The Republic of Palau Compact of Free Association Trust Fund (CTF or trust fund) Board of Trustees (Board), during a special meeting today, signed a resolution authorizing and directing the Ministry of Finance to transfer $65,250,000 to the CTF Board’s Investment Consultant, Raymond James & Associates, for investment in accordance with the CTF Investment Policy Statement.
Vice President & Minister of Justice Raynold B. Oilouch was present to witness this auspicious event along with the Board’s ex-officio members: Minister of Finance Mr. Elbuchel Sadang; Senator Mark U. Rudimch, Chairman of the Senate Committee on Ways & Means, 10th OEK; and Delegate Jonathan Isechal, Chairman of the House of Delegates’ Committee on Ways and Means, 10th OEK.
The $65.25million additional capital contribution to the CTF are part of the approximately $87.4million received last week from the U.S. Department of the Interior pursuant to the Compact Review Agreement. Palau’s Minister of Finance Elbuchel Sadang and U.S. Ambassador Amy Hyatt signed the agreement on September 19, 2018, in Palau. The signing of the agreement formally concluded the first 15-year review and amendment process as provided for under the original Compact of Free Association. Following the signing of the agreement, on September 21, 2018, the CTF Board was officially informed that Interior Secretary Ryan Zinke had effectuated the immediate transfer of the funds and that the funds were currently on deposit in a local bank account.
The additional capital contribution will be distributed among the trust fund’s asset classes in accordance to the asset allocation strategy established in the Board approved and implemented Investment Policy Statement. As part of its mandatory annual review of the IPS, the Board will work with its investment consultant and stakeholders to ensure the trust fund continues to be optimally invested in a manner consistent with a fund in perpetuity. This means the Board will be looking at strategies aimed at guaranteeing the trust fund will continue to fulfill its stated objectives beyond the terminal date of the Compact of Free Association agreement in 2044.
The trust fund interim performance report as of September 19, 2018, shows the fund’s total market value is at approximately $227.8million. Upon transfer of the additional funds, the total value of the CTF will be approximately $294million. Since its inception in 1994, the compact trust fund has earned an average annual rate of return of 7.49% net of fees according to the August 31, 2018, performance report, which exceeds the fund’s target rate of return of 6% established in policy.
The Board of Trustees wishes to convey its deep appreciation to His Excellency President Tommy E. Remengesau, Jr., Minister of Finance Elbuchel Sadang, and all stakeholders involved for the tremendous effort and hard work that led to securing these additional funds. The Board will continue to work hard overseeing the investment of the trust fund, which is an integral part of securing the future viability of our nation’s economy, and thus sustaining the livelihood of all Palauans. (PR)