## IMF Staff Completes a Visit to Solomon Islands

_IMF News, March 6, 2018_

## Source details

**Canonical URL:** [IMF Staff Completes a Visit to Solomon Islands](https://www.imf.org/en/news/articles/2018/03/06/pr1874-imf-staff-completes-a-visit-to-solomon-islands)

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## Bibliographic details
- Published: March 6, 2018

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### Mission overview and timing
- Press Release No. 18/74
- Visit led by Ms. Alison Stuart to Honiara February 27-March 2.
- End-of-Mission press release dated March 6, 2018.
- Statement: views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board; this mission will not result in a Board discussion.
- Media contact: PRESS OFFICER: Raphael Anspach; Phone: +1 202 623-7100; Email: MEDIA@IMF.org

### Key macroeconomic findings
- “Growth has been relatively buoyant, inflation is contained, and exchange rate and monetary policies are broadly appropriate.”
- Fiscal buffers have eroded since 2016 and domestic arrears have built up.
- The fiscal position is described as fragile, heightening the need for fiscal adjustment in 2018 and public financial management reforms.

### Fiscal assessment and recommendations
- The authorities’ fiscal consolidation goal in the 2018 Budget is commended.
- Policy measures and recommendations:
  - Anchor the budget on realistic revenue projections.
  - Align spending with the available resource envelope.
  - Take steps to eliminate arrears.
  - Include a contingency reserve in the budget.
- Rebuilding a fiscal buffer in 2018 will require a temporary slowdown in government‑financed development spending to raise the cash balance to an adequate level and restore response capacity to shocks, including natural disasters.
- When pursuing expenditure restraint:
  - Maintain expenditures in priority areas.
  - Curb expenditures in areas which have expanded recently, for example: tertiary scholarships, constituency development funds and shipping grants.
- Encourage continued pursuit of concessional external financing for critical infrastructure consistent with debt sustainability and implementation capacity.

### Revenue mobilization and tax policy
- Support for the ongoing tax review to improve revenue mobilization.
- Objectives for the tax review:
  - Broaden the tax base.
  - Reduce revenue volatility.
  - Improve compliance.
  - Eliminate ad hoc exemptions.
  - Simplify the tax laws.

### Public financial management and public investment
- Pressing ahead with public financial management reforms will improve spending efficiency.
- Combine public financial management reform with natural disaster mitigation measures to raise the benefits of public investment.
- Improve accountability and transparency of the constituency development funds.

### Financial stability, contingency planning, and external engagement
- Authorities should closely monitor potential macroeconomic and financial stability risks from natural disasters, domestic and external shocks, including via correspondent banking relationships.
- Close regional engagement with development partners, banks, regulators, and supervisors is encouraged to assist with contingency planning.

### IMF support and closing remarks
- “The IMF stands ready to support the government’s reform efforts through policy advice, technical assistance and capacity development.”
- The IMF team underscored the excellent, cooperative relationship between Solomon Islands and the IMF and thanked the authorities for their hospitality and productive discussions.

*IMF Press Release No. 18/74, March 6, 2018.*

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## References

- [Solomon Islands and the IMF](http://www.imf.org/external/country/SLB/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2018/03/06/pr1874-imf-staff-completes-a-visit-to-solomon-islands_