The Asian Development Bank (ADB) and the World Bank have pledged to provide funding support to Solomon Islands to address budgetary and balance of payment challenges attributed to the impacts of the global economic crisis.The ADB and the World Bank made this pledge and assurance to the Minister of Finance and Treasury, Hon. Snyder Rini, at the recent Annual Meeting of the Asian Development Bank in Bali, Indonesia.
The pledge of funding support was made following Minister Rini's presentation of the Solomon Islands Government's package of measures aimed at addressing the impacts of the global economic crisis on the Government's 2009 Budget and the national economy.
In his presentation to the ADB and the World Bank, Minister Rini explained that Solomon Islands began to experience the impacts of the global economic crisis in the first quarter of this year with declining export earnings from its export commodities such as logs and fish with resultant shortfall in revenue.
Minister Rini said, despite the shortfall in revenue collection in the first quarter the Government has been able to successfully implement its policies and ensuring essential services continue to run and operate.
"We are prioritizing public spending to make essential services our highest priority and ensure these continue to run and operate. We are continuing to spend on education, health, national security and public officers salaries whilst at the same time align spending with key Government policies and priorities", Minister Rini explained to the ADB and the World Bank.
Minister Rini also informed the ADB and the World Bank that the Government has developed a strategy for managing the economy, which would help ensure that the Government continues to meet its commitments to delivering services to its people. This strategy included placing a 10 per cent reservation on 2009 recurrent estimates; freeze on recruitment; prioritize spending in the 2009 development estimates; increase government revenue by new compliance measures and higher duties and excises on luxury goods and; pursue budget reforms and economic reforms to encourage greater investment and trade in Solomon Islands.
"We are continuing to implement important policies that help to grow our country and implementing the economic reforms that make Solomon Islands an easier and better place to do business and create employment," Minister Rini told the ADB and the World Bank.
Minister Rini informed the ADB and the World Bank that taking these series of actions demonstrate that the Government is serious about managing the economy. Minister Rini, however, acknowledged that Solomon Islands faces significant challenges in its fiscal and balance of payments position due to the economic downturn. "We cannot afford to be complacent and simply wait for the crisis to deepen and take control of us," Minister Rini said.
Minister Rini said the ADB and the World Bank welcomed and applauded the Solomon Islands Government for its initiatives and efforts in managing its Budget and economy thus far. Consequently, the ADB and the World have pledged funding support including budgetary and balance of payments support as well as programme and project support.
The ADB has pledged budget support and programme support from the Asian Development Fund (ADF) resources and by front-loading of the eligible resources due to Solomon Islands. ADB has also pledged crisis support to provide integrated and comprehensive crisis assistance to small and fragile island economies including Solomon Islands. In addition, ADB will provide technical assistance to monitor the impacts of the global economic crisis and assist the government to develop appropriate strategies and programmes to meet urgent needs stemming from the crisis.
Likewise, the World Bank has pledged budget support and balance of payments support to Solomon Islands through its various facilities of financial assistance. The World Bank also pledged to embark on programmes to provide local employment opportunities as well as monitoring fiscal measure impacts.
In addition the World Bank, together with the International Financial Corporation (IFC) has pledged to engage as partners in progressing various private sector development project such as the Gold Ridge Mining, KFPL and Soltai.
Minister Rini has described his meetings with the ADB and the World Bank as most successful and very fruitful.
The meetings have paved the way for further consultations and working together as partners to bring these initiatives to bear. "I am very pleased and satisfied with the outcomes and success of the meetings with the ADB and the World Bank as well as the International Financial Corporation (IFC) and other bilateral partners", said Minister Rini.
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