Overview:
Palau’s Senate is urging President Whipps to transfer $30 million from the Compact Trust Fund into the National Development Bank of Palau (NDBP) to fund local housing, farming, fishing, and small businesses. Proponents argue it’s time to invest trust fund money directly into Palau’s economy rather than leaving it strictly in overseas markets. However, with questions surrounding bank leadership, tech upgrades, and potential loss of stock market returns, lawmakers remain divided on the best path forward.
By: Eoghan Olkeriil Ngirudelsang
Ngerulmud, Palau — A Senate joint resolution is urging President Whipps to inject US$30 million from the Compact Trust Fund into the National Development Bank of Palau (NDBP) to boost lending for agriculture, fisheries, housing, infrastructure and small business.
Resolution aims to unlock long-stalled development
Senate Joint Resolution No. 12-22 seeks to capitalize NDBP so the bank can expand its lending capacity and stimulate investment in priority sectors. The resolution argues that while a significant portion of Compact assistance “is held in a trust fund intended for long-term development goals”, development in key sectors such as agriculture, fishing, housing and infrastructure “has remained stagnant for the past thirty years, hindering economic growth and perpetuating reliance on foreign aid.”
It says NDBP is “positioned to address these challenges by providing accessible and affordable loans to Palauan’s seeking to invest in these critical sector.”
Lawmakers weigh trade-offs: trust fund earnings vs. domestic investment
During Monday’s Senate session, Senator Mason Whipps said he supports moves to inject more capital into NDBP but raised concerns about the opportunity cost of pulling money out of the trust fund’s overseas investments. He stated that, “We get earnings of our trust fund funding while it’s being invested in the U.S. Stock market. The challenge we face is, if we are to give that money to NDBP, can it afford to pay those earnings that we currently realize, or do we decide to forgo those earnings because instead of our money invested in the U.S., it will instead be invested in Palau?”
Senator Mariur raised concern that, “We should review the bank’s purpose and its services; does the bank have the capacity to receive such funding? Should we just hand them this funding or give it to the bank as a loan?”
Mariur further said that, “While our trust fund is required to be invested in the United States, we must find ways to invest in Palau, and possibly hand such funding to the development bank but require the bank to pay it back including interests.”
Recent $15M housing loan, Temenos rollout and CEO vacancy fuel capacity questions
NDBP recently received a US$15 million loan from the national government at a fixed 2.5% interest rate for a 20-year term, channeled through the bank for housing development. The infusion came amid staff complaints about management and reports that the bank lacks sufficient capacity to operate its newly procured core banking and digital transformation system, Temenos. NDBP also currently has no CEO, raising concerns among lawmakers and the public about whether the bank has the capacity to absorb another large funding injection.
President Whipps: ‘There is no reason why it’s been left… for a year and a half’
At a press conference yesterday, President Whipps highlighted the need for additional funding to NDBP and criticized the slow progress of related legislation. He said, “A request to the Senate to consider a commemorative coin is additional funding to NDBP to help NDBP. There is no reason why it’s been left in Senator Mariur’s committee in the Olbiil er a Kelulau for a year and a half.”
NDBP was established in February 1982 during the first constitutional government to promote economic development through targeted lending. The Senate resolution frames the proposed $30 million capital injection as a way to finally leverage the Compact Trust Fund for on-the-ground investment in Palau, even as lawmakers debate the funding structure and the bank’s readiness to deploy it.