Monday, August 19, 2013

A set-aside fund for the FSM as Compact reaches midpoint

FSMIS (August 19, 2013): On August 14, President Manny Mori transmitted to Speaker Dohsis Halbert a proposed bill to establish the FSM Set Aside Fund for Congress’ consideration during its upcoming September session.

The proposed fund would provide for two main objectives: “to finance viable investment projects that will accelerate economic growth” and “to prepare for and mitigate the budgetary shortfall expected in 2023 arising from the termination of Compact financial assistance”.

The proposed bill intends to set aside as restricted fund a minimum amount of $5 million annually beginning with the fiscal year 2014 budget in a special account that will be “invested, maintained, reserved, and eventually used subject to the restrictions” that are set out in some detail in the bill.

If passed, the bill would secure a reserve of not less than $50 million by 2023. However, some of this amount could be used to fund selective projects that must undergo due diligent review by the Department of Resources and Development and the Department of Finance for recommendation purposes to the President. Recommended projects would still have to gain approval of Congress through the appropriation process to tap the Set Aside Fund.

Calling for a Set Aside Fund is one of a number of initiatives and measures for which the President has sought the support of Congress to position the FSM strongly for the 10-year remainder of economic assistance under the amended Compact with the United States. 

Each year, the FSM Congress convenes in September to finalize its review of the National Government’s recommended budget for the new fiscal year submitted by the President in April. 

A fiscal year starts on the 1st of October.

In similar long-term oriented fund investment, the FSM National Government also has a Trust Fund for “future operations” with a reported amount of approximately $11.4 million as of September 30, 2012.
In terms of its purposes, President Mori indicated to Congress at the start of the July 15-24 first special session that he intended to create a restricted sub-account in the FSM Trust Fund for mitigations of environmental catastrophes. Other portions will be built up for post-2023 Government operations.

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