OEK joint to loan US$20 million approved in Palau

Surangel Whipps Jr. (Photo: Office of the President, Palau)

Palau Senate passed a joint resolution authorising President Whipps to execute a loan agreement between the Republic of Palau and Mega International Commercial Bank Co. Ltd. of Taiwan of up to US$20 million to fund activities of the National Development Bank of Palau (NDBP).

The loan will be between the Republic of Palau (ROP) and Mega Bank, and the proceeds will go to NDPB to fund its housing loan programs and other activities supporting the bank.  Additionally, ROP waives its right to sovereign immunity from lawsuits and states that the interest rate will be Term-SOFR plus 1.2 percent per year to apply after the funds are disbursed.

Although the Senate passed the joint resolution, its Committee Report recommended that President Whipps or his representative proceed with securing the loan but it “highly” urges President Whipps to “explore other financing options such as allocating money from newly negotiated Compact of Free Association financing” or explore the “feasibility of borrowing from the United Arab Emirates (UAE) as President has mentioned before that UAE is willing to help with financing of projects… at more favourable terms.” “Your committee, therefore, urges the President of the Republic, through consultations with the NDBP to consider a better timing and explore other financing terms before executing the loan and advance proceeds to NDBP before relending.”