Transcript FY 2008

JEMFAC Progress Monitoring
Presented by the RMI Government
RMI-U.S. JEMFAC Meeting
Honolulu, HI
August 29, 2007
1
Outline of Presentation
•
•
•
•
•
•
Economic Update & Policy Reform
Priority Funding
Fiscal Year 2008 Budget
Fiscal Update & Decrement
Management
Compliance Management
Education Reform Initiatives
2
Policy Framework
•
Maintaining Macroeconomic Stability
•
Improving the Business Policy Environment
•
Prioritizing Education & Health Sectors
•
Implementing Infrastructure Development Projects
3
Recent Economic Performance
• Positive GDP growth continues but at a modest pace;
• Real GDP in FY 2006 is estimated 1.3% increased with anticipated real
GDP growth for FY 2007 at 2.0%;
• Growth experienced in FY 2004 was 5.6%;
• Slow growth in FY 2005 & 2006 partly due to high global energy prices;
• While Government continues to be the main component of the
economy, its growth has been steady but the private sector growth is
gradually increasing.
4
Real Gross Domestic Product Growth
1997-2007 Trend
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
Real GDP Grow th
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
(f orec
as t)
-5.4%
-3.6%
-2.9%
5.1%
2.7%
3.8%
3.4%
5.6%
1.7%
1.3%
2.0%
5
Sectoral Shares of GDP, FY 2006
Households
13.4%
Private
Enterprise
32.1%
NGOs
1.6%
Government
38.8%
Finance
(Banks)
6.0%
Public
Enterprise
8.1%
6
What is influencing growth?
•
•
•
Construction and fisheries industries have generated
significant employment growth which has been major
factor in private sector contribution to the real GDP.
Government compensation of employees is still a
major contributor to the GDP growth.
The difficulties with Marshall Energy Company, as a
result of high fuel prices, constrained growth in FY
2005 & 2006.
7
Employment Trend Factors
•
Government payroll has re-absorbed the Kindergarten
program with approximately 200 employees from the
former Head Start program.
•
Employment growth is derived from the private sector
while the Government is presently steady.
•
The opening of the new Tuna Loining Plant is expected
to further increase the private sector employment
growth in FY 2008.
8
Employees by Major Sectors, FY1997 - FY2007
5,000
4,500
4,000
3,500
3,000
Public sector
Non-Government sector
Kwajalein US Base
Private sector
2,500
2,000
1,500
1,000
500
0
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
proj
9
Industry Developments
Positive prospects for the RMI economy;
•
The newly formed Marshall Islands Shipping Corporation has
operated with improved delivery services to the outer islands;
•
Japan Airlines has conducted direct chartered flights between
Tokyo and Majuro, boosting the tourism industry;
•
A modern Dry-Dock Facility nearing final approval of securing
operational site.
•
The Tuna Loining Plant is to re-open soon under new
management. Construction is near completion with prospect of
employing up to 600 workers by early 2008;
10
Improving Business Environment
• Passage of Immigration and Labor Laws
• Passage of Secured Transactions Law
• Strengthening of the Land Registration Authority
• Establishment of Public-Private RMI Economic
Development Council to advise President on economic
reform initiatives.
11
Public-Private Dialogue
Role of the RMI Economic Development Advisory Council;
The Council will:
•
Consult with the business community to foster public-private
cooperation;
•
Provide advice to the President on appropriate policies to
encourage private sector development including, but not
limited to, regulatory reform, tax reform, public sector reform,
land tenure, trade and industry policy;
12
RMI Priorities:
Education & Health Sectors
•
Education and Health sectors continue as the RMI
Government’s two top priorities;
•
Focus implementation of the base grant;
•
Direct positive impact on all other sectors and the economy,
as a whole, over the medium and long-term.
13
Education & Health Spendings
Recurrent spending on Education & Health have grown
rapidly since FY 2003:
•
Education recurrent spending has increased by
125%;
•
Health recurrent spending has increased by 71%;
•
Spending on other areas has declined by 9%.
