Friday, 6 March 2009 9:11 AM

Government Tightens Spending as Global Economic Crises Worsens

The Government is proactively tightening expenditure as the nation braces for signs and effects of the global economic crisis.

Prime Minister Dr Derek Sikua said the government is taking responsible measures, particularly, on public spending to ensure critical services such as health and education continue to operate.

Dr. Sikua was responding to concerns raised by the Opposition Leader, Manasseh Sogavare, in Parliament yesterday. Dr Sikua said the government is taking appropriate steps and actions to ensure the impacts of the downturn on the national economy are minimized.

The Prime Minister said two immediate steps already taken in the last two months included the commitment of SBD$38 million dollars to finance the fee free basic education policy and the financing of students studying in overseas institutions.

He said the implementation of the fee free basic education policy has already reduced the financial burden on fee payers in light of the rising cost of living, limited jobs and income generating opportunities in rural areas

He said Government officials are working closely with donors and Financial Institutions to seek wide ranging views and opinions on the issues. Dr Sikua said the Government is committed to handling the economic challenges our nation faces with responsibility and care.

Like other developing countries, Solomon Islands will experience a downturn in export as global demand declines. Economists have warned that the financial crises will soon seep into the commodities market, affecting all of our major exports. "At the moment it is a financial crisis, no liquidity with banks so they cannot lend so businesses then suffer," said a local economist. "This financial crisis is slowly seeping into the commodities market as demand from these businesses decline...prices for these once prized commodities will also decline." The economist warned that what is happening right now is unprecedented, and it will take great sacrifice by many to pull through.


Solomontimes.com With SIBC News