Problems With New Responsibilities of Self-Government in the Northern Mariana Islands

ID-80-20: Published: Mar 7, 1980. Publicly Released: Mar 7, 1980.

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A review was undertaken to determine the ability of the Government of the Northern Mariana Islands (GNMI) to manage Federal funds. The trusteeship agreement under which the United States has administered the Trust Territory of the Pacific Islands is expected to end by 1981. On January 9, 1978, the people of the Northern Mariana Islands established a system of self-government under a covenant with the United States. GNMI is the first government to emerge as a result of the negotiations determining the future political status of the Trust Territory of the Pacific Islands. It is to be expected that a newly established government will have organizational problems and problems in handling fiscal affairs.

It is the primary responsibility of GNMI to correct financial management deficiencies and to prevent their recurrence. However, factors other than initial organizational problems have limited the effective use of funds by GNMI. These include the prolonged absence of an approved spending plan because of a political battle between the executive and legislative branches and the lack of an approved master development plan. Additionally, although single-source funding would be a simpler and more appropriate method for delivering the substantial Federal assistance now received by GNMI, there is no effective means to make sure that these grant funds meet the most urgent needs of the Islands. Recordkeeping and controls are also unreliable as their is a lack of qualified personnel to supervise and carry out necessary accounting functions. Many of these problems are a result of the inability of the Federal Government to provide sufficient technical assistance or effective oversight before the Northern Mariana Islands established its system of self-government. Consequently, the Islands failed to develop an adequate economic base, a skilled labor force, and other institutions and facilities necessary to stimulate and sustain economic growth. At present, the Government has an operating deficit which could lead to a fiscal crisis if its serious problems are not corrected.

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