Micronesia, Federated States of

Law, Economic Management and Public Policy

Subsector: Economic Management

Developing and Implementing the Pacific Plan for Strengthening Regional Cooperation and Integration
The goal of the regional technical assistance (TA) is to strengthen the contribution of Pacific regional cooperation and integration to development outcomes in ADB's Pacific developing member countries (PDMCs). To achieve this goal, the TA will focus on improving the capacity of Pacific island countries and members of the Pacific Plan Taskforce (PPTF) to assess and take actions that successfully improve regional cooperation and integration in the Pacific. The main outputs of the TA will be:

• enhancement of the capacity of members of the PPTF to recommend a Pacific Plan underpinned by a clear rationale, including an analytical framework for cost-benefit analysis of regional options
• increased PDMC capacity to analyze the Pacific Plan recommendations and frame appropriate responses and follow-up actions, based on improved understanding of the costs and benefits of regional programs and options.

Mainstreaming Environmental Considerations in Economic and Development Planning Processes in Selected PDMCs
This regional TA will support preparation of country environmental analyses that will provide inputs to ADB country and strategy programs for selected PDMCs, including Marshall Islands. The TA will also contribute to the countries' medium-term development strategy, particularly in addressing key environmental challenges. The TA's main objective is to mainstream key environmental concerns into economic and development planning processes and to help reduce poverty in PDMCs. The TA will:

• identify priority areas in policy, institutional and legislative mechanisms, and programs/projects that will help mainstream environmental concerns into economic development planning
• strengthen understanding among policy making, economic planning, and environmental authorities about key environmental and natural resource management issues and their link with macroeconomic and national development goals.

A country environmental analysis (CEA) will be prepared as an input to the country strategy and program (CSP). The CEA will provide the background information necessary for informed decision making on environmental constraints, needs, and opportunities in developing member countries (DMCs), including those that impinge upon poverty partnership agreements, as appropriate. The CEA report will cover (i) the general environmental status and trends in the country, (ii) the policy, legislative, institutional and budgetary framework for environmental management, (iii) the main environmental opportunities and issues associated with the CSP.

Legislation for Private Sector Development
The purpose of the TA is to support the governments in fulfilling conditions for release of the 2nd tranche under the Private Sector Development Program. The TA outputs include: (i) enactment and promulgation in each of the states and at national level of legislation for foreign direct investment; long-term leasing of land mortgage; and mortgage-secured lending, and (ii) at least one public enterprise transformed in each of the 4 states and at national level.

Strengthening Public Sector Audit Function
The goal of the TA is to assist the Government in increasing its accountability and transparency at the national and state levels. To achieve this goal, the TA will focus on enhancing the audit and administrative processes of audit offices necessary to effectively carry out productive and efficient audits.

Improving Economic Management and Policy Formulation (PIER)
This Technical Assistance (TA) aims to prepare an economic report for the FSM in the ADB PIER series, to analyze the past trend, current situation and future perspectives for the country's development. The PIER will start with and introduction and executive summary where the main findings of the study will be highlighted. Section I of the report will provide a historical background and a comprehensive analysis of traditional and modern institutions, focused on the way they affect the decision-making process of individuals and companies, with particular regard to economic matters. This part will also include an examination of governance issues related to major economic institutions. Section II will review the economic development process occurred in the FSM since its formation as an independent nation in 1986, analyze the current economic policy and reform agenda, and discuss the challenges to be faced in the medium and long term.

Strengthening of Public Sector Management and Administration
The objective of the Technical Assistance (TA) is to assist the Government in strengthening its institutional capacities at both national and state level, aimed at realizing its "dream of economic self-sufficiency and security" at the end of the period of the amended Compact. A main output of the TA will be a long-term institutional capacity building roadmap of the Government. In addition, the TA will also provide economic policy advisory services to assist the Government in achieving a smooth transition of the current and amended Compact.

National Strategic Development Plan
The objective of this TA is to assist the Government in preparing the 3rd FSM Economic Summit and the medium-term national strategic plan with a view to continuing structural reforms of the FSM and creating an enabling environment for pro-poor sustainable economic growth. The main outputs of the TA will be resource materials for the Economic Summit, which will be a basis for the preparation of the National Strategic Development Plan.

