Bond float eyed to retire deficit

The Commonwealth government is mulling over a plan to use a portion of the proceeds from the proposed $60 million bond flotation for deficit reduction in earlier appropriation of capital improvement project funds, according to the chair of the House Ways and Means Committee.

Rep. Karl T. Reyes said the move will push other infrastructure projects that have stalled due to lack of funds as well as allow transfer of balance from those that have been completed.

The Attorney General’s Office is currently drafting a legislation to establish the mechanism on the proposal to borrow up to $60 million from investments firms in efforts to immediately use federal construction grants provided under Covenant 702 funding.

According to the representative, the proceeds from the sale of the bonds will be used to match the U.S. assistance as well as finance other projects that sorely need additional funds from the island government.

“If the (Office of Insular Affairs) will reimburse, the funds will be met and some will go back to the General Fund,” Reyes told reporters in an interview last Friday.

He added the bonds could also be used to cut deficit of the government, particularly on pending infrastructure projects that have been delayed waiting for infusion of capital.

In effect, this will also reduce the overall budget deficit of the government as money available in its cash resources will then be used to retire past obligations of the Commonwealth, according to Reyes.

There is no detail yet of the government proposal which comes amid frantic efforts by the Legislature to scramble for funds for its CIP master plan, although the AG has begun work on the legislation.

The Commonwealth is hoping to borrow up to $60 million from investment firms to match the federal grants in a bid to immediately tap millions of dollars in CIP.

Government officials and lawmakers have been meeting the past few weeks to lay the groundwork for the plan which, if it goes through, will be the largest financial obligation of the CNMI.

The Northern Marianas also expects to release within the next five years between $60 million to $120 million in CIP money for its massive infrastructure development plan intended to boost the local economy.

This will also take care of a huge portion of the $154 million in both federal and CNMI funds under the seven-year grants which have been kept idle since 1996 due to failure by the island government to meet the matching requirement.

So far, more than $28 million have been set aside from local matching for its CIP, leaving the government some $49 million that still have to be raised for the next three years.