Commonwealth of the Northern Mariana Islands: Serious Economic, Fiscal, and Accountability Challenges

The Commonwelth of the Northern Mariana Islands (CNMI) is a self-governing commonwealth of the United States that administers its own local government functions under its own constitution. CNMI consists of 14 islands in the North Pacific with a total land area about 2.5 times the size of Washington, D.C. In recent years, CNMI has experienced serious economic and fiscal challenges, and several indicators point to a fiscal crisis in fiscal year 2006. This testimony highlights the recent economic trends in the CNMI economy, its weakening fiscal condition, and its financial accountability challenges. Our conclusions are based on work performed for our December 2006 report on U.S. insular areas and our February 2007 testimony on CNMI before the Senate Committee on Energy and Natural Resources, which was updated to include audited financial information through fiscal year 2005 and some recent developments in fiscal year 2006 based on information available as of February 2007. Today, we are also including additional information on CNMI's fiscal year 2006 status recently provided to us by CNMI's Secretary of Finance. We conducted our work in accordance with generally accepted government auditing standards.