Effectively, the team from the IMF Asia Pacific Department, composed of two advisors, Akihiko Yoshida and Benjamin Pereira, and two economists, Pelin Berkmen and Waikei Raphael Lam, were accompanied on their mission by Sally Pedersen, Asian Development Bank human capacity development specialist for the Pacific Region.
Yoshida explained to Mori that the team traveled throughout Pohnpei and Chuuk during Nov. 8-17, and met with a wide range of people from the national and state governments and from the private sector to discuss the current economic outlook for FSM and the policies needed to promote sustainable growth. “It’s a biannual check-up of the economy,” said Berkmen.
The team brought some good news, spotlighting that in FY 2009, the FSM economy grew for the first time in three years.
They expect this growth to continue modestly in FY 2010.
However, they also stressed that with the annual decreases in Compact funds over the next 13 years and the continued outbound migration of the population, the FSM is likely to see its economic growth stunted if certain reforms are not soon established.
Yoshida and Berkmen recommended that the national government focus its efforts on the pending tax reform.
They believe that the additional revenue which will be generated by the tax reform, coupled with cuts in expenditures, will help in covering the financial gap which will result from the upcoming decreases in Compact funding.
They also emphasized the obvious need to continue developing the private sector, as well as the need to promote foreign investment.
