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    Monday, August 26, 2019-7:30:54P.M.

     

     

     

     

     

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MPLT consultant doubts government’s ability to pay

MARIANAS Public Land Trust’s board consultant Bruce M. MacMillan doubts the CNMI government’s ability to pay off a $15 million loan.

In his May 21 memorandum to the trustees, MacMillan noted that the Department of Finance has revised the fiscal year 2019 projected revenues available for appropriation from $167 million to $141 million — a $25.5 million reduction.

The actual net revenues available for appropriation for six months ending March 31, 2019 was $67.88 million or 48 percent of the latest estimate, the consultant added.

Since Finance did not provide the actual expenditures for six months and the budgeted expenditures for the remainder of the fiscal year, MacMillan said, “I could not determine the extent of the potential deficit of FY 2019.”

But, he added, “it has been referenced that the current fiscal year deficit was a substantial amount of $25 million to $30 million.”

He said “given these circumstances, it is doubtful that the CNMI government will have resources to operate on a revolving [line-of-credit]. It is most likely that this loan would have to follow the pattern of the most recent term loan in the amount of $5 million, which will pay off this fiscal year,” he said.

MacMillan was referring to the line-of-credit to the Commonwealth Healthcare Corp. that was not paid on a short-term basis. Eventually, he said, MPLT had to term out the loan on a five-year amortization.

He said CHCC needed a long-term loan and not a line-of-credit.

Click to enlarge
Marianas Public Land Trust board member Pedro Guerrero gestures as he speaks during a meeting on Wednesday.  Photo by Emmanuel T. Erediano

“MPLT does not need to make the same mistake with this loan request as it appears that the CNMI needs long-term financing in order to recover from the current revenue shortfall,” MacMillan said.

He added that the government’s line-of-credit request should “be approached in the same manner as other loans to the CNMI.”

“The only resource for repayment that can be relied on is the offset of our annual distribution to the CNMI [general fund]. If [Finance] is able to pay off the loan advances, then all the better but I have reservations that this can be accomplished,” MacMillan said.

“It would be beneficial to structure the loan so that the offset begins in 2019 and not 2020. Also, a requirement that [Finance] pay the monthly accrued interest would pay off the loan more quickly,” he added.

The MPLT board met at 1 p.m. on Wednesday to hear from its investment consultant, Jason Miyashita, who made a power-point presentation on portfolio rebalancing.

The administration has requested a line-of-credit to pay the Settlement Fund and the government’s bond obligations.