Koror, Palau – Palau’s Minister of Finance, Kaleb Udui Jr., signed a loan agreement with the Asian Development Bank (ADB) on Tuesday for $12.5 million. The policy-based loan aims to bolster recovery efforts and build resilience in Palau’s states.
The funds will be provided at a fixed interest rate of 1% with a 40-year term, including a 10-year grace period. The loan targets specific objectives, including promoting gender equality, addressing climate change and building environmental sustainability, and strengthening governance.
“We plan to allocate the loan to three states,” Minister Udui said. “Koror is already included, but with a remaining $2.5 million, we’d like to offer it to Airai and Peleliu to support their recovery and resilience-building initiatives.”
He continued, emphasizing the loan’s potential to position states for future growth. “Our goal is to see a much stronger position not only for the national government but for state governments as well by 2026, when we anticipate a return to pre-pandemic tourism levels.”
The loan falls under ADB’s Strengthening Fiscal Resilience for Sustainable Development Program, which focuses on public spending and fiscal management.
“We’re already working on improving our fiscal systems at Koror State, and this will be a significant addition,” said Koror State Governor Eyos Rudimch, who participated in the signing ceremony virtually alongside Minister Udui, Senator Rukebai Inabo, Delegate Warren Umetaro, and ADB officials.
Since the COVID-19 pandemic decimated tourism revenue, Koror State’s primary income source, it has relied on drawing down funds from its reserves to support operations. However, Governor Rudimch noted positive signs, stating, “This year, we haven’t had to tap into our reserves as much as we had budgeted for.”