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Category Blog Administration wants to borrow $120 million
Category Blog Administration wants to borrow $120 million
Friday, 28 September 2007 00:00
AN administration official says they will propose a special election next year to consider a constitutional amendment that will allow the cash-strapped government to borrow at least $120 million.The government’s current bond debt amounts to $246 million. Tony Muna, the governor’s special assistant for budget and management, told Variety that an actuarial study was conducted to back up the administration’s intention to borrow money through a bond-flotation scheme.
“We’ve got to come to terms with what we owe the Retirement Fund,” Muna said. “As far as floating a bond, you have to go through a process of getting a legislative initiative passed and we hope to do that over the next few months to allow for a special election in the early spring of 2008.”
Muna said the government owes the Fund at least $120 million in terms of direct unremitted contributions.
This is separate from the government’s unfunded liability to the local pension program which amounts to some $400 million.
Muna said the government is able to remit only 11 percent of the recommended 40 percent premium to the agency, thereby affecting the financial stability of the Fund.
He said floating a general obligation bond of at least $120 million should address this issue.
“That should put us in a position to address the needs of the Retirement Fund in a reasonable manner and to a point where we have the ability to fund that amount in a manner that should be advantageous to the government,” he said.
“At a minimum, it’s about addressing that unpaid liability,” he added.
The administration commissioned an actuarial study (prepared by Hal S. Tepler and Debbie Sylvester) that was completed in August.
The Fund also commissioned its own actuarial study that is expected to be completed before the year ends.
Department of Finance records show that the CNMI government owes $112 million on bonds and loans as of 2005. These debts have a combined interest of $134 million for a total of $246 million, which should be paid by 2033.
