A report by the United States Government Accountability Office says trust funds for the Marshall Islands and Federated States of Micronesia will not be able to replace U.S. grant funding when it expires in 2023.
FSM officials say the trust funds would provide an income equal or better the level of U.S. grants at the time of transition.
However, the State Department says this is not the goal of the trust funds as agreed in the Compact.
A State Department official says the FSM's interpretation is one that is likely to build up unwarranted expectations that are not supported by the agreements reached.
American aid makes up about seventy per cent of both former U.S. territories' national budgets.
