President Tommy Remengesau, Jr. signed into law the Fiscal Year 2019 Unified Budget authorizing $104 million but appropriating only $90.7 million for government operations.
The budget bill was signed during a national leadership meeting at the Palasia Hotel yesterday, September 13.
The $90.1 million budget is based on projected economic growth of 3% according to Minister of Finance Elbuchel Sadang.
Construction activities, especially of public sector projects are cited as primary drivers of this growth. States stimulus package, Koror-Airai Sewer Improvement Project, $34 million Airai-Koror resurfacing project, relocation of solid waste site and installation of ADA/MDA satellite systems in addition to private projects such as West Plaza and Ocean Star Hotel openings contribute to this growth.
In addition, government expects tourism to rebound based on existing marketing efforts and “sustained growth in Asian economies.”
Furthermore, it cites the emerging ICT sector and labor growth owing to construction boom to stimulate economic growth.
With these optimistic projections, President Remengesau cautions conservative spending citing Palau’s vulnerability to the impact of world fuel prices which also affect cost of imports.
Minister Sadang, at the press conference on Wednesday, reported that they were conservative with their projections based on tourism.
“Last year we projected tourism revenue based on 129 thousand arrivals which was less then what we actually expected based on 2017 numbers. For FY 2019 budget, we projected arrivals at 117 thousand which is less than what we received this year,” Sadang said.
$13.9 million Compact Assistance was also included as source of revenue for the 2019 budget. According to Minister Sadang, US has promised that this will be disbursed by December of this year.
In addition to operating expenses, the FY 2019 Unified Budget included 2.1 million increase in benefits to retirees, $9,000 to cover uninsured but ineligible for other subsidies, $16 thousand to Governors Association, $16 thousand to Speakers Association, increase of $30 thousand for each State block grant, $100 thousand for PCC and $500 thousand for State capital improvement projects. (L.N. Reklai)