under the severe case or worst case scenario, Palau will continue to draw the 9 million dollars from its trust fund and will lose some federal programs along with services. These programs will not all end at the same time due to the timing and authorization by the United States’ congress. However, according to Jason he believes that this is a “highly unlikely case”.

Meanwhile, on the base case scenario, all existing programs and services will still continue but Palau will not get funds from the United States.

Under the coordinated action case United States will provide a large sum of money for Palau’s Compact Trust fund so that it can yield 15 million dollars a year with the purpose of sustaining Palau’s economy for many years. They also believe that the ties Palau has developed with other countries will help aide Palau’s economic growth.

Jason says that “in the coordinated action case, the other partners of Palau whether it would be the donor partners from the Asian Development Bank and the World Bank or other governments like Taiwan, Japan, and Australia will come together in a way that would compliment funding for each other and would set Palau on a growth trajectory.” Both men believe that the coordinated action case would be the path Palau is heading towards due to its strong relationships with other countries and the United States.