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Annual Report 2002 : Pacific
Federated States of MicronesiaEconomic performance
Real GDP growth in the Federated States of Micronesia (FSM) increased by 0.8% in FY2002 (ending September 2002), following 1.1% growth in FY2001. This reflects a fiscal and financial crisis, particularly in Chuuk State, and sluggish private sector demand pending the Compact II negotiations. Job opportunities increased by 3.0% in FY2001 and by 0.8% in FY2002. According to recent government estimates, based on a new CPI, inflation was nil in FY2002, compared with 2.0% in FY2001. The trade and current account balances in FY2002 were negative 33.2% and 3.7% of GDP, respectively. With the external debt:GDP ratio declining to 23% in FY2002, the ability to undertake additional concessional borrowing has improved. However, in the last few years, the Government has been prudent and inclined to give priority to securing funds for repaying new debt. ADB operations
Operational strategy: ADB’s strategy focuses on good governance, social service development, and pro-poor economic growth. To promote good governance, ADB has provided technical assistance for improving public sector efficiency and effectiveness in both national and state governments, particularly in formulating and implementing economic policy and public financial management. In social services development, ADB promotes equity, access, and quality; strengthens management efficiency; and mobilizes resources for sustainable delivery. For pro-poor economic growth, ADB promotes the private sector and infrastructure development. Federated States of Micronesia
Policy dialogue: A poverty partnership agreement seeks the Government’s commitment to better define and assess the concept of poverty, design appropriate strategies to reduce poverty, and incorporate these strategies into the country’s development plans. Loans and technical assistance: No loans were approved in 2002. Two technical assistance totaling $1 million were approved (see tables 24 and 25 in the Statistical Annex). Project implementation: Since joining ADB in 1990, the Federated States of Micronesia has received six loans totaling $56.1 million, of which four were active at the end of 2002. Contract awards totaled $1.1 million, bringing the cumulative figure to $31.8 million. The contract awards ratio was 5.6%—lower than the ADB-wide average of 22.6%. Disbursements during the year totaled $1.4 million, bringing cumulative disbursements to $31.2 million. The disbursement ratio was 56.7%—higher than the ADB-wide average of 22.2% (see tables 14–23 in the Statistical Annex). Federated States of Micronesia
a Figures may not add due to rounding.
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