Marianas Public Land Trust chair Martin B. Ada said it is premature to say the CNMI government won’t be able to repay a loan if it accedes to the government’s request for a line of credit.
In an earlier presentation to the board, MPLT financial consultant Bruce MacMillan had cited the current economic climate of the Commonwealth in expressing doubt about the government’s capacity to repay a loan.
Ada told Saipan Tribune that MPLT and the CNMI government are still in negotiations and the MPLT trustees are still deliberating within themselves.
“It is premature to say that the government cannot pay their debt. That analysis from our board consultant is one of the information that we are gathering before we make a decision,” he said.
Another matter that is still in deliberation within MPLT is, if it grants a line of credit—essentially a loan—to the CNMI government, is if it will be $7.5 million, $10 million, or $15 million.
Ada stressed that the decision on the line of credit request will be done by “all MPLT trustees, the entire board, and not only me. We will discuss and vote if we’re going to approve the government’s request.”
Gov. Ralph DLG Torres had asked MPLT for a $15-million line of credit that will be coursed through the Department of Finance with an interest rate of not less than 5 percent per annum.
Since receiving the governor’s letter last month, MPLT has been meeting regularly to weigh the pros and cons of granting the governor’s request.
The board met yesterday with acting governor Arnold I. Palacios but decided to go on recess until next Tuesday, May 28, where they want MacMillan and Finance Secretary David Atalig to attend via videoconference.
“We do respect the analysis of our financial consultant…but we’re still in the process of gathering information,” he said.
Ada said the trustees would follow three steps in granting the LOC.
First, for MPLT’s financial consultant, MacMillan, to do an analysis on the drawdown and advice the board in looking at a payment stream based on the revenues that are coming in.
The second step is doing the portfolio optimizer, and looking at the impact of the drawdown and portfolio rebalancing.
The third and final step is having both the lawyers of the Legislature and MPLT to draft the contract with the terms and conditions of the payment.
“We will be making a decision on the line of credit once we complete two out of the three process,” said Ada. “We’ve been discussing with acting Finance secretary [Connie Agulto]…on the ability of the government to pay. We’re not yet done with our three steps. We’re not yet done with our due diligence.”