Private Sector Development Program
The goal of the Private Sector Development Program is to promote economic growth by expanding the private sector in FSM, thereby raising domestic employment and incomes and reducing dependence on external assistance. To attain this goal, the objectives of the PSDP are to (i) improve the policy and legal environment for private sector development, and (ii) strengthen capacity to manage land, labor, and capital resources. The scope of PSDP will be at national and state levels. It will focus on states and groups where income inequality is more pronounced and will be tailor-made to meet the individual states' needs.

Private Sector Development Program
The objective of the technical assistance is to prepare a Private Sector Development Program (PSDP) in the form of a Sector Development Program, which would combine investment components with a quick disbursing policy based component. The TA will undertake a sector review of the private sector and conduct a business survey to identify needs for skills training, financial services, and policy changes. The TA will contribute to preparing PSDP with focus on vocational education and training; business development training and advisory services, and policy adjustments, including preparation of a logical framework, cost estimates, implementation and institutional arrangements; economic and social justifications; and design of a policy matrix. The TA will also identify additional areas for potential technical assistance to strengthen institutional capacity in the sector.

Economic Policy Reform and Capacity Building, Phase I
The primary emphasis of the technical assistance will be to strengthen and develop the institutional capacity for economic policy making required during the transitional phase covering about 2 years.  The technical assistance will play a greater role in providing economic policy advice and public sector management at the state level of government, in particular, to help plan reduced levels in the Compact provisions expected to come into effect by the end of 2003.

Strengthening the National Statistical System
The objective of the TA is to assist the Government in strengthening and building their systems and capacities for statistics collection, collation, verification, monitoring, analysis and use in support of policy formulation, public sector and economic reform.

Read the Technical Assistance Completion Report

Privatization of Public Enterprises and Corporate Governance Reforms
The objective of the Technical Assistance (TA) is to assist the Government in formulation of an overall privatization strategy and in carrying out effective, smooth and transparent reforms of PSEs. These reforms will constitute an integral part of the overall public sector reforms initiated under the PSRP. The scope of the TA will include the following components: (i) assistance to the National and State governments in formulation of the PSEs reform strategy; (ii) institutional capacity building of the proposed Public Enterprise Reform Unit; (iii) providing advice on privatization/corporatization of individual PSEs, (iv) strengthening monitoring framework for PSEs, and (v) information campaign.

Read the Technical Assistance Completion Report

Human Resource Development Study
Since the Bank financed Human Resource Development Study in 1995, there are no reliable and consolidated social indicators and local capacity to monitor the health and education status. The proposed technical assistance (TA) will help the Government assess the human resource development situation and prepare the appropriate policies. Main tasks are to: (i) update population, health and education indicators of FSM, (ii) improve the social statistics compilation system in the National Statistics Office, (iii) review the government policies and delivery systems in the health and education sector and (iv) prepare the policy recommendations for improving the government policy and management capacity.

Economic Policy Reform and Management
The technical assistance will help strengthen and develop the capacity of the Department of Economic Affairs and thereby the Offices of the President and Vice President, as well as the Economic Policy Advisory Board, to support national level strategic planning, policy coordination, and development management; and also strengthen the institutional capacity of the Office of the Governors and their Governments for similar activities at the State level. 

Public Sector Reform Program
The overall objective of the is to reform and reduce the size of the public sector and to shift the balance of economic activity away from the public sector to the private sector.  To achieve this, the PSRP has five components: (i) reduce the size and operating costs of the civil service, (ii) increase domestic revenue generation, (iii) restructure government operations and public enterprises, (iv) mitigate the social and economic impact of such public expenditure adjustment, and (v) foster development of the private sector.

Read the Program Performance Audit Report

Expansion of the Economic Management Policy Advisory Team
supplementary to above loan

Investment Promotion and Financial Sector Review
The scope of the TA will be to support the National and four state governments in operationalizing (i) new foreign investment laws; and (ii) loan guarantee scheme. The broad objective of the TA is to supplement the proposed Public Sector Reform Program Loan in assisting the nationwide implementation of the economic reform programs to promote the private sector development.

Improved Economic Use of Land
The TA aims to identify constraints on the use of land as a factor of production in the economy, identify possible solutions, institute an effective consultation mechanism to reach a consensus on the desired solution and prepare an action plan for implementation.  It is recognized that land tenure problems are different in each of the four states of the FSM and that reaching a consensus will require different inputs in each state.  The TA is therefore designed to be process-oriented.

