Koror, Palau – Citing the need to fully recover from the economic impact of COVID-19, Koror Governor Eyos Rudimch has requested the national government to align the loan terms for Koror State with those received by the national government from the Asian Development Bank (ADB).
The policy-based loan from the national government is intended to bolster recovery efforts and build resilience in Palau’s states. The national government received the loan from the ADB, and then loans the funds to state governments, primarily Koror and potentially Airai and Peleliu.
In a letter to the Senate, Governor Rudimch argued that the 5-year term with three possible 5-year extensions offered to Koror State is significantly shorter than the 40-year term the national government secured from the ADB. This shorter term would require Koror State to make annual principal payments of $500,000, which is nearly 7% of the state’s 2023 revenues.
Koror also requested alignment on interest rate repayment terms. The current terms require Koror to begin principal and interest repayments after two years. Given the state’s ongoing economic recovery, the letter requested an extension of the interest-only repayment period from two to five years, mirroring the national government’s ten-year grace period.
“A longer grace period would enable Koror State Government (KSG) to complete its post-COVID recovery before starting principal repayments,” the letter stated.
Finally, regarding policy changes tied to the loan, Koror requested assistance from the national government in securing technical assistance to meet the required policy actions and their timelines. (By: L.N. Reklai)