{
  "title": "IMF Executive Board Concludes 2019 Article IV Consultation with the Solomon Islands",
  "publication": "IMF News, February 18, 2020",
  "sourceUrl": "https://www.imf.org/en/news/articles/2020/02/18/pr2055-solomon-islands-imf-executive-board-concludes-2019-article-iv-consultation",
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  "summary": "Executive Board conclusion date: February 5, 2020.",
  "publishDate": "2020-02-18",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Executive Board conclusion date: February 5, 2020.\n- Press Release No. 20/55.\n- Summary judgment: welcomed recent growth performance, improvement in the fiscal position in 2018, low inflation, and comfortable international reserves; noted slowing growth, re-emerging fiscal pressures, and mostly downside risks to the outlook.\n- Per capita GDP (2017): US$2,144.\n- Population (2017): 613,712."
    },
    {
      "heading": "Growth and Prices",
      "content": "- Real GDP growth:\n  - 2018: 3.9 percent (driven by logging, infrastructure spending, fisheries, agriculture, and manufacturing).\n  - 2019: 2.7 percent (expected slowdown from weakening logging exports and temporary pause in activity around the election period).\n  - Projections: 2020: 2.8 percent; 2021: 2.9 percent; 2022: 2.9 percent (table shows multi‑year series through 2024).\n- Inflation:\n  - Annual rate: 1.7 percent in August 2019 (described as subdued).\n  - CPI (period average) series in table: 2015: -0.6; 2016: 0.5; 2017: 3.5; 2018: 1.9; 2019: 2.3; 2020: 4.0.\n  - CPI (end of period) series in table: 2015: -2.2; 2016: 2.1; 2017: 2.2; 2018: 2.4; 2019: 3.3."
    },
    {
      "heading": "Fiscal Position and Public Debt",
      "content": "- Central government operations (in percent of GDP):\n  - Total revenue and grants: 2018: 45.3; 2019: 39.0; 2020: 36.5; 2021: 36.7; 2022: 37.2; 2023: 38.3; 2024: 37.3.\n  - Revenue: 2018: 34.3; 2019: 30.1; 2020: 29.8; 2021: 29.6; 2022: 29.5; 2023: 29.2; 2024: 29.1.\n  - Grants: 2018: 11.0; 2019: 8.8; 2020: 6.7; 2021: 7.2; 2022: 7.7; 2023: 9.1; 2024: 8.2.\n  - Total expenditure: 2018: 44.6; 2019: 41.6; 2020: 40.2; 2021: 42.2; 2022: 43.9; 2023: 42.1.\n  - Overall balance: 2018: -2.7 (percent of GDP); projections worsen: 2019: -3.7; 2020: -4.8; 2021: -5.0; 2022: -5.6.\n- Cash and balances (in SI$ millions):\n  - Cash balance: 2018: 337; 2019: 240; 2020: 129; 2021: -26; 2022: -238; 2023: -512; 2024: -846.\n  - SIG Deposit Account (additional): 2015–2018 series: 140, 141, 142, 143.\n  - Broader cash balance (=Cash balance + SIG Deposit Account): 2018: 477; 2019: 380; 2020: 269; 2021: 114; 2022: -97; 2023: -370; 2024: -703.\n  - Broader cash balance in months of total spending: 2018: 1.0; 2019: -0.7; 2020: -1.5.\n- Central government debt:\n  - Central government debt 1/ (percent of GDP) series: 2018: 18.9; 2019: 22.8; 2020: 26.9; 2021: 30.0; 2022: 33.1.\n  - Public domestic debt, including arrears (in SI$ millions): 2018: 502; 2019: 613; 2020: 768; 2021: 966; 2022: 1,219; 2023: 1,533.\n- Narrative:\n  - Fiscal deficit widened to 2.7 percent of GDP in 2019 and is expected to widen further over the medium term.\n  - Public debt is currently low but rises over the medium term.\n  - Risks to fiscal outlook: weak fiscal policy, decline in logging, spending pressures associated with the Pacific Games 2023, and spillovers from global trade tensions."
