26 Oct 2009

Marshalls to tackle grant funding challenge

8:05 am on 26 October 2009

Six years into a 20-year economic package with the United States, the Marshall Islands government has agreed to increase its effort to address declining American grant funding.

The U.S.-Marshall Islands Joint Economic Management and Financial Accountability Committee agrees the government needs to develop a plan for managing annual decreases in Compact direct assistance and General Fund support.

The committee also says it wants to use those plans as the basis for Fiscal Year 2012 budget decisions.

U.S. grant funding under a Compact of Free Association declines by half a million US dollars a year, with a corresponding bump up in contributions to a government trust fund intended to provide financial support to the Marshall Islands when the agreement with Washington ends in 2023.

The government's Chief Secretary, Casten Nemra, says this affects key ministries and although this issue has been long-discussed since the second Compact went into effect in 2003, it is now becoming visible.

The Committee, in which the U.S. government has a controlling three-to-two vote, set August 1 2010 as the deadline for the Marshall Islands government to submit a plan.

Currently, U.S. funding accounts for two thirds of the Marshall Islands national budget of 137 million dollars, and more than 80 percent of the funding for the Ministries of Education and Health.