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FSM Vice President Offers Yap State Help on FSM/ADB Water Supply Loan

PALIKIR, Pohnpei (FSM Information Service): July 8, 1997 - On July 2, 1997, Vice President Leo A. Falcam wrote to the Governor of the State of Yap Vincent Figir responding to certain concerns the Governor raised relative to the FSM/ADB Water Supply and Sanitation Project.

Of particular concern is the potential risk to the borrower [Yap State] from the accelerated maturity clause in the ADB Loan Agreement. As a possible solution, the Vice President suggested that Congressional approval is sought for the National Government to share the risk with the states. Which will take effect only when a state or its Utility Corporation is defaulted in its repayment of its loan. If Congress agrees, Falcam said, then the draft financing agreement will be amended accordingly.

The Vice President stated his pleasure with the steps that Yap State has taken including the drafting of the enabling legislation authorizing the execution of the financing agreement.

In conclusion, Falcam offered to Governor Figir the assistance of the FSM Attorney General's Office, if needed, for finalizing of the draft legislation.