The state and national action plans each cover five distinct development areas: trade and industry, infrastructure; business, regulatory and logistics; transportation; and human resource and development. Each state action plan has been taken back to its respective state for further specification and finalization. All plans will be used to guide budgetary planning processes for fiscal year 2012.
In conjunction with these plans, the national long term fiscal and economic framework specifically addresses the fiscal challenges raised by the Joint Economic Management Committee at a meeting held in Hawaii in Sept. 2010.
JEMCO saw unsustainable growth trends in health and education expenditures, as well as in government wage bills; with, amongst other things, limited progress on broad-based tax reforms and limited increases in other revenue categories.
A report recommends cost constraining measures, including the reduction of personnel, travel, consumable and other costs, as well as revenue reform measures, and as such will be submitted as a response to the JEMCO requirements.
The National Economic Symposium endorsed the passage of the tax reform legislation currently before the FSM Congress and state legislatures. The major reform components of the legislation include: the establishment of a unified revenue authority to replace the existing state and national tax offices, the replacement of the gross revenue tax with a nets profit tax, and the replacement of the states sales tax with a value added tax.
The fourth and final resolution spotlighted that currently the U.S. Office of Insular Affairs is largely limiting infrastructure funding to primary and secondary education capital projects and projects that directly affect health and safety, including water and wastewater projects, solid waste disposal projects, and health care facilities.
While the symposium participants advised that they strongly supported strengthening infrastructure in the above-referenced areas, they also affirmed that broadening the scope of infrastructure projects to include the development of the private sector; the upgrading of the energy, transportation and communication sectors; and the emergency infrastructure needs, would certainly assist in revitalizing the FSM economy.
All resolutions have been executed by FSM President Manny Mori, Chuuk Gov. Wesley Simina, Kosrae Lt. Gov. Carson Sigrah and Yap Gov. Sebastian Anefal. Final execution by Pohnpei Gov. John Ehsa is pending.
