The Marshall Islands government was forced last month to take out a bank loan to meet a $1.2 million loan payment to the US Rural Utilities Service for the National Telecommunications Authority.
Despite it being early in the new fiscal year, a cash flow shortage prevented the Ministry of Finance from making the $1.2 million payment from its own revenue to meet an overdue loan payment to RUS. Finance Secretary Maybelline Bing confirmed that a one-year bank loan at six percent interest was arranged by Finance based on a Cabinet Minute approving the loan. “If RMI didn’t pay for the delinquent loan, it would have gone to collection,” she said.
The loan prompted KEA Party head Alvin Jacklick to send Bing a letter of complaint, saying it was unconstitutional and illegal.
But she said the FY2016 budget includes a $1.5 million appropriation for NTA, which was intended to cover the government’s $1.2 annual loan payment for the RUS loan, which the bank loan is paying.
NTA pays the balance of the approximately $2.5 million annual loan payment.
“It was either pay or NTA would be in default,” said NTA General Manager Tommy Kijiner. NTA has been behind in meeting loan payments since an initial default two and a half years ago, he said. As a result of the government’s $1.2 million payment, “we are current as of November 30,” he said.
This has opened the door with RUS for NTA to discuss possible options for changing the loan payment situation. “RUS said get current and we’ll talk with you,” said Kijiner. “We had a phone conference last week and have another one scheduled for this Friday,” he said. “We’re discussing a way forward for NTA, RUS and the RMI government.”
Read more about this in the December 4, 2015 edition of the Marshall Islands Journal.