UNDER $30-M LOAN DEAL No money for NMRIF

The NMI Retirement Fund should not expect to collect payment soon from the Tenorio administration to settle portion of the $32 million in unpaid government contributions despite anticipated good cash flow brought about by a recent loan agreement.

The agency has pinned its hopes on the $30 million secured by the government from the Bank of Guam, which it said could be used to partly meet the growing financial obligations.

While the CNMI has already forged an agreement with the bank over release of funds from the loan, these will be set aside to match federal construction grants for various capital improvement projects on the islands, according to Gov. Pedro P. Tenorio.

The money, part of the interim financing ahead of the $60 million bond flotation to be undertaken by the Commonwealth Development Authority by next month, is expected to finance the CIP program of the government under the Covenant 702 funding.

Approximately $40 million worth of new projects will be bankrolled by funds from both the loan and equal amount of federal grants, while the rest of the money may be used to complete ongoing infrastructure projects, government officials have said.

The governor assured, however, that his administration will seek other funding source to pay off the debt to the NMIRF. He did not indicate when or how his administration will allocate payment for government contributions.

The Tenorio administration has been behind in remitting its share to the Retirement Fund due to the financial difficulties confronting the Commonwealth for the past three years.

NMIRF Administrator Juan S. Torres earlier has expressed hopes of collecting partial payment from the government with the signing of the $30 million loan deal.

The agency is currently experiencing problems in its cash position due to the failure of the government to pay its employer’s contribution now totaling over $32 million.

Although its assets invested in stock markets have shot up in recent months due to the recovery of Asian economies, NMIRF is wary of the impact of the unpaid obligations to its investments.

At present, the Fund has about $390.55 million in total assets managed by its nine money managers, most of which are in equities. In December alone, the off-island portfolio reported a gain of $28.89 million, based on a recent investment report to the NMIRF board.

Despite the significant increase in earnings from its overseas investments, the agency has raised concern on its cash flow situation which may hamper its operations.

The Fund needs $3.2 million every month to manage the contributions of 5,000-strong government workforce. Of this, $2.7 million goes to pensions of government employees while the rest are spent on salaries and administrative expenses.

Its total revenue covering the contribution of members and employers amounts to $1.44 million every month, but the government currently manages to remit between $500,000 to a million dollars each month.

Aside from its obligations to the NMIRF, the government has also been trying to identify other funds to pay its utilities bills –– which continue to grow to over $12 million — as well as the retroactive pay long overdue to nearly 2,000 employees.