President Tommy Remengesau Jr. in his State of the Republic Address yesterday says its time the leaders and the people of Palau “take greater ownership of our continued growth and economic well-being.”
Citing that Palau’s development strides have changed its international classification from “Medium Income Country” to “High Income Country” and such achievement has unfortunate bearing on Palau’s continued eligibility to access international development assistance that it has depended on to improve “living conditions” of its people.
Despite this criteria, Palau will continue to “face many of the same unique development issues that face all small island states, including our 3 inherent economic vulnerability and the mounting impacts and economic costs of climate change”, added Remengesau.
Remengesau urged innovative and creative solutions to address continued development challenges. A solution he said is by broadening and strengthening the nature of Palau’s partnerships to fit its realities.
“Only through strong and creative planning, along with enhanced partnerships, will we be able to develop the innovative financing options that will be the foundation for our sustained growth.”
Furthermore he said that “in order to implement these innovative options, we will need to continue to improve the capacity of our people and our government to access and implement these financial opportunities with our strengthened partnerships.”
Remengesau noted specific growth opportunities in the coming two years and but also cited challenges.
He said construction and tourism growth are expected drivers of economic growth in the next two years but Palau remains vulnerable to external impacts of world prices of fuel and other commodities which can erode growth in medium term.
Palau’s challenges include utdated tax system, unfunded pension plan, inability to access outside financial assistance due to its recent classification as high income country and an infrastructure that will no longer be funded by external aid continue to be challenges.
SORA endorses a medium term fiscal strategy to address challenges to come utilizing enhanced partnerships and financing. (By L.N. Reklai)