The new law allows the president to borrow money from the National Development Bank to enable the government to pay its unpaid obligations.
“I am very pleased to again be able to congratulate you and your colleagues for considering and passing this bill in such timely manner,” the president said in his transmittal letters to Olbiil Era Kelulau leaders.“As the Republic’s financial situation has declined due to global recession and the unprecedented reduction in the Republic’s collection of local revenues, this legislation is absolutely necessary to assist the Republic in my administration to focus on the business of running the government, a task that I expect to be extremely challenging in the near term given the present state of our economy,” the letter said.The new law gives authorization and approval to the president to obtain a line of credit for the purpose of paying lawful debts owed to local vendors.The government earlier stated that it has debts amounting to at least $10 million.The new law also included a new provision to allow state governments to impose penalties that the states deem appropriate for violations of state laws.The new law gives the states the authority to impose penalty not exceeding $500.
