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  • By Mar-Vic Cagurangan

FSM still coronavirus-free; foreign aid coming in

FSM President David Panuelo shakes hands with Wesley Simina. Photo by FSMIS

The Federated States of Micronesia is one of the 15 remaining countries in the world that have dodged the Covid-19 contagion. While still on high alert, FSM appears headed to a relatively smoother road to recovery compared to most countries.

Besides receiving millions in foreign assistance, FSM has managed to reprogram its current budget early on and put in place a domestic relief program for tourism-related businesses and employees impacted by the Covid-19 pandemic.

FSM has received $7.7 million in Covid-19 relief assistance from the United States under the Coronavirus Aid, Relief & Economic Security or CARES Act, the FSM Information Service announced Sunday.

The Office of the FSM President said the CARES Act package will be used “explicitly and exclusively” for procurement of essential supplies and equipment for the health sector. Each of the four states will receive its share of the funding through the same methods and procedures used to obtain resources from Sector Grants of the Compact of Free Association,

U.S. Ambassador Carmen G. Cantor handed the CARES Act check to FSM President David W. Panuelo and Vice President Yosiwo P. George on April 30.

“Thank you for the demonstration of the Enduring Partnership between our two countries,” Panuelo told Cantor. “I keep saying that true colors really do come out in times of crisis. We appreciate the help very much, and you can rest assured that it will be put to very good use.”


Cantor said the relief package is aimed at helping FSM prepare, prevent and respond to Covid-19. “This is our way to continue strengthening our great relationship between the FSM and the United States,” she said.

While FSM remains coronavirus-free, Panuelo has extended the public health emergency through May 31. It is one the Pacific island countries that have promptly implemented stringent measures and closed its entry points to prevent the spread of Covid-19 in the country.

On April 4, FSM also received medical supplies and $100,000 in cash donation from China to assist the Pacific nation in its efforts to fight Covid-19 pandemic.

On April 22, Panuelo signed Public Law 21-105, which temporarily diverts funding from the nation’s fishing access fees and from revenue derived from major corporations to the economic stimulus package.

The $15 million relief package is the largest single stimulus of its type in the nation’s 41 years of constitutional government, according to the Office of the FSM President. The new fund reprogramming covers the bulk of the economic stimulus package, which in its current form prioritizes the tourism sector through the Tourism Sector Mitigation Fund.

"This release will focus on how the economic stimulus package came about and how it presently operates, the executive branch’s intentions for the Fourth Regular Session of the 21st FSM Congress this month in May 2020 as it relates to the economic stimulus package, and how businesses can apply for and receive financial assistance," the Office of the President said.

The Tourism Sector Mitigation Fund, with a $1 million allotment for financial assistance to the tourism sector, was created during the Court Special Session of the 21st FSM Congress in March.

"This was developed at a time when Covid-19 was not yet identified as a global pandemic and when the most affected sector of the nation’s economy was in the tourism industry, which has affected Yap and Chuuk disproportionately compared to Pohnpei and Kosrae, to include temporary closure of some of the nation’s most prestigious and recognized hotels," the Office of the President said.

Like other Pacific island countries, tourism is one of FSM's main industries. It has taken a pause following the state governments' temporary closures of their respective airports.


"As the nature of the threat posed by Covid-19 has continued to evolve and it became clearer to the president and the Congress that the economic impacts may be more involved and with a longer and deeper impact on the economy, the nation began working on the economic stimulus package which would allow the FSM national government to process wage subsidies, debt relief and gross revenue tax and social security tax rebates for affected businesses," the Office of the President said.

Panuelo said the economic stimulus package seeks to ensure the nation's continued prosperity during the crisis period. “One of the key priorities for the government is to keep businesses open and our people gainfully employed,” he said.

Initially the economic stimulus package was intended to target assistance to both the private sector (including businesses proper as well as its owners and employees) as well as provide individual unemployment assistance. The U.S. Department of Labor and the FSM Department of Finance & Administration are collaborating to develop the FSM Pandemic Unemployment Assistance Program, which will offer direct payments to individuals who have lost their job due to Cobid-9.

The FSM Economic stimulus package targets businesses and their employees, and has three separate funding sources: the first funding source is the Tourism Sector Mitigation Fund, which includes approximately $1 million from the 21st FSM Congress and an additional $500,000 from the Project Development Fund managed by the National Oceanic Marine Resource Authority.

The second funding source is through Public Law 21- 105, which diverts approximately $9 million previously earmarked for the FSM Trust Fund into the Economic Stimulus Package; and the third funding source is approximately $3 million in financial assistance from the Asian Development Bank.

Additionally, the national government has submitted for congressional review an additional $2 million in the fiscal 2021 budget.


Panuelo and George vowed to work with the 21st FSM Congress to ensure that the economic stimulus program expands beyond the tourism sector to include other industries such as retail and fishing.

Citizens presently employed by, or owning, businesses designated as part of the tourism sector through the Tourism Sector Mitigation Fund are currently able to apply for benefits through the FSM Economic Stimulus Package, which will subsidize 75 percent of the payroll.

“If you are currently employed by a business in the tourism sector, you don’t need to do anything at this stage to gain benefits; if you are the owner of a business in the tourism sector, there are two items you will need to complete prior to receiving financial assistance,” the FSM government said.

In March, the Joint Economic Management Committee (JEMCO) allocated up to $7 million from prior-year unexpended Compact of Free Association funding to provide emergency support for FSM’s health-related needs. The JEMCO approved the Compact allocation in connection with the FSM government’s Covid19 Response Framework and Budget. Funds provided to Yap, Chuuk, and Kosrae States will be used to strengthen hospital and quarantine infrastructure and support outreach by health personnel to the outer islands of Yap and Chuuk during this global Covid-19 pandemic.

“I am pleased that the JEMCO moved decisively to approve these Compact funds to address Covid-19 health-related needs for the FSM during this global pandemic,” said Assistant Secretary Doug Domenech of the U.S. Department of the Interior. “The FSM is among the few remaining countries in the world yet to report any positive Covid-19 cases, however their health infrastructure and small populations face the serious risk of being completely overwhelmed without necessary preparations. This funding will help the FSM be as prepared as possible during this unprecedented time.”'

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