Overview:
Palau Eyes $94M in Low-Interest ADB Loans to Ease Debt and Fund Key Projects
President Surangel Whipps Jr. says Palau could use low-interest loans from the Asian Development Bank to refinance high-interest debt, fund housing and energy projects, and address long-term pension and Social Security obligations — all subject to approval by the Olbiil Era Kelulau.
By: L.N. Reklai
Koror, Palau — President Surangel Whipps Jr. said Palau has a significant opportunity to stabilize its economy and reduce long-term debt through access to low-interest loans from the Asian Development Bank, following his recent visit to ADB headquarters.
Whipps said Palau is eligible for up to $94 million in low-interest ADB loans over the next three years, which could be used to finance key development projects and refinance existing high-interest debt.
According to Whipps, some of the ADB loans could be used to pay off Palau’s current high-interest loans, allowing the government to reduce costly interest payments and improve its overall financial position.
“One of the opportunities here is to relieve ourselves from high interest,” Whipps said, noting that refinancing existing obligations could free up government resources for other priorities.
Among the projects discussed, Whipps said Palau Public Utilities Corporation could receive a $10 million loan at just 1% interest to purchase a new power generator, strengthening the country’s energy infrastructure while keeping borrowing costs low.
Whipps also said a $20 million loan could be extended to the National Development Bank of Palau to support housing programs, including joint projects with state governments. He said the funding could be used to develop apartment complexes and other low-cost housing options.
Whipps said such housing initiatives would help address the needs of young Palauans, particularly those who have lived in apartments while studying or working in the United States and are accustomed to that type of housing.
In addition to project-based financing, Whipps said Palau could also access policy-based loans aimed at addressing the nation’s major long-term liabilities, including the Social Security Administration and the Civil Service Pension Plan.
“We need to confront the issues of SSA and Pension,” Whipps said, emphasizing the importance of addressing structural financial challenges to ensure long-term stability.
Whipps said, however, that access to these loans depends on approval from the Olbiil Era Kelulau, which must authorize the government to borrow the funds.