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President Nena Reminds Pohnpei Governor of PSRP Requirements

PALIKIR, Pohnpei (FSM Information Service): February 10, 1998 - President Jacob Nena, on February 4^th informed Pohnpei Governor Del Pangelinan that an Asian Development Bank (ADB) Mission will visit the FSM next month to review the performance of each of the five governments participating in the Public Sector Reform program (PSRP).

In this regard he expressed his grave concern that Pohnpei State may fail its commitments on the ADB sponsored PSRP which involves retiring employees in the public service system (PSS) in order to trim government's annual expenditures.

The President reiterated that a condition of the ADB loan is that the states and the national government are required to focus their performance against the following reform critical areas: reductions in personnel through the Early Retirement Program (ERP); reduction in wage levels; increase in taxes and other revenues; enactment at the state-level of companion foreign investment legislation; and the maintenance of reforms and overall fiscal adjustment.

Pohnpei State, Nena said, is meeting only the "reductions in personnel through the ERP" requirement but not the other four requirements.

As a condition for the second drawdown of the remaining $8 million dollars, the National Government and at least two States must show sufficient progress in meeting their targets.

President Nena expressed his concerns over the inclusion of the Pohnpei State's inflation adjustment projections in the operating budget for fiscal year 1998, reminding Pangelinan the consensus of the Chief Executive Conference (CEC) and a subsequent legislation which precludes the use of inflation adjustment funds for operation.

Pohnpei State has including its fiscal 1998 operation budget, the President stated, in order to balance its budget while at the same time it shows the State of Pohnpei has lost its previous commitment to reform and adjustment.

While acknowledging that the tone of his letter may not readily accepted, President Nena believes it is in the best interest of the State and the National Government to return to the more austere or strict medium-term fiscal policy earlier achieved by Pohnpei State.

"Each of our Governments is undertaking reforms that require greater political will and courage," President Nena stated adding, "I hope that you will review efforts with your State leadership to re-establish consensus to fully implement our two-pronged economic strategy of public sector reform and private sector promotion."

The President concluded his letter by offering to Governor Pangelinan the assistance of the National Task Force.

The letter was copied to the FSM Vice President, Speaker of FSM Congress, Speaker of Pohnpei Legislature and the Chairman of Pohnpei Congressional Delegation.