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President Falcam's State of the Union Address

POHNPEI, Palikir (FSM Information Service): November 5, 2001 -President Leo A. Falcam delivered his second State of the Union message on October 29. Broadcast live throughout the Federated States of Micronesia, it focused on the current economic status.

The President delivered his message from the Congress Chambers in Palikir with an opening request for a moment of silence to reflect on the events of September 11.

He said, "It is not possible to proceed into an examination of the current status of our nation without first pausing to take note of what is happening to the world in which we live.

"We share totally in the determination that the world community must band together to understand the continuing threat for what it is and what we can do to wipe it out."

The President indicated that the nation has increased security measures, from the forming of a Security Task Force to increasing manpower and security around national facilities, foreign embassies, seaports, airports and other facilities to ensure the safety of the people and those who travel through the FSM.

He added that as a U.S. ally, the nation must stand squarely with the rest of the world and "be prepared to do our part."

The President's economic report started with the 2000 census results, which indicated a population of 107,000 households. Although an increase from the last census in 1994, the total still reflected the increased emigration from the FSM.

The following matters were covered in the message:

• Economic Growth: The President said that "the FSM has once again registered a positive real rate of economic growth in fiscal year 2001, the 3rd year in succession that the economy has grown and stabilized, considering the economic shocks from the compact step downs." He credited this plus to the steadily growing private and public sector, which employs a majority of the FSM workforce, a 2.5% increase in employment from last year. The President also touched on the Private Sector Development loans from the Asian Development Bank to support the private sector development programs.

• Compact Negotiations: Considering the recent changes in the U.S. team composition and the current events in the U.S., President Falcam said that it is likely that the negotiations will slow down, but is hopeful that an agreement could be reached during the two-year interim period. He indicated that after the formal presentation of the proposals and counterproposals, the two sides have had several informal discussions and feels that "progress is being made towards a shared understanding" of the issues.

• Economic Policy Implementation Council (EPIC): The President referred to the council meetings as a "regular forum for Micronesian consensus building, enabling our State and National leaders to discuss and resolve important policy issues." (The council is made up of the leadership of the five governments.) The most significant outcome of the three EPIC meetings in the year 2001, according to the President, was the consensus to create a "stability account" Trust Fund, and the resolution to set aside 60% of the extra compact funds for the interim period of the compact (the "bump-up" funds).

• Infrastructure: The President identified three areas he considered to be adequately attended to, and these are: school facilities, the creation of a functioning Public Utilities Corporation in all four states and international transportation facilities. He went on to say that a comprehensive study has been conducted to identify the needs for new infrastructure and improve existing ones. The FSM Infrastructure Development Plan for 2003-2007 will be completed at the end of November.

• Protection of Natural Environment: Although the governments are steadfast in their efforts to pursuit economically sound developments, the President said there is a need to review the policies of publicly owned enterprises to ensure they follow the measures instated for the protection of the nation's life-sustaining environment.

• Tourism Industry: As it is worldwide, FSM tourism is also affected by the September 11 events. President Falcam said there is the potential of reversing the negative impacts of the international events, but that it would require a collective effort from the whole nation.

• Agriculture: As one of the vital sectors in the economy, agriculture has generated over a million dollars from such trade products as bananas, betel nut, kava and copra, exported to neighboring Guam, Saipan, the Marshalls and even to Hawai'i and the U.S. mainland.

• Fisheries: As an integral part of island life, fisheries is an area that needs responsible development through a "multifaceted approach" through marine resource sustainable development and a management framework, training and capacity building, and regional and international development.

The President said the USD $4 million shortfall experienced in this area last fiscal year was due to a reduction in the revenues from fishing rights fees. Revenue of USD $14 million was projected but due to fishing industry fluctuations the projection was shy $4 million.

The President urged Congress's action on the revised Title 24 to give the Micronesia Fisheries Authority more flexibility to react to a changing industry environment.

As a result of changes that directly impact the FSM economy, and considering all the events of the past months, a deficit of USD $100,000 is projected for fiscal year 2002.

President Falcam said his administration continues to explore ways to "improve the allocations and management of our limited resources." He cited the performance-based budgeting system that is in its third year of implementation by the national government.

Regarding the health of the nation, the President said the general health status of the population has improved, although it concerns him that lifestyle diseases seem to be on the rise. He called upon the nation to work together to prevent these diseases from crippling the population.

The Basic Social Service Project loan from ADB will provide the health and education sectors the needed financial support to improve the basic delivery of their programs.

The President mentioned the success of the 3rd FSM Games held in Yap and paid tribute it to the hard work and dedication of the people.

The President recognized and gave special thanks to the Diplomatic community in FSM for their close working relationships and extended the sentiment to the countries in which FSM has diplomatic relations.

President Falcam ended his message with a note of encouragement to the nation, that despite "the tremendous challenges we face amidst a very uncertain world, I am proud of the progress our young nation has made, and am equally confident in our desire and ability to overcome any obstacles by providing for this and future generations of Micronesians, a thriving, peaceful and enjoyable country for all our citizens."