The Palau House of Representatives is today due to vote on emergency legislation to borrow three million US dollars from a special fund supplied by Taiwan to pay for government operations.
The Senate approved the bill yesterday.
The action is the result of a Palau political leadership mini-summit this week to come up with a strategy to deal with skyrocketing utility costs and falling tax revenues.
Palau's president, Tommy Remengesau, and legislators met on Wednesday and they decided to tap a fund provided by Taiwan for airport improvements, rather than Compact of Free Association monies provided by the United States.
The Palau Public Utilities Corporation is hiking its rates by up to 47 percent because of rising fuel prices.
At the same time, Palau's tourism industry has taken a hit when Far Eastern Air Transport stopped flying from Taipei to Palau.
Taiwan is Palau's largest visitor market.
Talks between Palau and Taiwan led to the decision to have China Airlines fly charter flights to Palau four times a week, with the possibility of upgrading to a scheduled service in September.