The Graduate School’s EconMAP program, with funding support from the United States Department of the Interior, has developed and released an Economic and Fiscal Forecasting Framework for the Republic of the Marshall Islands. The RMI Economic & Fiscal Forecasting Framework (EFFF) is an extended version of the medium-term framework developed for the RMI as part of the Graduate School USA’s annual review process. The original medium term framework, covering a three year forecasting period, was based on the IMF Financial Programming (FP) system. An FP, which is most frequently a spreadsheet based model, projects the four main economic accounts of a nation: national accounts, fiscal, balance of payments and monetary survey.
This long-term version has been developed to address the need for the RMI to prepare a Decrement Management Plan or DMP. The amended Compact of Free Association between the US and the RMI provides for an annual grant stream over a 20 year period FY2004-FY2023, with the annual grants being reduced by an annual decrement and lack of full inflation adjustment. Over time the real value of the grant stream diminishes which forces the RMI into economic and fiscal adjustment. There are a variety of policy options that the RMI can adopt to achieve fiscal sustainability. The EFFF was built to explore the implications of the different options and to assist the development of an overall program.