FSM: Recent Economic Developments

"FSM: Recent Economic Developments". 96 (107). International Monetary Fund. 1996: 1. doi:10.5089/9781451813753.002. ISSN 1934-7685.

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Abstract: The Federated States of Micronesia was part of the United Nations Trust Territory of the Pacific Islands, under U. S. administration during 1947-86. A Compact of Free Association with the United States came into effect in 1986 for a 15-year period to 2000/2001, 1 under which the United States retains authority and responsibility for security and defense matters in exchange for financial assistance, presently equivalent to 50 percent of GDP. This support includes annual block grants of $60 million for the first five years, $51 million for the next five years, and $40 million for the final five years, as weU as amounts for special projects, all subject to a partial annual inflation adjustment. U. S. federal agencies also provide grants for specified purposes, including health, education, and marine surveillance. IL Output and Prices A. OutputReal GDP grew by a modest 1 percent in 1995, well below the average growth rate recorded during 1991-94, according to tentative estimates prepared by the staff (Table 1). Analysis of output developments is hampered by the absence of official national accounts and aggregate production indicators but partial information points to sluggish activity in fisheries, agriculture, and tourism. Commercial fishing is centered on the export of skipjack and yellow-eye tuna. Substantial investments have been made in fleets, shore facilities, and processing plants in recent years by government-owned enterprises, spearheaded by the National Fisheries Corporation. Purse seiner joint venture operations undertaken with the states of Chuuk, Pohnpei, and Yap and private investors proved unprofitable and both companies were placed under receivership. However, transshipment operations in Chuuk and Yap, which include *The fiscal year starts on October 1.

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