The Northern Mariana Islands continues to face severe economic and fiscal challenges as its tourism sector struggles to recover from the COVID-19 pandemic, according to a status report by Settlement Fund Trustee Joyce C.H. Tang.
At the start of fiscal year 2025, on October 1, 2024, Saipan’s tourism industry was hit hard by Asiana Airlines’ withdrawal and reduced flights from South Korea, leading to limited service and rising airfare costs. Despite the launch of interisland air service between the CNMI and Guam in July by Micronesia Air Connections Services, visitor arrivals remain low.
This was followed by the closure of T Galleria (Duty Free Saipan Ltd.) in April after 40 years of operation, which sent shockwaves through the community.
By the beginning of FY 2026, starting October 1, 2026, hotel occupancy rates had fallen to 23.18 percent, their lowest level since 1992.
“These dire economic conditions have resulted in severe fiscal consequences for the CNMI,” Tang said in her report.
To meet its FY 2026 Minimum Annual Payment (MAP) obligation to the Settlement Fund, the government authorized a $29 million loan from the Marianas Public Land Trust, redirecting previously budgeted MAP funds for operational needs. Critical programs have been affected, including retiree premiums for the Group Health and Life Insurance program, which will lapse at the end of December. Education appropriations have also been drastically cut.
Although $5.7 million in federal relief was provided for government operations and partial retiree benefit payments, the legislature has not appropriated enough to cover retiree health insurance. The House passed HB 24-74, appropriating $2.8 million for retiree health insurance, but a $4.4 million shortfall and uncertainty about coverage duration remain.
US interest
Tang noted national interests could also affect the CNMI. The U.S. government is considering deep-sea mining near the Marianas Trench, covering more than 35 million acres of waters near the CNMI and Guam. Restoration of Tinian’s North Field as a backup divert airfield for the Pacific is also underway.
“While the government continues to prioritize the MAP, the Settlement Fund finds reliance on a loan to satisfy this critical obligation and the inability to adequately fund the GHLI program deeply concerning,” Tang said.
Despite these challenges, the Settlement Fund’s investments remain strong. In October, however, $4 million was liquidated at the start of FY 2026 to cover 75 percent benefit payments. As of Oct. 31, 2025, the Settlement Fund’s portfolio value stood at $142.3 million.
Background
In 2009, retiree Betty Johnson sued the CNMI government for failing to remit required contributions to the NMI Retirement Fund since 2005. Johnson warned that the Fund would be insolvent by June 2014 and unable to pay benefits.
In September 2013, the parties reached a settlement, and the federal court approved a $779 million consent judgment to ensure compliance. The court established the Settlement Fund to protect retirees’ payments and appointed Tang as trustee on Sept. 25, 2013.
Since its establishment, the CNMI government has remitted more than $500 million in total payments — including over $400 million in MAP contributions and more than $100 million in voluntary 25 percent benefit payments. Tang noted that the voluntary 25 percent payments are not required under the consent judgment, depend on discretionary funding, and remain vulnerable.
