Palau’s projected revenue shortfall this FY 2020 will reach $23 million, $2 million more than what was earlier projected according to report from Minister of Finance Elbuchel Sadang to the national leadership yesterday.

Minister Sadang assured that the $2 million can be covered by collections over the next 3 months.  “We will have a balance budget by September 30,” said Sadang.

Due to impact of COVID-19, the expected $66.5 million local revenue collection for FY 2020 Unified Budget could not be met with Ministry of Finance reporting only 65% ($43.2 million) collected at the end of this 3rd quarter.  Earlier when COVID-19 pandemic first hit, the projected loss of local revenue was pegged at $21 million.

The $21 million shortfall was funded under the CROSS Act which appropriated $21 million,sourced from both the Reserve Fund and the ADB Disaster Relief loan.

The current projection is now $23 million, which is $2 million more than estimated. 

Minister Sadang expressed confidence that they will be able to collect $2 million in the remaining 3 months to cover the difference and have a balanced budget by end of the fiscal year 2020.

FY 2021 is expected to be more difficult, with minimal number of tourists expected.  The projected budget shortfall for FY 2021 is expected to reach $40 million.  OEK had authorized the President to obtain a loan of  up to $60 million dollars to address this year’s  budget short as well as  next year’s budget.  Under the Cross Act, $16 million of the $60 million is authorized to help fund private sector COVID relief. 

President Remengesau Jr. during his report to the national leadership meeting yesterday said that the difference of the $60 million is supposed to help subsidize government budget in FY 2021 when the new administration takes office.

Minister Sadang reported that the $40 million is expected to be issued in two tranches with first tranche of $20 million to help with basic operations and the remaining $20 million to be accompanied by legislative reforms.

Budget call for FY 2021, reported Sadang,  will be issued soon to all ministries and departments of the government including State governments in the coming days.

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