The Palau government is working with the Asian Development Bank (ADB) for a debt-to-gross domestic product (GDP) analysis which is expected to be pushed higher following a planned loan to mitigate the COVID-19 economic impact.
Finance Minister Elbuchel Sadang last week said that debt-to-GDP ratio is currently at 30 percent and that they plan to keep the debt at a sustainable level and not to exceed 50 percent.
“We are working with ADB, right now to do the debt ratio analysis for Palau,” Sadang said.
He also said that Palau is asking ADB and Taiwan for a debt deferment to help recover from the impacts of COVID-19.
Palau President Tommy Remengesau Jr. signed on April 22, a law authorize to borrow up to $60 million to help mitigate the economic and social impact of COVID-19.
The loan will help pave the way for addressing the economic losses as a result of the pandemic.
According to a March 31 economic assessment by the Graduate School of USA and Economic Monitoring Analysis Program (ECONMAP), that there is a financing need of about $46 million up until FY2021.
The assessment forecast that there will be a fiscal deficit of $18 million in FY2020 and it widens with a deficit rise of $22 million through FY2021.
It is also expecting that total tax revenue fall by $11 million in FY2020 and a further $19 million in FY2021.
Sadang said the new loan will have a grace period of five years. (B. Carreon)