Overview:
A new bill before the Olbiil Era Kelulau would more than double the borrowing authority of Palau’s state governments, raising the limit from $2 million to $5 million. Supporters say the increase would help states secure financing for infrastructure and other projects that could generate additional revenue.
By: Eoghan Olkeriil Ngirudelsang
Koror, Palau (August 10, 2026) – A bill had been introduced in the Olbiil Era Kelulau (OEK) would increase the borrowing authority of state governments from $2 million to $5 million.
Senate Bill No. 12-75, introduced by Senator Lentcer Basilius on Aug. 4, 2026, was listed for first reading during the Seventh Regular Session of the Twelfth Olbiil Era Kelulau.
The bill’s legislative findings state that the existing borrowing limit of 2 million set by the 7th OEK has been eroded by inflation and prevents states from obtaining financing for important projects, including projects that could eventually increase state revenues.
The proposed measure would amend Section 401 of Title 5 of the Palau National Code to authorize each state to negotiate and initiate a line of credit, loans, or both, from more than one source, for any state program or purpose.
States using such financing would be responsible for repaying the loans or lines of credit, including applicable interest and related fees. The bill also specifies that any borrowing would be the sole responsibility of the state that obtains it.
The proposed law would take effect upon approval by the President of Palau. It passed the first reading by unanimous approval and assigned to the Committee of Ways and Means and Financial Matters.