Senate Bill 8-97, is aimed at helping the country retire its unpaid obligations by having the authority to borrow money from lenders.
The measure was passed on first reading during the Senate session on Wednesday. “The Olbiil Era Kelulau finds that the Republic’s current financial situation is dire due to the global economic recession and an unprecedented reduction in the Republic’s collection of local revenues. The Republic has unpaid bills totaling as much as $10 million. The inability of the Republic to pay its debts is affecting the ability of the National Government to obtain goods and services and to provide important government services. In light of this, the Olbiil Era Kelulau finds it necessary for the Republic to be given the authority to obtain a line of credit to pay its outstanding debts,” the measure said. According to the measure, in addition to the president’s existing authority the president can negotiate for , “execute all documents relating to, and obtain a revolving line of credit for no more than one year periods, renewable annually, with a Lender in the maximum amount of $3,000,000 at a reasonable interest rate, for the purposes of ensuring the timely acquisition of goods and services.”The measure also allows the government to lend money from National Development Bank of Palau.Earlier, President Johnson Toribiong asked lawmakers to take action in a separate bill a rider in the budget measure which will authorize NDBP to loan money to the Republic.President Toribiong is considering taking out a loan from NDBP to pay the government obligations amounting to at least $10 million.The rider however was removed from the bill by the OEK.Earlier the president said the Palau government has accumulated unpaid obligations of $10 million due to an overestimation of revenues collection.Toribiong said because the government in prior years has calculated incoming revenues too high it has resulted into debts that have built up within four to five years.The president said the government is also trying to secure loans from commercial banks in Palau, but because of the economic crisis, most are reluctant to do so.He added commercial banks and financial institutions also collect high interest rates.The president said that the country’s revenues are in a downward spiral and will stay that way in the near future.Section 3. Amendment. Section 122(a) of Title 26 of the Palau National Code is hereby amended to read as follows:“§122. Purposes, powers and duties in general.(a) The Bank shall provide guaranteed loans and direct financing:(1) to persons for housing and for the development within the Republic of industry, agriculture, tourism, marine resources, and other ventures, with priority emphasis given to those venture which involve the development of new enterprises and import substitutes; and(2) to the National Government of the Republic of Palau for any purpose requested by the President.”Section 4. Effective date. This act shall become law upon approval by the President of the Republic of Palau or upon its becoming law without such approval.
