Former Prime Minister, Manasseh Sogavare, says the 5% appreciation of the Solomon Islands dollar will directly affect the government's budget.

Mr Sogavare, who had also previously held the Finance Ministry portfolio, says that private and official funds from aid donors will be affected, which will in turn impact the government's budget.

"We will have to see how the donor community will respond, but for now we can say that the 5% appreciation will negatively impact the budget."

Mr Sogavare also questions how the decision will affect the behavior of capital flow into the country by big companies.

"Those big companies who want to invest in the country will now have to assess the situation carefully since we have a very small capital base," Sogavare said. "It will now cost more to bring in additional capital for their operations."

The former Finance Minister urges the Attorney General to also advise on the effects of the sudden change in government policy especially the legal implications of contracts that have been concluded.