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RMI Economic Review

Graduate School USA, Pacific & Virgin Islands Training Initiatives. RMI Economic Review. Majuro, October 2013. 1. RMI Presentation. Economic Performance State-Owned Enterprise Performance Economic Policy Issues Compact Trust Fund. 1. REAL GDP and Per Capita GDP.

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RMI Economic Review

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  1. Graduate School USA, Pacific & Virgin Islands Training Initiatives RMI Economic Review Majuro, October 2013 1

  2. RMI Presentation Economic Performance State-Owned Enterprise Performance Economic Policy Issues Compact Trust Fund 1

  3. REAL GDP and Per Capita GDP 1.5% GDP Growth from FY03 to FY12 0.8% GDP Per Capita Growth 2

  4. Average Wage Rates 1.3% Average Public Wage Growth During Amended Compact Period 1.8% Average Private Wage Growth During Amended Compact Period 3

  5. Outmigration -1.5% ANNUALLY -7,148 over the Amended Compact Period 4

  6. Employment by Sector 1.8% Average Government Growth During Amended Compact Period 1.1% Average Private Job Growth During Amended Compact Period 5

  7. Govt Revenues vs Expenditures 6

  8. Current Revenues vs Expense $1.5 m 7

  9. Govt Employment & Payroll 8

  10. External Debt 9

  11. FY12 SOE Cap Transfers & Subsidies MEC MIPA MISC NTA MIR TOBOLAR $11 million in Subsidies in FY12 10

  12. RMI Presentation Economic Performance State-Owned Enterprise Performance Economic Policy Issues Compact Trust Fund 11

  13. SOE Operating Rev vs Exp 12

  14. SOE Operating Rev, Exp, Income 13

  15. SOE Operating Rev, Exp, Income 14

  16. SOE FY12 Current Ratio 15

  17. SOE Subsidies FY03-FY12 16

  18. MEC Electricity Operating Rev & Exp FY13 assuming provision for doubtful accts of $1.5 m 17

  19. MEC Tank Farm Rev & Exp 18

  20. MEC Outstanding Debt 19

  21. MEC Debt Servicing 20

  22. MEC Accounts Receivable 21

  23. RMI Presentation Economic Performance State-Owned Enterprise Performance Economic Policy Issues Compact Trust Fund 22

  24. Other RMI Policy Initiatives 23 CAP (minimally 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) Fiscal Responsibility Act (with Nitijela) Public Service Commission Reform & Personnel Audit Decrement Management & Long-Term Planning(requires urgent & sustained effort)

  25. RMI Policy Issues FISCAL MANAGEMENT ISSUES/OPPORTUNITIES Infusion of additional resources supports previously unplanned expenditures in FY13: • $3 million from World Bank (ICT reforms); • $5 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); • ~$2 million from continued large surplus from VDS with anticipated increase to $6,000 daily rate. • $1 million from Papua New Guinea 24

  26. RMI Policy Issues DECREMENT MANAGEMENT & LONG-TERM PLANNING 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 • Most recent update came late and fell short of extensive requirements RMI needs to develop, for its own benefit, a technically proficient long-term fiscal and planning framework with demonstrated broad ownership. Unallocated Compact resources (~$1.8 million) should not be committed at least until RMI has confidence in its own plan. 25

  27. RMI Presentation Economic Performance State-Owned Enterprise Performance Economic Policy Issues Compact Trust Fund 26

  28. RMI Compact Trust Fund OBSERVATIONS Management of the CTF further streamlined and improved; investment costs now better match investment strategy but need to be monitored closely Annual report for FY2012 continues improvements, building on the FY2011 report Looming need to focus on “distribution policy” per TF Agreement Article 15(1) New issue 25 percent of annual grants continue after FY2023 per Military Use and Operating Rights Agreement 27

  29. RMI Compact Trust Fund 28

  30. RMI Compact Trust Fund 29

  31. RMI Compact Trust Fund $557m 30

  32. Graduate School USA, Pacific & Virgin Islands Training Initiatives Questions or Comments? JEMCO-JEMFAC, August 2012 31

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