The main factor leading to the difficulty of the energy company was that its long-time supplier discontinued the sale of fuel on a consignment basis, a practice that had been in effect for over a decade. This required the energy company to seek other sources of funding for its fuel inventory. In addition, the energy company was slow to adjust tariffs but has since adopted a template for tariffs that automatically adjusts to changes in world oil prices.
Japan Airlines started operating charter flights to the Marshall Islands in early 2007 with six charter flights visiting RMI during 2007.
The government has limited access to borrowed funds. In the past, when faced with a cash crunch the Ministry of Finance has either arranged an advance to be taken from the following year’s grant receipts or used grant money as a stopgap measure. The amended Compact does not permit such activities.
There is evidence, however, that loans to small businesses are often classified as personal loans to the business owners, to simplify the approval process.
Typical interest rates on consumer loans are 18–20 percent, despite the fact that these loans are usually guaranteed by salary allotments, with debt payments deducted from the paycheck by the borrower’s employer.
There are no reliable statistics on remittances.
Chapter 1 of the Selected Issues describes various scenarios in detail.
Chapter 2 of the Selected Issues discusses various options for the tax reform.
Unlike the national government, local governments do not conduct tax audits, exacerbating the problem of low compliance.
RMI was removed from the FATF list of non-cooperative countries and territories in 2002, and from the OECD tax haven list in 2007.