advisory group has recommended ways the government can cut from $4 million to $10 million a year.
Finance Minister Jack Ading said the report by local advisors provided a roadmap and it was now up to the cabinet to decide what to do.
“If we don’t start now and put more money into the trust fund, who suffers?” Ading said Friday. “Our children and grandchildren. We have to think about future generations.”
A member of the advisory group called on the cabinet to begin implementing cost-cutting recommendations and not wait for a financial crash.
The IMF last week said the Marshall Islands will face a large revenue shortfall when United States grant funding ends in 2023 if it does not invest more money into a trust fund that now has about $100 million in it.
The Comprehensive Adjustment Program Advisory Committee’s report presented earlier this week to President Jurelang Zedkaia and the cabinet identified 13 areas where spending can be reduced by government. These areas range from the $34 million price tag of the public service, and housing and electricity allowances for VIPs to vehicle purchases and subsidies to government agencies.
“The report is great,” Ading said. “The next step is for the cabinet to consider seriously if it is ready to implement the recommendations.”
He acknowledged the challenge of implementing some of the recommended cutbacks. “Some of the recommendations are not easy,” he said. These include “entitlements” such as parliament sitting fees that provide $5,000 annually to each member. The recommendations to cut housing and power allowances for high-ranking government officials “may be easier and can be implemented as soon as possible,” Ading said.
Prominent in the report are a series of options regarding the government’s large salary bill, which represents about 25 percent of its national budget of $137 million. It suggests eliminating up to 70 vacant positions, a limited reduction in force from 50 up to 400 workers, reducing the number of hours worked, or reducing the pay scale of government workers from one-to-five percent.
Ading acknowledged the difficulty of these public service pay cut recommendations, but added “if it’s got to be done, it’s got to be done.
“I’m willing to sacrifice my benefits for the benefit of the Marshall Islands.”
Advisory group member Jack Niedenthal said he hopes government will start implementing the recommendations and won’t “wait for a crash.”
“The proposed cuts painful,” he said. But, he said, the nuclear test-affected Bikini Islands, whom Niedenthal works for, have been forced to chopped 50 percent off their budget in just two years because of poor performance of their trust fund, dropping from $10 million to just over $5 million a year in spending.
The Comprehensive Adjustment Program report recommends cutting between $4 and $10 million a year from a $137 million national budget, he said. “It’s very doable,” he said.
