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RMI Economic Review

Graduate School USA, Pacific & Virgin Islands Training Initiatives. RMI Economic Review. JEMCO-JEMFAC, August 2013. 1. RMI Presentation. Economic Performance Economic Policy Compact Trust Fund. 36. REAL GDP and Per Capita GDP. 1.5% GDP Growth from FY03 to FY12

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RMI Economic Review

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  1. Graduate School USA, Pacific & Virgin Islands Training Initiatives RMI Economic Review JEMCO-JEMFAC, August 2013 1

  2. RMI Presentation Economic Performance Economic Policy Compact Trust Fund 36

  3. REAL GDP and Per Capita GDP 1.5% GDP Growth from FY03 to FY12 0.8% GDP Per Capita Growth 37

  4. Average Wage Rates 1.3% Average Public Wage Growth During Amended Compact Period 1.8% Average Private Wage Growth During Amended Compact Period 38

  5. Employment by Sector 1.8% Average Public Wage Growth During Amended Compact Period 1.1% Average Private Wage Growth During Amended Compact Period 39

  6. Govt Revenues vs Expenditures 40

  7. Govt Employment & Avg Wages 41

  8. External Debt 42

  9. FY12 Subsidies to SOEs MEC MIPA MISC NTA MIR TOBOLAR $11 million in Subsidies in FY12 43

  10. Outmigration & GDP -7,148 -1.5% ANNUALLY 44

  11. RMI Policy Initiatives 45 CAP (not implemented) TRAM (under consideration) SOE Framework Legislation (with Nitijela) ADB Public Sector Program (closed-out) External Debt Management (with Nitijela) World Bank ICT Reform (underway) Decrement Management, MTBIF & the Fiscal Management Model (requires sustained attention)

  12. RMI Policy Issues FISCAL MANAGEMENT ISSUES/OPPORTUNITIES Infusion of additional resources supports previously unplanned expenditures in FY13: • $3 million from World Bank (ICT reforms); • $6 million from ADB as 2nd tranche of PSP • Large surplus from Vessel Day Scheme (VDS), US treaty and $5,000 VDS rate; (MIMRA revenues in FY12 over $10 million) Similar infusions likely in FY14: • $5 million possible from World Bank (ICT reforms); • Continued large surplus from VDS with anticipated increase to $6,000 daily rate. 46

  13. RMI Policy Issues DECREMENT MANAGEMENT, MTBIF & THE FISCAL MANAGEMENT MODEL RMI implementation of the MTBIF could have addressed 1st step of the requirement for a decrement management plan • Line agency ownership and leadership adoption were absent • Budgets did not reflect commitments Table submitted to USG in late July based on the Fiscal Management Model provided only a medium-term revenue forecast. A serious dialogue to specify a way forward is required; sustained solutions will take time 47

  14. RMI Compact Trust Fund OBSERVATIONS Management of the CTF further streamlined and improved; investment costs are admirably low and investment policy monitoring/updates reflect high standard of care Annual report for FY2012 continues improvements, building on the FY2011 report Looming need to focus on “distribution policy” per TF Agreement Article 15(1) Projections on CTF “effectiveness” could be further improved for clarity New issue 25 percent of annual grants continue after FY2023 per Military Use and Operating Rights Agreement 48

  15. RMI Compact Trust Fund 52

  16. RMI Compact Trust Fund 54

  17. RMI Compact Trust Fund $557m 55

  18. Graduate School USA, Pacific & Virgin Islands Training Initiatives Questions or Comments? JEMCO-JEMFAC, August 2012 56

  19. FSM Policy Issues PUBLIC EXPENDITURE & FINANCIAL ACCOUNTABILITY (PEFA) PEFA is a framework for the assessment of Public Financial Management (PFM) developed by the World Bank and IMF Implemented in many countries in the world PEFA focuses on PFM systems rather than fiscal objectives PEFA is based on an international standards and provides a precise measurement system. • 28 high level indicators • Further sub-categories FSM conducted a self and formal assessment with evaluators from PFTAC, World Bank, Forum, FSM, etc. Requested PFTAC to develop “Road Map” for PFM and PEFA 19

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