FSM’s Trust Fund hits $2 billion

President Wesley Simina leads the FSM Compact Trust Fund Committee during a meeting with Cambridge Associates this week. Photo courtesy of FSM Information Service

By Pacific Island Times News Staff

The Federated States of Micronesia’s Compact Trust Fund reached a $2 billion mark at the end of fiscal 2025, prefiguring further growth to a level that would secure the Pacific nation’s future, officials said.

“This Trust Fund represents our responsibility to future generations of Micronesians,” FSM President Wesley Simina said.

The U.S.-funded trust fund was established under the Compact of Free Association for the freely associated states to provide long-term economic self-reliance by generating future revenue for essential services, complementing direct U.S. grants. The Marshall Islands and Palau have separate trust funds.

“Our priority is long-term sustainability, ensuring that long after compact grants end, the FSM will have the capacity to support the five governments’ operational budgets, essential services and national development through prudent and disciplined management of this fund,” Simina said.

According to a press release from the Office of the President, the Trust Fund could grow to over $9 billion by 2043, the end of the current compact period, if no significant or frequent withdrawals are made.

The COFA Amendment Act pledges $3.3 billion to the FSM to be distributed over 20 years. The amount allocated for the FSM formed part of the $7.1 billion in U.S. package for the freely associated states.

Officials said the projected fund growth would position it to eventually replace Compact sector grants during a transition and provide financial stability for the nation.

Managed for future generations, the trust fund will support health, education and infrastructure, with disbursements for specific needs and inflation, ensuring financial stability beyond the direct grant periods. 

Complementing the Compact Trust Fund is the local FSM Trust Fund, with a current balance of nearly $600 million, financed through domestic sources and represents an additional layer of savings for the country’s fiscal resilience.

FSM leaders discussed the Trust Fund’s outlook and performance during this week’s meeting with representatives of Cambridge Associates and the FSM members of the Compact Trust Fund Committee.

“The FSM members of the Compact Trust Fund Committee and Cambridge Associates reaffirmed their commitment to safeguarding the Fund through disciplined, long-term investment strategies designed to balance growth with stability, while protecting the Fund from premature withdrawals that could undermine its future potential,” states a press release from the Office of the President.

The president’s office said the discussion highlighted the administration’s strategic decision last year to transition the fund’s investment advisory services from Mercer to Cambridge Associates, a move aimed at aligning investment strategies with the FSM’s long-term national interests.

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