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GAO REPORT ON CNMI:
‘Labor shortage may impair ability to pay debts’
CNMI debt to GDP ratio decreased to 16 pct.
The latest U.S. Government Accountability Office’s U.S. territories public debt outlook report to Congressional Committees echoes a familiar tune: the CNMI’s reliance on foreign workers.
The GAO report specifies that the CNMI, though having decreased its Gross Domestic Product, or GDP, to debt by 16 percent, may have trouble in “repaying public debt in the future” due to the labor shortages. According to the GAO report, the previous GDP to debt ratio was 23 percent in fiscal year 2005 to 26 percent in fiscal year 2007, before ultimately declining to 16 percent for fiscal year 2015.
“We reported that [the] CNMI’s economy relies heavily on a foreign workforce and foreign workers comprised a majority of the territory’s workforce in 2015,” the GAO report wrote, specifying that the CW-1 program, or the working visa issued to other nationalities that allow them to work in the CNMI until the program’s shutdown in Dec. 31, 2019.
“We analyzed the economic effect of removing all permitted foreign workers from CNMI’s economy using the most recent GDP information available from calendar year 2015,” said the GAO report.
“Depending on assumptions made, with no permitted workers the CNMI’s GDP in 2015 would have hypothetically declined by 26 to 62 percent,” the report specified, adding that the planned reduction of workers “could worsen the effect on GDP going forward and hamper the territory’s ability to repay existing debt.”
The GAO report noted a total public debt outstanding per capita of about $4,199 per person in fiscal year 2007 to about $2,776 per person in fiscal year 2015.
Amid general revenue fluctuations between fiscal years 2005 and 2015, the GAO reported that the CNMI’s net position for the primary government has been “negative and generally trending downward.”
“Specifically, [the] CNMI’s net position for the primary government declined from a negative $38.1 million as of fiscal year end 2005 to a negative $215.4 million as of fiscal year end 2015,” said the GAO report.
