House Bill No. 8-107-8 introduced by Delegate Lentcer Basilius aims to give Toribiong the authority to negotiate, execute and deliver on behalf of Palau, a loan up to $50 million for the purpose of repaying debts of the government, both local and international.
“Palau’s public debt consists of millions of dollars owed to domestic entities, such as Palau Public Utilities Corporation, Palau National Communications Corporation, and Palau Pension Fund, as well as unpaid obligations to international lending institutions and governance bodies, such as the United Nations,” Basilius explained in an interview.
Basilius added that the consolidation of these debts under more favorable terms would not only lessen Palau’s long term debt load, but would also ease the administrative costs of managing the country’s debt, protect its active status in various international bodies as well as the financial health of domestic lenders.
“We also took out the limitation of the terms so that the President has a leeway for that amount of loan,” Basilius said. While the President’s loan authority is limited to short tem loans, Basilius explained that such loans tend to have higher interest rates than those with longer repayment schedules.
“To obtain the most favorable terms possible, a loan obtained under this grant of authority is not limited to a certain term or repayment schedule,” he added.
Under the Palau Constitution, the Olbiil Era Kelulau (OEK) has the power to borrow money on the credit of the Palau national government to finance public programs or to settle public debt.
If both Houses agree to pass the Bill, Basilius said the President will have the authority to seek any lending companies to give Palau that certain amount.
