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Palau Koror – Koror State Governor Eyos Rudimch said full recovery from the economic impact of COVID-19 is needed and he has asked the national government to align the terms of Koror State’s loan with the one the national government received from the Asian Development Bank (ADB).
The policy-based loan from the national government is intended to support recovery efforts and strengthen resilience in Palau’s states. The national government obtains a loan from the Asian Development Bank and then lends the funds to the state governments, primarily Koror State, but also Airai and Peleliu States.
In a letter to the Senate, Governor Rudimuchi argued that Koror’s five-year term, plus three possible five-year extensions, is much shorter than the 40-year term the national government received from the Asian Development Bank. This shorter term would require Koror to pay $500,000 in principal annually, which is almost 7% of the state’s revenue in 2023.
Koror also requested an adjustment to the interest repayment terms. The current terms require Koror to start repaying the principal and interest after two years. Given that the state’s economy is recovering, the letter requested that the interest-only repayment period be extended from two years to five years to match the national government’s 10-year grace period.
“The longer grace period will allow the Koror State Government (KSG) to complete its post-COVID-19 recovery before commencing principal repayments,” the letter reads.
Finally, regarding policy changes related to the loan, Koror requested the national government’s assistance in securing technical assistance to meet the required policy actions and their timelines. (By LN Reklai)
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