COVID-19 pandemic caused losses to Compact Trust funds of the FSM and Marshall Islands

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The trust fund committees of the Federated States of Micronesia and the Marshall Islands report losses to its respective Compact trust funds from January to March 2020.

The trust fund committees of the Federated States of Micronesia and the Marshall Islands report losses to its respective Compact trust funds from January to March 2020. 

The financial and economic disruptions brought by the COVID-19 pandemic caused the trust fund losses. 

The two committees convened separate online meetings this month to discuss the trust fund’s investment performance for the first quarter of 2020. 

According to the amended Compact Agreement between the U.S. and the FSM and the Marshall Islands, the purpose of the fund is to contribute to the economic advancement and long-term budgetary self-reliance of the FSM and Marshall Islands by providing an annual source of revenue after fiscal year 2023. 

Here’s a summary of the trust fund reports for the FSM and Marshall Islands:

FSM

FSM Compact Trust Fund Report

  • For the January-March 2020 quarter, the FSM’s trust fund lost 13.46 percent, below the benchmark of -13.07 percent;
  • The net asset value of the fund was $662.16 million, preliminary and unaudited, as of March 31, 2020;
  • The fund recovered in April with a gain 6.6 percent for the month;
  • For the fiscal year to date (as of 10/1/19), the fund was down 2.4 percent and ended the month with a net asset value of $705.85 million (preliminary and unaudited figures).

 

Marshall Islands

RMI Compact Trust Fund Report

  • For the January-March 2020 quarter, the fund lost 14.95 percent above the benchmark of -16.19 percent;
  • The net asset value of the fund was around $417.90 million preliminary and unaudited, as of March 31, 2020;
  • The fund received a government contribution of $5 million on February 19, 2020;
  • The fund also received a contribution from Taiwan in the amount of $2.4 million on April 24, 2020.
  • The fund recovered in April with a gain of 7.32 percent for the month;
  • For the fiscal year to date (as of 10/1/19), the fund was down 2.38 percent and ended the month with a net asset value of $450.89 million (preliminary and unaudited figures).

The FSM and Marshall Islands’ trust fund committees approved a proposal from the fund auditor, Baker Tilly LLC, to conduct the audits for fiscal years 2020, 2021, and 2022. 

During the meeting, the committees also discussed issues that may affect the trust fund after 2023. These issues include the status of the trust fund distribution policy and the Compact Agreement negotiations between the U.S., the Marshall Islands, and the FSM. 

Both the FSM and the Marshall Islands are going through Compact negotiations with the U.S.

The next quarterly meeting of the trust fund committees will be held in late August or early September of this year.