Koror, Palau – The Palau Senate passed the Fiscal Year (FY) 2024 Supplemental Budget bill on its second reading by a narrow 7-6 margin. Notably absent from the Senate’s version were provisions codifying loan conditions set by the Saudi Development Fund (SDF) should Palau choose to borrow from them.
The originally proposed loan terms included diplomatic immunity for SDF employees, confidentiality of loan documents, and exemption from the Open Government Act. The Senate, however, recommends addressing these points through a separate congressional resolution.
Earlier this month, President Surangel Whipps Jr. submitted a draft resolution to the Olbiil era Kelulau (OEK), Palau’s bicameral legislature, seeking authorization to secure a $15 million, 2.5% interest rate loan from the SDF. These funds would then be sub-loaned to the National Development Bank of Palau (NDBP) for development projects.
President Whipps has publicly advocated for the SDF loan, citing its fixed interest rate and focus on programs like housing, where homeowners would shoulder the repayment burden rather than the government. He contrasted this with existing loans from Mega Commercial Bank of Taiwan, which currently charge a fluctuating rate based on the U.S. Federal Reserve’s SOFR (Secured Overnight Financing Rate).
He said the conditions were standard terms of the Saudi Development loans to protect the company’s employees while they discharged their duties related to the loans.
The President’s draft resolution initially sought OEK’s authorization to negotiate and obtain the loan. The House of Delegates, however, attached the SDF loan conditions as riders to the supplemental budget bill. The Senate subsequently removed this language, asserting it should be addressed within a dedicated resolution.