    },
    {
      "heading": "External Sector and Reserves",
      "content": "- Current account and trade:\n  - Current account balance (US$ millions): 2018: -62.5; 2019: -121.9; 2020: -120.2; 2021: -168.4; 2022: -219.1; 2023: -264.2; 2024: -233.6.\n  - Current account balance (percent of GDP) series: 2018: -8.6; 2019: -10.7; 2020: -13.1; 2021: -14.8; 2022: -12.2.\n  - Trade balance (US$ millions): 2018: -69.4; 2019: -156.0; 2020: -161.6; 2021: -219.9; 2022: -280.4; 2023: -335.8; 2024: -306.3.\n- Foreign direct investment (US$ millions): 2018: 48.5; 2019: 53.4; 2020: 61.4; 2021: 65.9; 2022: 68.1; 2023: 72.4.\n- Reserves:\n  - Gross official reserves (US$ millions, end of period): 2018: 613.1; 2019: 601.5; 2020: 600.8; 2021: 595.7; 2022: 563.1; 2023: 525.1; 2024: 497.6.\n  - Gross reserves in months of next year's imports of GNFS: 2018: 8.1; 2019: 7.6; 2020: 7.0; 2021: 6.2; 2022: 5.4; 2023: 5.2.\n  - Net official reserves (US$ millions, end of period): 2018: 603.0; 2019: 593.5; 2020: 593.0; 2021: 588.2; 2022: 556.0; 2023: 518.0; 2024: 490.5.\n- Narrative:\n  - The current account deficit has widened with higher infrastructure imports but international reserves remain comfortable.\n  - Directors noted fiscal consolidation and structural reforms would help bring the external sector position closer to that suggested by medium-term fundamentals."
    },
    {
      "heading": "Monetary and Financial Sector",
      "content": "- Monetary conditions:\n  - Described as accommodative.\n  - Excess liquidity overhang has reduced.\n  - Credit growth slowed to 4.1 percent year-on-year at end‑2018.\n- Macrofinancial indicators (annual percentage change, end of year):\n  - Credit to private sector: 2015: 16.7; 2016: 12.1; 2017: 6.4; 2018: 4.1; 2019: 4.9; 2020: 5.5; 2021: 5.7; 2022: 6.0; 2023: 5.0; 2024: 4.5.\n  - Broad money: 2015: 13.4; 2016: 6.8; 2017: 5.1; 2018: 2.6.\n  - Reserve money: 2015: 23.5; 2016: 14.5; 2017: 7.5; 2018: 10.5; 2019: 4.8; 2020: 6.9.\n- Financial sector reforms:\n  - Directors encouraged sustaining progress on financial sector reforms.\n  - Strengthening of the AML/CFT framework viewed as helpful to alleviate risks to correspondent banking relationships."
    },
    {
      "heading": "Risks, Structural Issues, and Policy Recommendations",
      "content": "- Key risks identified:\n  - Downside risks predominate: weak fiscal policy, decline in logging, spending pressures from Pacific Games 2023, spillovers from global trade tensions, and natural disasters.\n- Fiscal policy recommendations:\n  - Maintain fiscal discipline and strengthen governance.\n  - Rebuild the government cash balance by strengthening expenditure control and prioritizing spending in line with the National Development Strategy.\n  - Boost revenues through increased tax compliance, improving efficiency of the tax system, and strengthening revenue administration.\n  - Press ahead with expenditure reforms: strengthen procurement planning, enforce commitment controls, and increase transparency of the Constituency Development Funds.\n  - Prudently manage development partner‑financed infrastructure investments.\n  - Contain spending for the Pacific Games 2023; ensure financing is transparent, follows procurement and public financial management best practices, and is on grant or highly concessional terms in line with debt sustainability and implementation capacity.\n  - Continue progress in anti-corruption efforts with stronger enforcement encouraged.\n- Structural and growth recommendations:\n  - Generate new sources of growth; view improved internet connectivity as an opportunity to foster private‑sector development and public sector service provision.\n  - Harnessing connectivity benefits requires improvements in the regulatory framework and complementary investments in infrastructure and human capital.\n  - Continue progress in strengthening governance, including legislative framework, regulation and oversight to create a conducive environment for mining and avoid governance problems.\n- Exchange rate policy:\n  - Directors considered the basket exchange rate peg regime remains appropriate for Solomon Islands and welcomed the review on the composition of the basket."
