Palau government reported a $2.2 million surplus at fiscal year-end of September 30, 2020.
“We were able the close the books at the end of the fiscal year September 30 with a surplus, revenue in excess of expenditures of $2.2 million dollars,” reported Finance Minister Elbuchel Sadang at the press conference on Wednesday this week.
The total budget for FY 2020 which included three (3) supplemental budgets, was $102 million dollars. Government revenue collected including financing sources reached $96.07m. Total expenditures for FY 2020 was at $93.85 million, leaving a positive balance of $2.2 million dollars.
The surplus is a result of slightly better revenue collection than expected and reduced expenditures by the government.
Originally, the projected local revenue for FY 2020 was $67m but with COVID-19, that was expected to drop by $17m. As of September 30, government was able to collect $60m or 91% of the projected revenue.
Tax revenue only dropped by 9% and licenses and fees actually increased by 4%. Hospital Trust Fund increased by nearly 97% and Green Fees dropped by 1%. There were reductions in other revenue areas but overall, the total collected local revenue was 91% of the projected revenue collections for FY 2020.
President Remengesau explained that the strong tourism performance in first 2 quarters of FY 2020, the strong construction performance as result of increased infrastructure investments and windfall from the US WIOA CARES Act pandemic assistance contributed to the FY 2020’s overall financial performance. “We were on track at the beginning of FY 2020 to hit possibly the best tourism year ever, possibly reaching 112k in arrivals but then COVID-19 hit. We were still able to get good returns from the first two quarters of the FY 2020 as a result.”
This coupled with reduction in spending of about 8% contributed to the savings of $2.2 million as reported. Minister Sadang also reported that the government was able to close the year without spending the $10 million from the ADB loan appropriated for the CROSS Act and said it will be available to the next government. As result of nearly zero visitor arrivals for FY 2021, revenue shortfall for the government in FY 2021 is expected to reach $28 million.
Gov’t reported $2.2m surplus despite pandemic
