Three months into the new fiscal year, Palau’s hopes for financial relief remain hostage to the US Congress’s stalled approval of the 2nd Compact Review Agreement (CRA). President Surangel Whipps, speaking to ABC Australia, voiced his concern about the delay, saying it could be further exacerbated by the US elections.
The urgency behind the early negotiations surrounding the CRA stemmed from Palau’s dire economic situation. The collapse of the tourism industry, coupled with the national debt, has left the island nation struggling. $90 million of the proposed initial drawdown was earmarked for easing the burden of debts accumulated during the COVID-19 pandemic.
To mitigate the potential impact of the delay, Palau’s FY 2024 Unified Budget authorized the expenditure of $30 million from the Compact Trust Funds. This measure serves as a lifeline while the Olbiil Era Kelulau (Palau Congress) navigates the uncertain timeline set by the US Congress.
While there’s cautious optimism that the CRA won’t face an eight-year delay like its predecessor under President Obama, the current economic climate in Palau amplifies the consequences of any prolonged wait. The tourism industry’s slow recovery, coupled with the debt burden, leaves the nation vulnerable to further hardship.