Is Guam Set to Follow Puerto Rico’s Path?

We don’t usually hear too much about the US’ Pacific territories, Guam, American Samoa, and the Northern Mariana Islands because they are much smaller and even more remote than Puerto Rico and the US Virgin Islands. It’s rare that much news comes out of any of these places except when North Korea is issuing its latest threats to nuke Guam.

Given how things are going in Guam right now in terms of government spending, however, we may start hearing a lot more about them in the future:


Guam legislative Vice Speaker Benjamin Cruz, who heads the budget and finance committee, said the local government should stop racking up debt to avoid the path Puerto Rico has slipped into.

“Enough already … no more borrowing,” Cruz said.

As of 2012, GovGuam’s debt can be translated into a debt burden of $8,810 for every Guam resident, the Guam Office of Public Accountability states, citing information from credit ratings agency Standard & Poor’s.

GovGuam has numerous other debts that aren’t added up as part of the debt limit set by law.

Examples of debts that aren’t counted within the debt limit include $248 million for the construction of a new Guam Department of Education office, the purchase of property for Tiyan High School and the construction of John F. Kennedy High School, Okkodo High School and three other smaller schools. For these schools and Guam DOE’s building, the cost of debt repayment would exceed $660 million, including interest payments.

GovGuam had total public indebtedness of $2.48 billion as of last year, if debts owed by autonomous agencies, such as Guam Power Authority and Guam Waterworks authority, are factored in, documents show.

GovGuam borrowed more by raising its debt ceiling three times between 2007 to 2012, the public auditor’s office states. In that time frame, GovGuam’s debt ceiling went from 35 percent to 100 percent of Guam total real estate values, the public auditor’s office states.

I’ve seen in other articles that Guam’s debt to GDP is about 44%. Despite overspending being an important issue, that’s not really too bad compared to many of the tiny islands on the other side of the world in the Caribbean, where ratios between 80%-120% are the norm.

However, I don’t know whether the 44% figure takes into account the the debts that aren’t added in as part of the debt limit the article mentions above. Benjamin Cruz is absolutely right that the island should get its spending under control while the debt is still manageable and relatively easy to pay off.

If they wait until it’s at 100%+ like the Caribbean and Puerto Rico, they’re going to have a much rougher time putting their financial house in order.

Despite what liberals may tell you, it definitely is possible to reduce a country’s debt through means other than bankruptcy. The Northern Marianas, which has had a rough time of it since US government mismanagement destroyed their once-thriving garment manufacturing industry, has reduced their debt significantly, and their debt to GDP is now only 16%!

In terms of public debt, the CNMI is doing better than Guam, based on the U.S. Government Accountability Office’s public debt report on the five U.S. territories.

According to the report, the CNMI’s public debt went down from $251.7 million in fiscal year 2005 to $144.7 million in fiscal year 2015—a decline of $107 million.

Between fiscal years 2005 and 2015, public debt outstanding as a share of gross domestic product, or GDP, grew from 23 percent in fiscal year 2005 to 26 percent in fiscal year 2007 before ultimately falling to 16 percent at the end of fiscal year 2015, while bonded debt outstanding as a share of GDP was 14 percent for both fiscal years 2005 and 2015, but spiked to 19 percent in fiscal year 2011.

The CNMI public debt per capita reportedly declined from about $4,199 per person in fiscal year 2007 to $2,776 per person in fiscal year 2015.

Let’s hope Guam follows the example of their more fiscally prudent neighbor to the north.


Written by Doomberg

I am Doomberg, one of the original founding members of Sparta Report, and have been here since the beginning. I am an insatiable news junkie and enjoy reading and writing about the US territories, the Caribbean, video games, smartphones, and of course conservative politics in general.

I also really like pictures of gas stations and claim full responsibility for the silly gas station motif. I'm presently trapped behind enemy lines in a blue state with no hope of escape! The ride never ends.

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