Federated States of Micronesia
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Economic activity consists primarily of subsistence farming and fishing. The islands have few mineral deposits worth exploiting, except for high-grade phosphate. The potential for a tourist industry exists, but the remote location, a lack of adequate facilities, and limited air connections hinder development. Under the original terms of the Compact of Free Association, the US provided $1.3 billion in grant aid during the period 1986-2001; the level of aid has been subsequently reduced. The Amended Compact of Free Association with the US guarantees the Federated States of Micronesia (FSM) millions of dollars in annual aid through 2023, and establishes a Trust Fund into which the US and the FSM make annual contributions in order to provide annual payouts to the FSM in perpetuity after 2023. The country's medium-term economic outlook appears fragile due not only to the reduction in US assistance but also to the current slow growth of the private sector. Source: The Places Factbook, CIA. |
In
1979 the Federated States of Micronesia, a UN Trust Territory under US
administration, adopted a constitution. In 1986 independence was attained under
a Compact of Free Association with the US, which was amended and renewed in
2004. Present concerns include large-scale unemployment, overfishing, and
overdependence on US aid.