Governor Eyos Rudimch emphasizes efforts to control expenses while maintaining government operations
KOROR, PALAU – Koror State Government is facing a budget shortfall of nearly $2.5 million at year-end, a consequence of the COVID-19 pandemic that severely impacted the state’s revenue streams. The pandemic wiped out more than 60% of Koror State’s annual revenue for three consecutive years, forcing the state to seek financial assistance from the national government.
To address the budget shortfall, the Koror State Government has been utilizing its Reserve Savings to balance its budget while simultaneously requesting approval from the national government to secure a loan that would supplement its budget until the economy recovers. In response to this request, the House of Delegates proposed a joint resolution to approve Koror State’s request for a $15 million dollar loan to supplement its budget for three years.
The resolution was passed by the House and subsequently transmitted to the Senate for consideration. The Senate reviewed the resolution and passed it with recommendations to reduce the loan amount to $10 million and to require the provision of full loan documents, including the terms of the loan, before obtaining approval from the Olbiil Era Kelulau (OEK).
The resolution now returns to the House for consideration. If the House accepts the Senate’s recommendations, the resolution will be approved. However, if the House rejects the Senate’s recommendations, both houses of Congress will need to reconvene to address the resolution once again.
The financial situation of Koror State highlights the ongoing economic challenges faced by Palau in the aftermath of the COVID-19 pandemic. While the economy is gradually recovering, the pandemic’s impact continues to strain the financial resources of both national and state governments.
“We will work with what they give us. It is not what we were asking for, but if $10 million is all we get, we will be happy to work with that,” expressed Governor Eyos Rudimch of the proposed changes Senate made to the House Joint Resolution 11-32-7S.
Regarding the condition in the Senate version of the resolution to provide loan documents with all terms and conditions in order to obtain Olbiil Era Kelulau approval, Governor Rudimch explained that the information comes from the Minister of Finance Kaleb Udui Jr.
“We had asked for the loan from the national government through the Asian Development Bank’s Policy-Base loan program. We wanted this because it had flexible terms and low-interest rates. We wanted the same terms ADB gave to the national government. My understanding is that the loan agreement details are still being negotiated between the national government and the Asian Development Bank. That is why I cannot provide Senator Inabo with the information she wants because the loan is between the national and ADB,” explained Governor Rudimch.
Meanwhile, Governor Rudimch is not saying what they will do if the loan does not come through, but he emphasized the efforts they are making to control Koror State government expenses while maintaining government operations.
Governor Rudimch said that they had implemented measures that greatly reduced expenses and contained costs overall. They have also withheld major capital improvement projects, and implemented only small hamlet projects in order to keep within their limited budget.
“We have really worked hard to leverage partnerships and collaborations in order to share costs and minimize expenses, again, in order to keep within our budget,” expressed Governor Rudimch. Citing as an example the Koror State’s Constitution Day event, where costs were shared between partners, reducing the expense burden of the State.
“There is recovery, but it is not where it needs to be to cover operating expenses. As of June 30th of this year, we are looking at a possible shortfall of nearly $2.5 million dollars at year-end, money that we will need to pull out of the Reserve Savings to balance the budget,” said Governor Eyos Rudimch of Koror State Government.