    },
    {
      "heading": "Selected Key Indicators (from Table 1)",
      "content": "- Real GDP (annual percentage change): 2015: 2.5; 2016: 3.2; 2017: 3.7; 2018: 3.9; 2019: 2.7; 2020: 2.8; 2021: 2.9; 2022: 2.9.\n- Nominal GDP (in SI$ millions): 2015: 9,139; 2016: 9,780; 2017: 10,330; 2018: 11,099; 2019: 11,553; 2020: 12,130; 2021: 12,839; 2022: 13,643; 2023: 14,544; 2024: 15,556.\n- Overall balance (percent of GDP): 2015: -3.9; 2016: -4.5; 2017: 0.7; 2018: -2.7; 2019: -3.7; 2020: -4.8; 2021: -5.0; 2022: -5.6.\n- Gross official reserves (US$ millions, end of period): 2015: 519.6; 2016: 513.6; 2017: 576.9; 2018: 613.1; 2019: 601.5.\n\nSummary based on the IMF press release “IMF Executive Board Concludes 2019 Article IV Consultation with the Solomon Islands,” February 18, 2020.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Solomon Islands and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2020/02/18/pr2055-solomon-islands-imf-executive-board-concludes-2019-article-iv-consultation"
    }
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    "Published: February 18, 2020",
    "Executive Board conclusion date: February 5, 2020.",
    "Press Release No. 20/55.",
    "Summary judgment: welcomed recent growth performance, improvement in the fiscal position in 2018, low inflation, and comfortable international reserves; noted slowing growth, re-emerging fiscal pressures, and mostly downside risks to the outlook.",
    "Per capita GDP (2017): US$2,144.",
    "Population (2017): 613,712.",
    "Real GDP growth:",
    "Inflation:",
    "Central government operations (in percent of GDP):",
    "Cash and balances (in SI$ millions):",
    "Central government debt:",
    "Narrative:",
    "Current account and trade:",
    "Foreign direct investment (US$ millions): 2018: 48.5; 2019: 53.4; 2020: 61.4; 2021: 65.9; 2022: 68.1; 2023: 72.4.",
    "Reserves:",
    "Narrative:",
    "Monetary conditions:",
    "Macrofinancial indicators (annual percentage change, end of year):",
    "Financial sector reforms:",
    "Key risks identified:",
    "Fiscal policy recommendations:",
    "Structural and growth recommendations:",
    "Exchange rate policy:",
    "Real GDP (annual percentage change): 2015: 2.5; 2016: 3.2; 2017: 3.7; 2018: 3.9; 2019: 2.7; 2020: 2.8; 2021: 2.9; 2022: 2.9.",
    "Nominal GDP (in SI$ millions): 2015: 9,139; 2016: 9,780; 2017: 10,330; 2018: 11,099; 2019: 11,553; 2020: 12,130; 2021: 12,839; 2022: 13,643; 2023: 14,544; 2024: 15,556.",
    "Overall balance (percent of GDP): 2015: -3.9; 2016: -4.5; 2017: 0.7; 2018: -2.7; 2019: -3.7; 2020: -4.8; 2021: -5.0; 2022: -5.6.",
    "Gross official reserves (US$ millions, end of period): 2015: 519.6; 2016: 513.6; 2017: 576.9; 2018: 613.1; 2019: 601.5.",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Solomon Islands and the IMF](http://www.imf.org/external/country/SLB/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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