Policy Advisory Team for Economic Management
The TA has the following three principal objectives: (i) to assist the Government in formulating an economic strategy and economic policies that will lead to more rapid and self- sustaining growth and particularly to address the major structural problems faced by the country; (ii) to help monitor policy implementation and provide feedback on the effects of structural adjustment measures; and (iii) to provide on-the-job training and to help organize formal training to enable the Government in the medium term future to continue the work of policy analysis without any need for expatriate staff.

Strengthening the Office of Planning & Statistics
The TA is designed to strengthen the capabilities of the National and State Government to (i) formulate and implement development plans and projects; (ii) develop and implement an ongoing system for the generation of a macro- economic and social statistics as inputs for planning and monitoring the state of the FSM economy.

Human Resources Development Study
The TA will strengthen the capabilities of the education and training agencies at national and state levels, and improve the capacity at the state level to develop the required supply and quality of human resources and address the critical need for skilled manpower. It is expected that the TA will provide an appropriate forum for cooperation and coordination between the Government and the states and will review the issues of efficiency, accessibility and effectiveness of the existing educational system.

Subsector: Public Finance and Expenditure

Pacific Financial Technical Assistance Centre 2005–2008
The TA will help address the continued need for institutional and human capacity development to improve policy systems and practices by the Pacific Financial Technical Assistance Center (PFTAC) in the following four program areas:

• public financial management,
• tax administration and policy,
• banking sector regulation and supervision, and
• economic and financial statistics.

To improve sustainability of capacity building activities, PFTAC will enhance efforts to better coordinate activities with donors and provide on-the-job training. Follow-up and monitoring of progress in key reform areas will be integrated into PFTAC’s country strategies.

Pacific Financial Technical Assistance Center (2004)
The regional technical assistance (TA) will support Pacific Financial Technical Assistance Center (PFTAC) to continue to provide necessary assistance to Pacific Developing Member Countries (PDMCs). PFTAC assistance will aim to strengthen and improve PDMC's economic and financial management capacities and will enable PDMCs to progress toward effective and efficient economic and financial governance, public resource allocation, and macroeconomic stability.

Capacity Building in Public Sector Financial Management
To improve public sector resource management and good governance. The TA will support capacity building in accounting, budgeting, and financial management information system to ensure a successful implementation and ongoing operation of the new financial management information system (FMIS).

Implementation of Performance-Based Budget Management
The TA aims to assist the governments of the FSM in strengthening the implementation of the performance-based public finance management and putting it on a self-sustainable basis. The TA will strive to build upon and achieve an acceptable level of support and self-sustainability for the performance-based budgeting system at the national Government and in each of the four state governments.

Improving Capacity in Performance-Based Public Finance Management
The TA will enhance the application of the performance based budget framework in line departments of the National and State Governments. The TA will also assist in overseeing application of the performance based budget framework developed under the previous budget-related technical assistance focusing on integrating the results of the budget round and the improvements in management process that will become clear from the application of the new budget processes. The TA will address issues related to longer-term fiscal projections, multi-year budgets, management of project-related funds, and cash flow management.

Performance-Based Public Resource Management
The principal objective of this advisory TA was to improve budget management in the budget offices of the two governments through adoption of a budget system based on performance (output), training of staff, and orientation of all those involved in the budget process to the new approach.  The TA was intended to assist the Government’s initiatives to improve economic performance and enable it to cope with reduced payments by the United States under the Compact of Free Association.

Improved Budget Management
The main objective of the TA is to strengthen the national and state budgetary systems, to arrive at a more effective budgeting method, a greater budget control and linking of budget items with expected output. Initially, this will be developed for two of the give offices of budget.

Financial Resources Management (Supplementary)
Supplementary financing of the above TA to permit the consultants to be available for hands-on staff training and for fine tuning of new budget and information systems during their initial period of implementation.

Financial Resources Management
The Project aims to address two fundamental weaknesses in financial management within the complex federal-state structure of government. It will help the National and state governments to improve the management of public finances, to increase absorptive capacity for aid and to enhance project planning and implementation.

Subsector: Subnational or Local Government Administration

Improving Access to Law

The scope of this TA includes:

• establishment of a law information system (LIS)
• community education program of laws