RMI Economic Review

slide

RMI Economic ReviewJEMCO-JEMFAC, August 2013

Graduate School USA, Pacific & Virgin Islands Training Initiatives

1

slideGraduate School USAPacific Islands Training Initiativewww.econmap.org

RMI Presentation

Economic Performance

Economic Policy

Compact Trust Fund

36


REAL GDP and Per Capita GDP

37

FY03FY04

FY05FY06

FY07FY08

FY09FY10

FY11FY12

$120

$125

$130

$135

$140

$145

$150

$155

$160

$2,400

$2,500

$2,600

$2,700

$2,800

$2,900

$3,000

$3,100

$3,200

131.3

150.5

2,626

2,821

GDP at constant prices GDP per Capita

GDP

US$

Milli

ons

GDP

(Per

Cap

ita)

1.5% GDP Growth from FY03 to FY120.8% GDP Per Capita Growth


Average Wage Rates

38

FY03FY04

FY05FY06

FY07FY08

FY09FY10

FY11FY12

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$13,000

Private Sector Public Sector

1.8% Average Private Wage Growth During Amended Compact Period

1.3% Average Public Wage Growth During Amended Compact Period


Employment by Sector

39

FY03FY04

FY05FY06

FY07FY08

FY09FY10

FY11FY12

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

Private Sector RMI Government

1.1% Average Private Wage Growth During Amended Compact Period

1.8% Average Public Wage Growth During Amended Compact Period


Govt Revenues vs Expenditures

40

FY04 FY05FY06 FY07 FY08

FY09 FY10 FY11FY12

$40

$50

$60

$70

$80

$90

$100

$110

$120

$130

$140

Total Revenues Exp adjusted for CTF Total Expenditures

US$

Mill

ions


Govt Employment & Avg Wages

41

FY03FY04

FY05FY06

FY07FY08

FY09FY10

FY11FY12

0

500

1,000

1,500

2,000

2,500

3,000

3,500

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

No.

of

Empl

oyee

s on

Pay

roll

Tota

l Gov

ernm

ent

Payr

oll $

'000


External Debt

42

FY03FY04

FY05FY06

FY07FY08

FY09FY10

FY11FY12

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

External Debt, % of GDP Debt Service, % of General Fund


FY12 Subsidies to SOEs

43

-$3,000

-$2,500

-$2,000

-$1,500

-$1,000

-$500

$0

$500

$1,000

US$

‘000

AMI KAJUR MWSC MEC MIPA MISC NTA MIR TOBOLAR

$11 million in Subsidies in FY12


Outmigration & GDP

44

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

0.8%

GDP per capita growth FY03-FY12 Annual average net migration FY03-FY12

-7,148

-1.5% ANNUALLY


CAP (not implemented)

TRAM (under consideration)

SOE Framework Legislation (with Nitijela)

ADB Public Sector Program (closed-out)

External Debt Management (with Nitijela)

World Bank ICT Reform (underway)

Decrement Management, MTBIF & the Fiscal Management Model (requires sustained attention)

RMI Policy Initiatives

45


RMI Policy Issues

FISCAL MANAGEMENT ISSUES/OPPORTUNITIESInfusion of additional resources supports previously unplanned expenditures in FY13:

$3 million from World Bank (ICT reforms);$6 million from ADB as 2nd tranche of PSPLarge surplus from Vessel Day Scheme (VDS), US treaty and $5,000 VDS rate; (MIMRA revenues in FY12 over $10 million)

Similar infusions likely in FY14:$5 million possible from World Bank (ICT reforms);Continued large surplus from VDS with anticipated increase to $6,000 daily rate.

46


RMI Policy Issues DECREMENT MANAGEMENT, MTBIF & THE FISCAL

MANAGEMENT MODEL RMI implementation of the MTBIF could have addressed 1st step of the requirement for a decrement management plan

Line agency ownership and leadership adoption were absentBudgets did not reflect commitments

Table submitted to USG in late July based on the Fiscal Management Model provided only a medium-term revenue forecast.A serious dialogue to specify a way forward is required; sustained solutions will take time

47


RMI Compact Trust Fund OBSERVATIONS

Management of the CTF further streamlined and improved; investment costs are admirably low and investment policy monitoring/updates reflect high standard of careAnnual report for FY2012 continues improvements, building on the FY2011 reportLooming need to focus on “distribution policy” per TF Agreement Article 15(1)Projections on CTF “effectiveness” could be further improved for clarityNew issue 25 percent of annual grants continue after FY2023 per Military Use and Operating Rights Agreement

48


RMI Compact Trust Fund

52



54



55

$557m

slide

Questions or Comments?JEMCO-JEMFAC, August 2012

56

Graduate School USA, Pacific & Virgin Islands Training Initiatives


FSM Policy Issues

PUBLIC EXPENDITURE & FINANCIAL ACCOUNTABILITY (PEFA)PEFA is a framework for the assessment of Public Financial Management (PFM) developed by the World Bank and IMFImplemented in many countries in the worldPEFA focuses on PFM systems rather than fiscal objectivesPEFA is based on an international standards and provides a precise measurement system.

28 high level indicatorsFurther sub-categories

FSM conducted a self and formal assessment with evaluators from PFTAC, World Bank, Forum, FSM, etc.Requested PFTAC to develop “Road Map” for PFM and PEFA

19

Documents

RMI Economic Review