## SOLOMON ISLANDS — REQUEST FOR AN EXTENSION OF THE ARRANGEMENT UNDER THE EXTENDED CREDIT FACILITY (Content unit: _cr15352)

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### Executive action and timetable
- IMF Executive Board approved an extension of Solomon Islands’ Extended Credit Facility (ECF) Arrangement to March 31, 2016. Decision taken on a lapse-of-time basis.
- The ECF arrangement for Solomon Islands was approved by the IMF’s Executive Board on December 7, 2012.
- Executive Board consideration of the fifth and sixth reviews of the ECF arrangement is tentatively scheduled for March 21, 2016.
- The Solomon Islands authorities formally requested the extension in a Letter of Intent dated November 18, 2015, and requested an IMF team visit to Honiara in January 2016.

### Program size, access, and disbursements
- Original ECF amount: SDR 1.04 million (about US$1.59 million or 10 percent of quota).
- Amount drawn to date following four program reviews: SDR 0.743 million (7 percent of quota).
- The extension is intended to allow completion of the fifth and sixth (final) reviews and related disbursements.

### Macroeconomic program implementation and performance
- Staff assessment (based on information available as of November 20, 2015): program quantitative performance is on track.
- Performance criteria (PCs) and indicative targets (ITs) status:
  - All end-December 2014 performance criteria (PCs) were met by a considerable margin.
  - Indicative targets (ITs) for March 2015 were met by a considerable margin.
  - End-June 2015 PCs were met by a considerable margin.
  - Exception: ITs on government-funded recurrent spending on health and education have been consistently missed since last year albeit by a small margin.
- Recent (September and August 2015) balance-sheet and cash indicators:
  - September available data indicate ITs on international reserves, net domestic assets at the Central Bank, and net credit to the government have been comfortably met.
  - Central government program cash balance as of August 2015: SI$925 million; this suggests the September IT is likely to have been met by a large margin.

### Rationale for extension and structural reform considerations
- The extension will provide flexibility for the authorities to make further progress implementing structural reforms under the program.
- Recent political developments resulting in a Cabinet reshuffle have temporarily diverted Executive and Parliamentary time; several structural benchmarks require Cabinet approval or submission of documents to Parliament.
- Staff supports the authorities’ request for an extension of the ECF arrangement to March 31, 2016.

### Government and central bank commitments
- Authorities reaffirm commitment to macroeconomic stability and completion of the program reviews.
- Letter of Intent signatories:
  - Hon. Snyder Rini, MP, Minister of Finance and Treasury.
  - Denton Rarawa, Governor, Central Bank of Solomon Islands.

*Prepared by the Asia and Pacific Department, in consultation with other departments. Document completed on November 20, 2015. Approved by Hoe Ee Khor (APD) and Masato Miyazaki (SPR).*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2015/_cr15352.pdf_