Regions and Countries

	Table of Contents
p. 20 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Federated States of Micronesia

---

IX. Local Cost Financing

52. FSM's ability to finance local cost of ADB projects remains limited due to financial constraints arising from decline in Compact funding. The constraints are more significant at the individual state level than at the overall national aggregate as a result of budgetary allocation between the state and national government and the priorities set by each state. The FSM and states governments, nevertheless, continue to finance portions of local costs for advisors and other externally funded priority programs. The Government is considering ceiling for external debts based on its ability to meet the debt service and corresponding counterpart funding requirements. Over the medium to long term domestic resource mobilization measures, improved public expenditure management, and other fiscal reforms being introduced should improve the tight budgetary situation and allow for a gradual increase in local cost financing by the Government.

Back VIII. Economic and Sector Work Program	Country Assistance Plans - Federated States of Micronesia