The Joint Economic Management Committee Holds Its Annual Meetin

Palikir, Pohnpei (FSM Office of the President, September 16, 2015) - On September 1, 2015, the Joint Economic Management Committee or JEMCO held its annual meeting in Honolulu, Hawai’i. At the meeting JEMCO approved three grant allocation resolutions.

The FSM request for the sector grants, excluding infrastructure, was $52,168,585 but only $50,835,415 was approved by JEMCO. The education and health budgets have been granted in full while cuts were made to the public sector capacity building, private sector development, and environment sectors.  The FSM JEMCO members stressed that the impact of these cuts, in what appear to be small grants, will be large at the State level. The committee’s final decision to cut funding to these sectors reflects a lack of sensitivity to the economic and financial situation in the States.

While the allocations to the education and health sectors are welcome and appear to be full grants, the FSM is disappointed that the previous 10 percent in operational grants allocated to the National Government, which the FSM Congress has redistributed to the States through amendment to the distribution formula in FY2015, have not been allowed by the US to be passed through to the operational budgets of the States. This withholding of $4 million in much needed funds to the States at a time of economic and financial stress is not in line with the spirit of the Amended Compact.  The FSM National Government is hopeful that for the FY2017 budget, JEMCO will increase the operational budgets of the States to the full amount they are entitled to under the Amended Compact.

The FSM requested a grant of $66.5 million for its infrastructure program.  This grant was to implement the first year of projects, as prioritized by the States, in the updated Infrastructure Development Plan 2015. The Plan is currently being finalized for endorsement later this month. However, the JEMCO resolution only provided for three projects – two in Pohnpei and one in Chuuk, totaling $16 million, which will be available after the Plan is completed. FSM National Government sees this as stalling the country’s economic recovery.

For the prior year unallocated sector grant assistance, the FSM States had requested $12,360,052 in project grants, but only $8,736,340 of grants are being approved by JEMCO. Once again, the withholding of funds from the States when every dollar counts towards their economic recovery, does not sit well with the FSM National Government   

Overall, the FSM was disappointed in the reaction of JEMCO to the urgent needs of the FSM. Our focus was on growing the economy by creating jobs through reinstating the infrastructure program and full allocation of FSM budget requests. The outcome on the other-hand, fell short of the FSM needs. While the FSM appreciates the focus on the social sectors, it is struggling to understand JEMCO’s strategy for achieving the key objectives of the Amended Compact of economic sustainability and budgetary self-reliance for FSM. 

For more detailed information about the 2015 Annual JEMCO meeting, please contact the FSM Compact Management Division at (691) 320-6260.