The Honiara Club, Solomon Islands, has unanimously endorsed the Government's new Debt Management Strategy (DMS) during a meeting on Wednesday last week.The Honiara Club is made of members representing International Lenders to Solomon Islands.
The meeting was held to review Honiara Club arrangements and to seek endorsement of the Government's new Debt Management Strategy (DMS) which was agreed to by Cabinet in May 2012.
Minister of Finance and Treasury Hon. Rick Hou said the DMS was unanimously endorsed by the representatives of the Honiara Club.
During the meeting an agreement was reached for the Honiara Club Agreement to be amended to allow for limited concessional new public sector borrowing for high value projects, in accordance with the Government's new DMS.
The amendment will be circulated to all Honiara Club Members for signing.
All new public sector borrowing proposals will be progressed through the Debt Management Advisory Committee which will provide advice and recommendations to the Finance Minister on the 'efficacy, affordability and value for money dimensions' of new borrowing proposals.
Minister Hou said representatives of the Honiara Club congratulated the Solomon Islands Government on its fiscal discipline and reduction in debt levels since 2005 when the Honiara Club Agreement was signed.
The strength of the Honiara Club Agreement as a tool for fiscal and debt discipline and the importance of its continuance were noted at the meeting.
Members of the Honiara Club stressed the importance of establishing a prudent annual public sector borrowing limit as part of the Budget process.
Minister Hou explained that under the new DMS he had sole authority for approving borrowing and that State Owned Enterprises would also come under the DMS.
The Government will keep track of debt levels and make sure that there are no ad hoc debt decisions and that there is accountability and transparency around debt management.
The Minister said the Honiara Club Agreement will remain in place and that there will be another review of the Agreement once the new debt management framework is encapsulated into the new Public Financial Management Act.
Discussion papers relating to the draft new legislation are expected to be available in coming months.
Minister Hou said the endorsement of the Government's new DMS by Honiara Club representatives represents a huge milestone and acknowledgment of the improvement in Government finances and debt levels over the last decade.
This paves the way for the Government to consider prudent new concessional borrowing for high quality development projects that will gradually improve infrastructure in the Solomon Islands.
Source: Press Release, Government Communications Unit