Government of the Federated States of Micronesia

FSM Vice President Offers Yap State Help on FSM/ADB Water Supply Loan

PALIKIR, Pohnpei (FSM Information Service): July 8, 1997 –
On July 2, 1997, Vice President Leo A. Falcam wrote to the Governor
of the State of Yap Vincent Figir responding to certain concerns the
Governor raised relative to the FSM/ADB Water Supply and Sanitation
Project.

Of particular concern is the potential risk to the borrower [Yap
State] from the accelerated maturity clause in the ADB Loan
Agreement. As a possible solution, the Vice President suggested that
Congressional approval is sought for the National Government to share
the risk with the states. Which will take effect only when a state
or its Utility Corporation is defaulted in its repayment of its loan.
If Congress agrees, Falcam said, then the draft financing agreement
will be amended accordingly.

The Vice President stated his pleasure with the steps that Yap
State has taken including the drafting of the enabling legislation
authorizing the execution of the financing agreement.

In conclusion, Falcam offered to Governor Figir the assistance of
the FSM Attorney General’s Office, if needed, for finalizing of the
draft legislation.