14
Education and Health Spending
Recurrent Expenditure FY 2003 - FY 2008
(General Fund, Compact Funds, Federal Grants and Special Revenues)
$90,000,000
$80,000,000
$70,000,000
$60,000,000
$50,000,000
MoH
MoE
Other
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$FY03
FY04
FY05
FY06
FY 07
Budget
FY 08
Proposed
15
Fiscal Policy Framework
•
Adoption of Balanced Budget
•
Implementation of Cash Management Plan
•
More Aggressive Tax Collections and Tight Expenditure Controls
•
Restructuring Selected Public Services into Corporate Enterprises
•
Continuation of Performance Based Budgeting Concept
16
Factors Affecting FY 2008
Budget Formulation
•
Wage & Hiring Freeze Policy;
•
Modest assumptions of inflation and growth used for
revenue estimates based on recent trends and expectations;
•
Utility costs to increase modestly;
•
ADB debt payment to increase substantially;
•
Slight reduction in Compact infrastructure grant to support
Ministry of Health & Ministry of Education.
17
Fiscal Year 2008 Budget
• FY 2008 Budget projected at $123.6 million
• Slight decline from FY 2007 largely due to ROC grants
from $13.0 million to $9.5 million
• Revenues forecast increase slightly with aggressive
collections and new agreement with Ship Registry
• Federal grants forecast to be steady
• Special Revenues increase due to more accurate
assessment of revenues
18
FY 2008 Tentative Budget Figures
Funding Source
Domestic Revenue
Compact Sector & Other Grants
Special Revenues
Federal Grants
Overseas Revenue (ROC recurrent and
projects)
Compact Trust Fund
Kwajalein Impact Funds
Kwajaleing Landowner payments
Total
FY 2007
30,511,827
39,982,002
5,977,336
8,414,586
13,000,000
$
$
$
$
$
FY 2008
30,999,890
40,272,580
7,528,008
7,310,129
9,500,000
$
8,949,592
$
2,000,497
$ 15,793,397
$ 124,629,237
$
$
$
$
9,713,700
2,050,670
16,189,500
123,564,476
$
$
$
$
$
19
FY 2008 Compact sector grant allocations
FY 2008 Compact Sector Grants Breakdown
Education
Health
Private Sector
Capacity Building
Environment
Infrastructure Development
Total Compact Sector Grants
FY 2008 proposed
Sector Allocations
$
11,336,978
$
6,512,349
$
$
300,000
$
$
11,855,213
$
30,004,540
20
FY 2008 Education Spending
Table 1: MOE Funding (total $) by Outcome, Agency and Source
MOE Outcomes & Compact Base General Fund
Grant
Related Agencies
Special
Revenue
Ebeye Special Federal and
Needs
other Grants
SEG
Capital
Tuition/Fees
Auxiliary
Pell Grants
Enterprise
Non-Appro
Non-Appro
Total
MOE Outcome 1:
Curriculum
$2,434,377
$521,989
0
$136,333
$1,951,139
$3,138,490
0
0
0
$8,182,328
MOE Outcome 2:
Teacher training
$86,959
$234,615
0
$158,256
$279,000
$876,286
0
0
0
$1,635,116
$7,099,217
$1,233,940
0
$1,380,835
$0
$720,710
0
0
0
$10,434,702
0
0
0
0
0
0
0
0
0
0
$716,426
$173,221
0
$100,000
0
$669,000
0
0
0
$1,658,647
0
$60,180
$174,631
0
0
$486,004
0
0
0
$720,815
0
0
0
0
$54,173
0
0
0
0
$54,173
$1,000,000
$2,000,000
0
0
$1,100,820
$100,000
$5,000,000
$2,309,595
$296,100
$11,806,515
$174,631
$1,775,424
$3,385,132
$5,990,490
$5,000,000
$2,309,595
$296,100
$34,492,296
MOE Outcome 3:
Improving student
performance
MOE Outcome 4:
Infrastructure
development and
maintenance plan
National
Scholarship
Board
National Training
Council
4-Atoll Feeding
Program
College of
Marshall Islands
Total
$11,336,979 $4,223,945
21
FY 2008 Recurrent Education
Spending by Outcomes
22
FY 2008 Health Spending
Diagram 1: MOH Funding (total $) by Outcome, Agency and Source
MOH Outcomes
Compact
Base Grant
General
Fund
Health Fund &
Health Care
US Federal
Grants*
Other
Other Revenues
non-appr’t
Grants
Ebeye Special
Needs
Total
Outcome 1: Outer
Islands Primary and
Preventive
$777,455
$492,349
$648,000
$500,296
0
0
0
2,418,100
Outcome 2:
Majuro Primary and
Preventive
Outcome 3:
Majuro Hospital
$0
$378,697
$30,000
$775,634
$73,720
0
0
1,258,051
$3,014,918
$1,110,817
$1,609,000
1,318,796
0
0
7,053,531
Outcome 4:Ebeye
