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Marshall Islands feeling economic hit of Covid-19

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MAJURO — Tax collections in the Marshall Islands are already dropping as local businesses layoff workers in the face of economic disruptions of the Covid-19 coronavirus.

A net repair yard that was established two years ago by Pacific International Inc. to service the hundreds of purse fishing vessels that use Majuro for tuna transshipment has seen little business for weeks because of rules banning entry of most fishing vessels except for locally based boats.

Photo by Giff Johnson


The Ministry of Finance is estimating a 25 percent shortfall in collections against projections for March, with worse likely to come.
“The number that I’m providing now is very rough,” said Finance Secretary May Bing Thursday. “But when we looked at our figures for FY2020, our collection in March is way below budgeted/expected figures and may continue the trend in coming months.” She estimated the March tax shortfall at 25 percent.
“We do anticipate a decrease in collection as activities within the private sector are clearly challenged,” Bing added.
Hotels and tourism-related operations are dropping staff as visitor arrivals have halted with an end to regular air service March 20 and an ongoing ban on inbound arrivals in an effort to prevent spread of Covid-19 to the Marshall Islands. An aquaculture farm in Majuro that exports coral and clams for the international aquarium market has been forced to temporarily halt exports as aquarium dealers in the U.S. and elsewhere are in lockdown.
A net repair yard that was established two years ago by Pacific International Inc. to service the hundreds of purse fishing vessels that use Majuro for tuna transshipment has seen almost no business for weeks because of rules banning entry of most fishing vessels except for locally-based boats.
An Economic Impact Committee established by the National Disaster Committee is looking at the economic situation of various sectors and industries, Bing added.
The Marshall Islands Chamber of Commerce has also been providing information to government from surveys of the business community in hopes of encouraging government to assist the private sector as it struggles through the global economic downturn.
“We will submit the first report to the National Disaster Committee or NDC Thursday and the NDC will transmit it to the Cabinet,” said National Weather Service Office Chief Reginald White who is co-chairing the Economic Impact Committee. He said the committee had been collecting information and data to show what is already happening to the economy as a result of the pandemic. Because collection of tax and other information is ongoing, White said he anticipates that the initial report will be the first of several updates to provide leaders with information to make decisions about a recovery and relief package.
The government is also engaging the Graduate School USA to assist in an economic impact analysis, he said. The Graduate School USA, which is funded by the U.S. Interior Department, has already produced a report for Palau focused on impacts to its tourism industry, White said.
Earlier last week Federated States of Micronesia President David Panuelo announced a $15 million Covid-19 Economic Stimulus Package. Over the next several weeks, President Panuelo said the FSM will work with its friends, allies, and development partners to fund the package which intends to, among other means of assistance, directly replace lost wages for those who have been laid off as a result of Covid-19.
“This literally means cash in hand,” President Panuelo said. “For the State of Yap for example, the tourism sector represents hundreds of jobs providing for thousands of people; the Economic Stimulus Package intends to subsidize their salaries so that citizens can worry less about where tomorrow’s meal is coming from, and more about how to protect their family from Covid-19.”

November 2020 pssnewsletter

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