The LUA was reached between the RMI government and Kwajalein landowners in May 2011, under which the landowners would allow U.S. military operations in Kwajalein until 2066. The agreement also authorized the disbursement of about $32 million from the U.S. government to the landowners. Part of the inflow contributes to the economy through consumption and investment, while a majority is expected to flow out overseas in the form of deposits.
The non-Compact sector grants exclude the Supplemental Education Grant (SEG), which is about $6.2 million (before inflation adjustment) per year.
The contributions to the Compact Trust Fund (Accounts A and C) are not available for withdrawal prior to FY2023. A separate account (Account D) where the RMI and other donors could contribute to is available for withdrawal if it exceeds $10 million (currently stands at about $7 million), which could be used to mitigate adverse impact of potential shocks.
See Staff Report 2008 Article IV consultation—Selected Issues ‘Strengthening the Tax Regime in the Marshall Islands’, No. 08/186.
The Public Expenditure and Financial Accountability (PEFA) allows an objective assessment of a country’s public financial management in a standardized manner based on multiple indicators such as budget credibility, comprehensiveness, and transparency.
According to the latest actuarial report in 2009, the MISSA faced $163 million of unfunded liabilities (more than 100 percent of GDP) over the long term. Unfunded liabilities represent the projected difference between the net present value of accrued benefits and the available asset level for meeting them, including the net present value of the projected contributions. The amount varies with the assumptions on investment returns, and expected contributions and benefit payouts.