Covenant negotiator offers hint on CIP waiver

Grappling with deepening financial crisis, the CNMI will try to appeal again to the federal government for waiver of the matching funds on millions of dollars in U.S. assistance granted under Capital Improvement Projects, officials said.

A negotiator on a bilateral agreement that set out the stringent requirement likewise prodded the Tenorio administration to intensify its efforts to convince Washington on the waiver in light of the economic difficulties on the island.

Former lieutenant governor Benjamin Manglona said a new round of negotiations should be held on Covenant funds guaranteed under Section 702 to take into account the current situation of the commonwealth.

Specifically, a provision reached under the Guerra-Manglona Agreement in 1992 — the accord that enabled the CNMI to wean its way out of full federal aid — allows bilateral talks for possible removal of the condition.

“I am suggesting that we use that provision to come around and justify that we don’t have the local matching funds and draw down their money so that we can start using these funds to rebound from the economic crisis,” Manglona said in an interview.

The Rota mayor underscored the need for the administration to persuade federal officials to release $77 million in CIP funds set aside from 1996 to 2002 for the CNMI in a meeting the other day with a government body tasked to draw up a master plan on local infrastructure projects.

Mike S. Sablan, chair of the CNMI Multi-Agency 702/OMIP CIP Task Force, echoed CNMI concerns over its inability to source local funds to match dollar-for-dollar the federal grants over the seven-year period.

“We are going to re-submit our request again for a waiver given that since the last request was made early this year, the economic situation has worsened and we don’t see any recovery, not even next year,” he told in an interview.

The committee has so far identified some $58 million in local resources to meet the matching requirement for the next four years, short by $19 million needed by the CNMI to fully tap the available money.

But Sablan said the matching funds are “tentative” and may further drop if NMI’s current economic woes continue. “They are subject to change if the situation of our economy worsens,” he added.

The island is reeling from its worst crisis in years spawned by the prolonged economic upheaval in Asia, its prime source of tourists and foreign investments.

Gov. Pedro P. Tenorio last month slashed government spending level by $32.5 million due to declining revenue collections. He is expected to propose a new package of wide-ranging austerity measures to narrow down anticipated shortfall in the budget next year.

Island leaders have pinned hopes on the $154 million CIP funds to revitalize the economy, but the money has remained idle since 1995 due to failure to meet its share.

“We have been as aggressive as we can be to identify every possible source of matching so that we can kick start the CIP program as soon as possible in the unfortunate event that our request for waiver continues to be denied,” Sablan pointed out.

CNMI officials earlier had lobbied Washington to defer the requirement, but the Office of Insular Affairs and other federal officials turned down the request as it would entail action by the U.S. Congress.

Manglona said the government should seriously look into reviving the appeal, particularly at this time when the required CIP master plan is almost ready for submission to OIA.

“I strongly recommend that we put up a good argument because all statistics will back us up,” the former lt. governor explained. “We know we have millions but we cannot get these millions because we don’t have our millions.”