According to exit report provided to the Transition Team of President-elect Surangel Whipps Jr. from the Ministry of Finance, Palau government has over $65.5 million cash in its various accounts as of November 18, 2020.
Of the $64.5 million amount, $37.2 million are in General Fund and $27.3 million are in Reserve Fund. Reserve Fund are accounts designated for specific purpose such as Non-Communicable Disease Fund which has over $3.8 million, Hospital Trust Fund with over $2.4 million and Road Maintenance Fund with over $3.1 million and others.
According to Minister Elbuchel Sadang of Finance, these are cash in government bank accounts. These do not include Palau’s invested funds.
Both General and Reserve Funds are expended according to budget appropriation law.
Despite having this cash in the bank, government will still need to raise another $20 million to balance the budget, if it is maintained at FY 2020 level. This would be in addition to the drawdown of $15m from COFA Trust Fund and the $5m from Compact Review Agreement (CRA).
In the transmittal letter to the Transition Team, Minister Sadang said that “although our fiscal reserve will cover the fiscal gap in the short term, it will not be sufficient to cover the full impact of the COVID-19 pandemic. The magnitude of the projected fiscal gap particularly for fiscal years 2021 and 2022 requires external financing as the impacts of addressing the fiscal gap through expenditure reduction and revenue enhancement measures in a short period of time will likely be drastic and yield the opposite results desired as government spending, along with tourism and construction, are the largest contributors to Palau’s economy.”
Meanwhile, Palau’s COFA Trust Fund assets reached $291,927,116 million as market close on November 18, 2020 from $275,601,404 on September 30, 2020, a gain of $16,325,172 million. Palau’s COFA Non-Trust Funds (Energy Fund) reached $5,078,387 million from $4,788,660 and (Defense Fund) rose to $5,602,961 from $5,287,072 from September 30.