Economic Brief, FSM FY 2021

Economic Brief, FSM FY 2021 (PDF) (Report). Washington, DC: Pacific and Virgin Islands Training Initiatives (PITI-VITI). 2021-09-10. p. 28.

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Abstract: The “Economic Brief, FSM FY 2021” assesses the economic performance and policy environment of the Federated States of Micronesia (FSM) during the fiscal year 2021. It analyzes various factors influencing the FSM economy, including the impacts of COVID-19 mitigation programs, donor assistance, fiscal performance and reforms, public financial management, and the performance and reforms of State-Owned Enterprises (SOEs). Additionally, it addresses structural issues within the nation’s economic framework. During the amended Compact period, the FSM experienced weak and volatile economic performance, with an average GDP growth of only 0.3 percent since FY2003. While the national government achieved a large fiscal surplus, the state governments have maintained fiscal balance. The impending amendment of the Compact in FY2023 underscores the need for long-term restructuring of national and state fiscal operations. Since FY2016, the lack of data-sharing between the Department of Finance and Administration and the Statistics Office has posed significant challenges, necessitating resolutions similar to those adopted in other South Pacific jurisdictions. Efforts to streamline and nationalize the Foreign Direct Investment (FDI) process have struggled to pass Congressional review. The report reviews Compact assistance renewal negotiations and emphasizes revisiting planning frameworks such as the 2023 Action Plan to anticipate economic changes following the COVID-19 pandemic and the amended Compact. Furthermore, the report provides a summary of economic indicators for FSM from FY2010 to FY2020, offering insights into trends and developments over the past decade.