GAO: NMI faces labor shortages, fiscal risks

THE CNMI’s economic outlook has improved, but it faces growing labor shortages that may affect its ability to repay public debt, the U.S. Government Accountability Office said in a report titled “U.S. Territories: Public Debt Outlook.”

An independent, nonpartisan agency that is often called the U.S. congressional “watchdog,” the GAO reiterated its earlier finding that removing all permitted foreign workers from the CNMI would result in a GDP decline of 26 to 62 percent — “a relatively large negative effect on the economy.”

In its latest report, the GAO said “planned reductions in permitted workers could worsen the effect on GDP going forward and hamper the territory’s ability to repay existing debt.”

The report noted that the CNMI’s outstanding public debt declined from $251.7 million in fiscal year 2005 to $144.7 million in fiscal year 2015.

“General revenues declined by about 39 percent between fiscal years 2005 and 2011, largely due to the decline in the territory’s garment industry,” the report stated. “General revenues have steadily increased since fiscal year 2011, primarily as a result of growth in the tourism sector. Data from the Marianas Visitor Authority show that the downward trend in Japanese visitors from 2013 to 2016 was offset by the growth in visitors from China and South Korea. The tourist industry has also been boosted by the introduction of a new casino.”

But the CNMI also has “significant pension liabilities.”

According to the GAO, “Territory officials told us they are planning to market a $45 million general obligation bond in 2017 to provide additional financing for the pension fund. They added, however, that they currently have no plans to issue debt for other purposes, such as infrastructure projects, because of uncertainty in the labor market.”

Source: Marianas Variety :

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