Government of the Federated States of Micronesia

Suspension of Compact Sector Grants for Chuuk State

Palikir, POHNPEI (FSM Information Services): August 11, 2008 - The Office of Insular Affairs, DOI, has informed the FSM National Government that effective August 4th funding for certain Compact sector grants for Chuuk State will be suspended pending restoration of sound financial management in Chuuk

The sectors affected by the suspension are Private Sector Development, Environment, and Public Sector Capacity Building. The state agencies affected are the Department of Administrative Services, Marine Resources, Agriculture, EPA and Chuuk Visitor's Bureau. There is however an exemption provision for the Public Sector Capacity Building for Chuuk State's Department of Administrative Services and certain functions at the Chuuk's Office of Environment Protection Agency involving water testing and waste monitoring.

With the credibility of sound financial management at stake since the removal of the Director of Administrative Services, the National Government and Chuuk State have been in consultation, especially at the technical level, in their efforts to resolve the issue. The National Government is also in close contact with the US Government Offices and agencies concerned.

President Mori who is heading the FSM Delegation in Beijing for the Summer Olympics had decided to shorten his visit to China and return to Chuuk to meet and consult with the State's leadership. President Mori intends to impress upon the leadership the urgency to take full charge of ensuring that all compact requirements and needed reforms agreed between Chuuk State and the National Government are strictly adhered to.