Hospital
$1,043,707
$373,637
$651,000
$76,204
0
0
$1,410,434
3,554,982
$59,429
0
0
$28,740
0
0
$91,884
180,053
$32,298
$126,363
$15,000
$518,046
0
0
$68,088
759,795
$1,584,542
$502,630
$252,000
584,891
0
0
0
2,924,063
0
$145,549
0
0
0
0
0
145,549
0
0
$2,772,000
0
0
0
0
$2,772,000
$6,512,349 $3,130,042
$5,977,000
$3,802,607
$73,720
0
$1,570,406
$21,066,124
Outcome 5:
Effectiveness of
Ebeye Hospital
Outcome 6: Ebeye
Primary and
Preventative
Outcome 7:MoH
Administration
Outcome 8:Health
Information Service
Outcome 9:
Overseas referrals
Total
* Not inclusive of Section 177 Federal grant
23
FY 2008 Recurrent Health
Spending By Outcomes
24
Infrastructure Development
•
Infrastructure Development Plan is consistent with the RMI’s
sectoral priorities, the Education and Health Sectors:
•
Elementary Schools
•
Majuro Hospital Redevelopment
•
The College of the Marshall Islands
•
Matching for FAA airport grants;
•
Infrastructure grant declines in FY 2008 to increase sector grant
to Education and Health but still well above 30% requirement
25
FY 2008 Capital Infrastructure
FY 2008 Infrastructure Allocations
Ministry of Education Elementary Schools
Majuro Hospital
College of the Marshall Islands
Marshall Islands Airports Authority (FAA Matching)
Infrastructure Maintenance Fund
Total
$
$
$
$
$
$
FY 2008
4,695,676
779,900
5,000,000
786,876
592,761
11,855,213
26
FY 2008 Infrastructure Plan
27
Recent Fiscal Developments
•
•
•
•
•
•
Overall fiscal position is improving;
Tighter expenditure control measures in place to meet modest
revenues collected (fuel tax);
ADB debt arrears in FY 2007 have been paid;
Marshalls Energy Company has resumed selling diesel fuel
after its recent re-financing initiative and establishment of
template rates in coincide with fuel costs;
Collected total tax arrears of $1.3 in FY 2006 & 2007 combined,
resulting from improved enforcement and greater compliance;
New Ship Registry agreement of contribution from $1.0 million
to $2.0 million per annum.
28
Decrement Management
•
Full inflation is critical to cope with rising costs and allow time to
make fiscal adjustments;
•
Cost controls through hiring and wage freeze policy;
•
Improved tax administration - auditing division, DOI TA on tax &
customs modernization systems & staff training
•
Broadened tax and revenue base - e.g. elimination of import tax
exemptions;
•
Comprehensive tax review
29
Compliance Management: Audit
•
No. of Audit Findings: FY 2003 (33) - FY2006 (10);
•
No. of unauditable Component Units: 8 to 2;
•
Initiating DOI TA aims to assist Component Units;
•
Fixed Assets Finding removed after 17 years;
•
Total Questioned Cost is lowest ever;
•
RMI’s aim to achieve a clean audit by FY 2008.
30
Compliance Management
Office of Compact Implementation
The Cabinet has approved the establishment of an Office of Compact
Implementation (OCI) in the Ministry of Foreign Affairs.
OCI will be responsible for coordinating, with other Offices, all
Compact matters including:
•
•
•
•
•
•
Performance budgeting and monitoring
MTBIF
Infrastructure programming
Section 215 report
JEMFAC preparations
Compact Trust Fund reporting
31
Compliance Management
Performance Budgeting
•
FY 2008 Budget includes $300,000 public sector capacity
building grant for consolidating and expanding performance
budgeting throughout Government;
•
The grant will be managed out of the newly formed Office of
Compact Implementation in the Ministry of Foreign Affairs;
•
The intention is to phase out over time as performance
budgeting becomes firmly established within the Ministries and
Agencies.
32
Education - Reform Initiatives
•
Personnel Auditing Initiative
•
Improving Data Collection & Analysis
•
Reviewing the Current Strategic Plan
•
Legislative Proposed Act requiring;
•
•
Teacher Certification Process
Minimum Standard for Teacher Qualifications
33
Thank you
“Kommoltata”
34