The president of Palau says he expects the United States to sign an agreement guaranteeing further economic assistance by the first of October.
Under the Compact of Free Association, a 50-year contract between the US and Palau, direct financial aid was intended to stop after 15 years, which falls on the 30th of September.
Johnson Toribiong says for each of the remaining 35 years, the Palau government was expecting to draw 15 million dollars from the Compact Trust Fund, which the global financial crisis has depleted.
He says the US needs to replenish the fund by about 18 million dollars annually for the next few years in order for it to become healthy again.
"United States assistance to Palau for a short while is necessary to make sure Palau becomes a stable partner of the United States at the edge of western Pacific. Because US has the defence and rights over our lands and waters in perpetuity or until it is mutually terminated. And Palau being at the edge of the western Pacific, it's important in my view strategically to the United States"