Palau's president, Johnson Toribiong, has presented a fiscal year budget of nearly 54 million US dollars to Congress.
The budget for 2010 is five million dollars lower than the current year funding.
President Toribiong says the appropriations bill reflects his policy that the government should live within its means.
He says the budget takes into account the effects of global economic recession and that fact that the republic is likely to raise four million dollars less in local revenues than in the past.
He also pointed out that the reduced amount is in anticipation that funding from the United States under the Compact of Free Association will cease from October the 1st.
By then, the republic will only be able to draw down 15 million dollars from the Compact Trust Fund.
The government expects a shortfall of nine million dollars.
The President has urged lawmakers to act on revenue generating bills pending before both houses such as the Shipping Registry, Corporate Registry and Foreign Investment Act.