340 likes | 471 Views
Graduate School USA, Pacific & Virgin Islands Training Initiatives. Palau Economic Review. Republic of Palau, June , 2013. 1. Palau Economic Presentation. EconMAP Purpose and Status Economic Update Fiscal & Economic Policy Issues Fiscal and Financial Management Tax Policy
E N D
Graduate School USA, Pacific & Virgin Islands Training Initiatives Palau Economic Review Republic of Palau, June, 2013 1
Palau Economic Presentation EconMAPPurpose and Status Economic Update Fiscal & Economic Policy Issues • Fiscal and Financial Management • Tax Policy • Constraints to Sustainable Growth • Compact Administration Going Forward 2
EconMAP Purpose & Status Background & Program Economic Reviews since FY05 (2006) in FSM & RMI Augmentation of in-house statistics offices Inclusion of Palau since January 2012, now rolling out statistical bulletin; Economic Review to follow Funding source through DOI/OIA (January 2015) Addition of Palau was justified by anticipated needs under post-Compact Review arrangements. Staffing includes Mark, Kevin & Glenn 3
Employment 11
Employment SOEs + Agencies + State Governments Total National Government Employees 12
Employment 13
Wage Bill 14
Banking 20
External Debt RMI: 60% of GDP FSM: 28% of GDP 25
A Measure of Fiscal Self-Reliance -16.6% -16.9% Other Domestic Revenues Taxes 26
Policy Discussion Fiscal & Economic Policy Issues • Fiscal Policy and Public Financial Management • Tax Policy • Constraints to Sustainable Growth • Compact Administration Going Forward 27
Fiscal & Economic Policy Fiscal Policy and Public Financial Management Uncertainty and lack of clarity on financial outturn constrains sound decision-making Clear need to modernize and strengthen public financial management system Restore Palau’s capacity to produce timely and reliable financial audits, as a necessary input to… 26
Fiscal & Economic Policy Fiscal and Financial Management Achieve first-rate fiscal and budgetary management, perhaps through a Fiscal Responsibility Act, and by: • Repairing the balance sheet (short-term debt retirement) • Adjusting to renewed Compact terms • Building reserves for near-term fiscal resilience (Palau Budget Reserve Fund) • Adopting a sensible long-term strategy for fiscal self-reliance (augmenting Trust Fund) 27
Fiscal & Economic Policy Tax Policy Achieved substantial increase in tax revenues as a share of GDP recently However, gains derived from outdated/inefficient tax policy regime (TT-inherited) Implementation of a well-formulated, modern and efficient tax regime advisable… 28
Fiscal & Economic Policy Tax Policy Implementation of a well-formulated, modern and efficient tax regime advisable: Broad-based consumption tax (VAT) and targeted excise taxes Abolish BGRT, uniform import tax as first-stage VAT Net profits tax Substantial investment in tax administration modernization and reform Quality of implementation more important than pace 29
Fiscal & Economic Policy Constraints to Sustainable Growth Limited Capital Stock to Support Sustained Growth (esp. Tourism Plant) Infrastructure (Power, Water, Sewer) Connectivity/Information Communication Technology (ICT) Labor Force Development and Expansion Efficiency and Effectiveness of Financial Sector Environment 30
Fiscal & Economic Policy Compact Administration Going Forward New arrangements (when in place) create new demands Advisory Group composition and role EconMAPby design is responsive to a portion of the anticipated needs 31
Graduate School USA, Pacific & Virgin Islands Training Initiatives Questions or Comments? 32