President Tommy E. Remengesau Jr. signed the FY 2018 Supplemental Budget into law yesterday during a leadership meeting, calling for spending restrain citing possible increase in government operating costs in near future due to increase in fuel prices and scheduled step-down of direct economic assistance through the Compact of Free Association.

Remengesau, in signing the supplemental budget, item reduced the budget of OEK by $175,000 and Mechesil Belau Silver Anniversary from $95,000 to $70,000.

“Rising fuel prices alone present a significant threat to our finances and the scheduled step-down of direct economic assistance through the Compact of Free Association only compounds the problem,” stated President Remengesau in his letter to both houses of OEK.

He further warned the congress to prepare for possible additional drawdown of Compact Funds to supplement government operations due to the March appropriation of the U.S. Congress of $123.824 million to fund the 2010 Compact Review Agreement.

“Unfortunately, I must take this opportunity to raise with you an unfortunate potential consequence of that long delay.  Because of discrepancies between the original CRA funding schedule and the continuing resolution funds provided by Congress from 2011 to 2017, the U.S. is proposing to allocate $123.824 million appropriation in a way that will drastically reduce direct economic assistance payments to Palau for the remainder of CRA term,” added Remengesau.

The president also urged that Palau must prepare for the worst which would be the increased reliance on COFA Trust Fund.

He added that Palau is working with friends in the U.S. government to mitigate this issue but Palau needs to prepare itself to drawdown funds from Compact under worst-case scenario.

President Remengesau signed the bill into law without changing the language of the budget for Office of Public Auditor which reduced $100,000 from the original budget appropriation to the Office of Public Auditor. (L.N. Reklai)