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JEMFAC Progress Monitoring. Presented by the RMI Government 6 th RMI-U.S. JEMFAC Meeting Washington D.C August 27 th , 2008. Outline of Presentation. Economic Update & Policy Reform Fiscal Year 2009 Budget Priority Funding Fiscal Update & Decrement Management.

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JEMFAC Progress Monitoring

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Jemfac progress monitoring

JEMFAC Progress Monitoring

Presented by the RMI Government

6th RMI-U.S. JEMFAC Meeting

Washington D.C

August 27th, 2008

Outline of presentation

Outline of Presentation

  • Economic Update & Policy Reform

  • Fiscal Year 2009 Budget

  • Priority Funding

  • Fiscal Update & Decrement Management

Photo: Rairok Elementary School II

Policy framework

Policy Framework

  • Maintaining Macroeconomic Stability

  • Improving the Business Policy Environment

  • Prioritizing Education & Health Sectors

  • Implementing Infrastructure Development Projects

Photo: Jaliut High School (JHS) Phase II – Admin. Building

Sectoral shares of gdp fy 2008

Sectoral Shares of GDP ( FY 2008)

Photo: NIHS Phase II - Classrooms

Recent economic performance

Recent Economic Performance

  • Positive GDP growth continues but at a modest pace;

  • Slow growth in FY 2007 & 2008 partly due to high global energy prices;

  • Real GDP growth in FY 2007 was1.3%;

  • Projected Real GDP growth for FY 2008 is 1.8%;

Photo: JHS Phase II – Staff House

What is influencing gdp

What is influencing GDP?

  • Modest value added activities in the private sector

  • Job losses and reduction of working hours at USAKA

  • Public sector

  • High energy cost.

Photo: Northern Islands High School (NIHS) Phase II - Classrooms

Industry developments

Industry Developments

Positive prospects for the RMI economy:

  • The newly formed Marshall Islands Shipping Corporation has operated with improved delivery services to the outer islands;

  • Japan Airlines has conducted direct chartered flights between Tokyo and Majuro, boosting the tourism industry;

  • The Tuna Loining Plant is open and operational with new management and prospect of employing up to 600 workers by the end 2008;

  • Majuro Atoll Waste Company (MAWC) has tremendously improve waste collections.

Photo: Majuro Atoll Waste Company (MAWC)

Usaka impact summary

USAKAImpact Summary

*estimated FY08 – FY12 and reflect Prime Contractor (KRS) and AAFES only;

*figures not adjusted for inflation

Photo: Pan Pacific Foods (RMI) Inc.

Employment trend factors

Employment Trend Factors

  • Modest growth in Private Sector in FY08, expected growth in FY09

  • Decreased employment in USAKA

  • Slight decrease in Non-Governmental Sector

  • Stagnant growth in RMI Government and Other Public Sectors

Photo: Pan Pacific Foods (RMI) Inc.

Rmi priorities

RMI Priorities:

  • Education and Health sectors continue as the RMI Government’s two top priorities;

  • Direct positive impact on all other sectors and the economy, as a whole, over the medium and long-term.

Photo: Rairok Elementary School II

Education health spending

Education & Health Spending

  • Recurrent spending on Education & Health have grown rapidly since FY 2003:

  • Education recurrent spending has increased by 125%;

  • Health recurrent spending has increased by 71%;

  • Spending on other areas has declined by 9%.

Photo: JHS Phase II – Admin. Building

Education and health spending

Education and Health Spending

Recurrent Expenditure FY 2003 - FY 2008(General Fund, Compact Funds, Federal Grants and Special Revenues)

Photo: JHS Phase II – Iakwe Sign

Fiscal year 2009 budget

Fiscal Year 2009 Budget

  • FY 2009 Budget projected at $124.5 million

  • Slight increase from FY 2009 partly due to inflation adjustments

  • Revenues forecast decrease largely to reduction in labor force in USAKA

  • Federal grants forecast to be steady

  • Special Revenues slightly decreased

Photo: CMI Classroom

Factors affecting fy 2009 budget formulation

Factors Affecting FY 2009 Budget Formulation

  • Energy costs which led to a declaration of economic emergency;

  • Wage & Hiring Freeze Policy;

  • Modest assumptions of inflation and growth used for revenue estimates based on recent trends and expectations;

  • Utility costs increased sharply;

  • ADB debt payment to increase substantially;

  • Slight reduction in Compact infrastructure grant to support Ministry of Health & Ministry of Education;

  • High inflation rate.

Photo: Rairok Elementary School II

Government fiscal status

Government Fiscal Status

  • Overall fiscal position is stagnant;

  • Imposed freeze on General Fund;

  • Recent freeze on vacant government posts;

  • Reduction of subsidies to State Owned Enterprises (SOE);

  • Aggressive tax collections;

  • Consolidation of funds

Photo: NIHS Phase II - Classrooms

Consumer price index fy2008

Consumer Price Index – FY2008

Photo: MAWC – Red Bin Repaired

Global budget figures

Global Budget Figures

Photo: JHS Phase II – Admin. Building

Fy 2009 compact sector grant allocations

FY 2009 Compact sector grant allocations

Photo: CMI Classroom

Fy 2009 education spending

FY 2009 Education Spending

Photo: Rairok Elementary School II

Fy 2009 recurrent education

FY 2009 Recurrent Education

Spending by Outcomes

Photo: JHS Phase II - Staff House

Fy 2009 health spending

FY 2009 Health Spending

Photo: JHS Phase II – Staff House

Fy 2009 recurrent health

FY 2009 Recurrent Health

Spending By Outcomes

Photo: NIHS Phase II - Classrooms

Infrastructure development

Infrastructure Development

  • Infrastructure Development Plan is consistent with the RMI’s sectoral priorities, the Education and Health Sectors:

    • The College of the Marshall Islands

    • Elementary and High Schools

    • Majuro Hospital Redevelopment

    • National Energy Capital Projects

    • Matching for grants;

    • Infrastructure and Maintenance Fund (IMF)

    • Majuro Atoll Waste Company (MAWC)

    • Infrastructure grant increased in FY 2009 due to inflation adjustments and well above 30% requirement

Photo: CMI Classroom

Fy 2009 capital infrastructure

FY 2009 Capital Infrastructure

Photo: CMI Classroom

Fy 2009 infrastructure plan

FY 2009 Infrastructure Plan

Photo: Rairok Elementary School II

Decrement management

Decrement Management

  • Full inflation is critical in coping with rising costs and will allow time to make fiscal adjustments;

  • Cost controls through hiring and wage freeze policy;

  • Consolidation of Special Revenue Funds

  • Tax Reform Commision

Photo: CMI Classrooms

Compliance management audit progress since fy2003

Compliance Management: Audit Progress since FY2003

  • No. of Audit Findings reduced by 50%;

  • No. of unauditable Component Units: 8 - 0;

  • Amount of Questioned Costs reduced by 33%;

  • Fixed Assets qualification resolved two years in a row;

  • Request for extension of DOI TA to assist Component Units

  • Achieved Unqualified Opinion – Clean Audit for the first time

Photo: Namdrik Elementary School (Phase 1 – Outer Islands School)

Jemfac progress monitoring

Thank you

“Kommol Tata”

Photo: MAWC – Majuro Dumpsite (Rebuilding Red Bins)

Jemfac progress monitoring

IDMP 0018 Marshall Islands High School Phase II

IDMP 0017 Rita Elementary School Phase II

IDMP 0020 Namdrik Elementary School (Phase I)

IDMP 0028 Laura High School Phase II (Stage II)

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