Trust Fund Currently Not on Path to Replace Compact Sector Grant Assistance in 2024
Palikir, Pohnpei (FSM Information Services): April 9, 2012 - On April 4, 2012, the FSM Office of SBOC submitted to the Executive and Legislative Branches of the FSM National Government the Fiscal Year 2011 Annual Report for the Compact Trust Fund, officially referred to as the "Trust Fund for the People of the Federated States of Micronesia."
The FY2011 Annual Report highlights the following:
The total Net Asset Value of the Fund increased 12% to $198.4 million in FY11 from $177.2 million in FY10. The increase was due mainly to increased contributions. The Fund experienced an investment loss of $339,386 primarily due to declining international equity markets.
A contribution of $22.4 million was received from the United States for FY11. FY10 contributions amounted to $21.5 million.
Investment expenses were substantially reduced by 31.3% to $645,382 in FY11 from $939,224 in FY10. The reduction is attributed to a new contract and fee structure with the newly contracted custodian and with the investment adviser in September 2010.
Administrative expenses also decreased by 3.1% to $147,921 in FY11 from $152,679 in FY10. The decrease can be attributed to reduced legal, audit, and miscellaneous administrative fees.
In an official submission of the Annual Report to President Mori, SBOC Director Evelyn Adolph noted that while the Fund has realized some gains since the economic downturn in FY2008 and FY2009, most recent estimates project that the fund will significantly fall short of the required amount to provide a smooth transition from Compact sector grants in 2024.
The Trust Fund is meant to contribute to FSM's long-term economic development and budgetary self-reliance after 2023 when economic provisions of the Amended Compact are set to expire. Given the relatively underfunded condition of the Trust Fund, and in the hope of maximizing on the FSM's investment portfolio returns, the Trust Fund Committee has recently agreed to explore opportunities to attract additional contributors to the fund. The recently finalized Independent FSM Amended Compact Five Year Review Report has also identified several options with the aim of improving the performance of the fund and to ensure it meets its intended target in 2024.
The Trust Fund requires close oversight and management by a committee, which, under the terms of the Amended Compact, is made up of five members -- three from the US Government and two from the FSM Government. The FSM's current members are Mr. Aren Palik, President and CEO of the Pacific Islands Development Bank in Guam and Mrs. Rose Nakanaga, Acting Secretary for the FSM Department of Finance & Administration, who serves as Interim Member.
For more information, please contact the Division of Compact Management at the FSM Office of Statistics, Budget and Economic Management, Overseas Development Assistance & Compact Management (SBOC) at (691) 320-6260 or email firstname.lastname@example.org.
For further information on this release, please contact:
FSM Office of the President Public Information: Press, Radio, Video P.O Box 34 Palikir Station, Pohnpei, FM 96941 Tel.: (691) 320-2548/2092 Fax.: (691) 320-4356 e-mail: email@example.com http://www.fsmpio.fm/