05 DECEMBER 2008 KOROR (Pacnews)
Palau President-elect Johnson Toribiong says the outgoing Remengesau administration should not use a special loan fund to pay off US$2 million in delinquent utility charges. Palau’s finance minister Elbuchel Sadang last week asked the House of delegates to amend legislation to allow the government to tap a US$3 million fuel subsidy authorisation to pay the long overdue bills to the Palau Public Utilities Corporation.
“The current administration has the legal and moral obligation to pay its outstanding bills, which have come due before transferring power to the new administration,” Mr Toribiong told Pacific Magazine in an exclusive interview. He also warned against using the fund that’s providing the emergency US$3 million to cover the dramatic fuel price hikes earlier this year.
“The subsidy funds are really a loan from the Taiwan Mega Bank so if there is no further need for it as it was originally intended to help subsidize the cost of utility bills for the PUC customers, it should be paid back or used for something critically needed, such as medical or education related services or programmes,” Mr Toribiong said.
“If it is used to pay government utility bills, then it doesn’t really help the financial condition of our government as it would be like borrowing from Paul to pay Peter and not lessen the outstanding financial obligations of the government,” he said. Mr Toribiong also said he’s been advised that the global financial crisis has dramatically reduced the value of the nation’s “Compact Trust Fund,” which is to provide on-going financial support for Palau when U.S. aid eventually ends.
Mr Toribiong said preliminary information suggests that Palau’s Trust Fund has lost about US$40 million in value, or about 25 to 30 percent of its value compared to a year ago. Vice President-elect Kerai Mariur, named by Mr Toribiong to also finance minister in the new administration, will attend an informational briefing of Palau’s Compact Fund Trust Fund managers, Mr Toribiong said.
“It appears that when the U.S.-Palau Compact was negotiated, the assumption was that this fund would generate an average return of 12.5 percent per annum which has proven to have been made by mutual mistake requiring reconsideration during the 2009 Compact Review. As a result of the drastic and unexpected reduction of the Compact Trust Fund, we need to tighten our belt, encourage more sustainable investments and request the United States to favourably consider our request for additional operating funds for our government,” Mr Toribiong told Pacific Magazine. Meanwhile, Palau’s incoming president also said he has received a letter of congratulations from U.S. President George W. Bush.
The letter was presented to Toribiong by U.S. Charge d’affaires Mark Bezner this week. “On behalf of the people of the United States, I would like to convey my congratulations on your election. We look forward to working with you and your government to maintain a strong relationship and continue to support the development of Palau,” President Bush said in his letter to Mr Toribiong.