The signing of the economic aid brings into conclusion the review which has been delayed for months.
President Johnson Toribiong’s delegation arrived last night from Hawaii and was welcomed by government officials at the Palau International Airport to congratulate the team in finalizing the agreement that lays out the financial assistance for the country for the next 15 years.
“The agreement was finally signed after a very heated and comprehensive meeting in Honolulu,” Toribiong said.
The president said the review was on a verge of collapse because of disagreement over provisions incorporated in the agreement.
He said the agreement requires the establishment of a .body which will institute economic and financial reforms for Palau. The composition of the body needs to be approved by the United States.
Toribiong said that Palau delegation is happy with the outcome.
Palau has accepted a $250 million financial package in January for the next 15 years.
For the first year of the Compact financial package’s renewal of the agreement, the US has agreed to give them over $20 million.
The final and signed agreement also included a $21 million subsidy for the United States Postal Service , the $16.8 million however of which is unrelated to Palau as it is intended for postal services to Federated States of Micronesia and Republic of the Marshall Islands.
Earlier, Toribiong said that the U.S. team are making demands that are highly intrusive such as requirements that tax deductibility for charitable contributions be totally eliminated and requirements of micromanaging such a increase in the tax Palau charges on its fish exports to $.85/kg.
These provisions were highly contested by the Palau government, thus delaying the formal signing.
At the final agreement, the U.S. government no longer insisted on these provisions but instead Palau will have to institute reforms to make the country self-sufficient, according to Toribiong.
The president also said that allocation of the funds for certain programs has been worked out. Other details of the agreement have yet to be revealed by the advisory group.
Both the U.S. and Palau conducted a year-long review of the Compact and Palau will have another opportunity to review the Compact after year 2024.
The government is confident that at the time the Compact funds will have performed well enough to sustain Palau’s economy.
The next stop is for U.S. lawmakers to re-approve the Compact economic aid.
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