Wednesday, October 1, 2014

FSM National Government Fiscal year 2015 budget of $54.5 million signed into law

FSMIS (September 30, 2014): After the Federated States of Micronesia Eighteenth Congress passed the proposed fiscal year 2015 budget for the FSM National Government on September 23, 2014, the Executive Branch undertook the necessary review over a six-day period to advise the President correctly before making decision on the Budget Act. Vice President Alik L. Alik, on behalf of President Manny Mori who is in New York for the purpose of the United Nations General Assembly, signed Congressional Act No. 18-92 into law on September 29th, two days before the new fiscal year kicks in.

The Budget Act appropriates the amount of $54,548,704 from the FSM general fund for the fiscal year ending September 30, 2015, in order to provide funding for the operations of the branches, agencies and various programs of the FSM National Government, including funding for grants, subsidies, contributions as well as some substantial amount for “capital and human resources development”.
It is pointed out that the Act contains computation errors for funds allocated to budget items for Capital and Human Resource Development, section 9 of the Act. Given this, the correct amount of appropriated funds is $54,548,704 instead of $55,090,704 as reflected in the Act. Congress will need to rectify the discrepancies at the earliest possible.

In the signing message, President Mori expressed his appreciation and noted that Congress concurred to the FY15 revenue projection of $66.9 million submitted on April 1st. However, based on current revenue collections achieved, the President asserts that FY15 revenue level will be much higher than initially projected. For instance, the FY15 revenue projection includes $36 million from fishing license fees. Yet, the current collection from that specific revenue source is $46.9 million.

Government Operation Expenditure Side

On the operation side of the budget, the total amount for the three Branches of Government is $22,592,776.  This includes $17,431,735 for the Executive Branch, $3,849,605 for the Legislative Branch and $1,311,436 for the Judicial Branch.

At the submission of the budget in April 2014, President Mori indicated to Congress his administration’s aim of containing operation costs increase in FY15 to below 0.2 percent, which is lower that the FY14 increase of 3.2 percent. Some increases are due to occur based on upward adjustment in per diem rate pursuant to a new policy for official travels within the FSM and to Guam. 

Investment Side

The annual budget also contains an “investment” portion. This section includes funding that are earmarked for infusion into trust funds, educational grants (such as scholarship), funding for the FSM Association of Chamber of Commerce, etc., or for the support of other capital improvement projects that have the capacity to aid economic growth and development.

In the signing message, the President indicates:

“I also thank Congress for appropriating $10 million into the FSM Trust Fund. While I welcome the $10 million infusion into the Trust Fund which is in line with the intents and purposes of our Draft 2023 Action Plan, I would ask that Congress urgently consider Congressional Bill 18-206 for the creation of the 2023 Investment Development Fund (IDF), a critical key financing component of a package of reforms under the 2023 Action Plan.”

The President has requested Congress to appropriate $10 to $15 million every year into the “2023 Investment Development Fund” to help boost economic growth through private sector investment. Congressional Bill 18-206, pending with Congress, defines the parameters and operational frameworks for the Fund. Congress has yet to pass the IDF legal framework and put money to support the IDF arrangement.

In section 8 of the Act, a total of $9,234,336 is appropriated for grants, subsidies and contributions under the Departments and Offices, including membership fees in global and regional bodies, such as the United Nations, the World Health Organization, South Pacific Tourism Organization, etc.
For this year, Congress extends funding to Kosrae circumferential road, $300,000; Yap International Airport terminal, $300,000; “Weno Road/Xavier Road”, $150,000; and the Chuuk International Airport Terminal, $150,000 in addition to providing new funding for Climate Change Conference participation for Members of Congress, $30,000; FSM/Israel Congressional Relations, $100,000; and Compact of Free Association Historical Project for $150,000.

After the FY15 budget appropriation has been made and got approved on September 29th, at present, an amount of $14.6 million remains to be earmarked for specific use.

The entire FY15 budget appropriation law can be read in the link below.

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