The Central Bank of Solomon Islands (CBSI) has just released the fourth edition of its Financial Stability Report (FSR) for the year 2019 as pursuant to section 31(4) of the CBSI Act 2012.
Governor Dr. Luke Forau officially released the FSR report yesterday at the CBSI Board room. Witnessing the event was the Deputy Governor, Raynold Moveni, Chief Manager for Financial System & Regulations Department (FSRD) Daniel Haridi and FSRD staff.
In the reports forward Dr Forau says that over the past twelve months, the domestic financial sector witnessed subdued growth in lending activities, investment activities, and premium receipts.
“Besides weak global market conditions, the decelerating trend underpins the slowdown in domestic economic activities emanating from slow fiscal supports, limited investment opportunities, and the continued aging legislative framework.”
He said despite the slowdown in the financial sector growth, the sector remained fundamentally strong during 2019.
Dr Forau says going forward, the overall financial sector growth could contract further given the projected economic growth of around minus 5% for 2020.
“This unfavorable growth is likely to stem from the impacts of the coronavirus (COVID-19). The magnitude and extent of which is unknown, although initial evidences have shown that the impacts could halt the normal financial sector performance in 2020.
“This will certainly put pressure on the financial institutions to explore for new ways to deliver financial services and at the same time enhance management and controls to remain profitable.”
The FSR report provides insights into the performances of the country’s financial system as well as the vulnerabilities and risks faced by the financial sectors in Solomon Islands.