{
  "title": "IMF Executive Board Concludes 2024 Article IV Consultation with Solomon Islands",
  "publication": "IMF News, February 25, 2025",
  "sourceUrl": "https://www.imf.org/en/news/articles/2025/02/25/pr25042-solomon-islands-imf-executive-board-concludes-2024-article-iv-consultation",
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  "summary": "On February 19, 2025, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Solomon Islands.",
  "publishDate": "2025-02-25",
  "sections": [
    {
      "heading": "Overview and recent developments",
      "content": "- On February 19, 2025, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Solomon Islands.\n- Solomon Islands has experienced civil unrest and the pandemic, successfully hosted the Pacific Games, and conducted peaceful general elections.\n- Consequences: public debt has nearly tripled since before the pandemic, and the government’s cash reserves have been significantly depleted."
    },
    {
      "heading": "Macroeconomic outlook and projections",
      "content": "- Real GDP growth:\n  - Estimated 2.4 percent for 2024.\n  - Projected 2.8 percent for 2025.\n  - Projected 2.9 percent for 2026.\n  - Projected 3.0 percent for 2027.\n- Inflation:\n  - Estimated to have returned to 3.4 percent at end-2024.\n  - Envisaged to reach 3.9 percent at end-2025.\n  - CPI (period average) entries: 3.8 (2023), 3.4 (2024), 3.3 (2025).\n  - CPI (end of period) entries: 3.9 (2023), 3.5 (2024).\n- GDP deflator entries: 1.2 (2019), -1.3 (2020), -5.5 (2021), 2.0 (2022), 1.3 (2023), 1.4 (2024).\n- Nominal GDP:\n  - In SI$ millions: 13,234 (2019) … 14,685 (2024) … 15,492 (2025) … 19,217 (2029).\n  - In US$ millions: 1,619 (2019) … 1,753 (2024) … 1,850 (2025) … 2,294 (2029).\n- Per capita GDP (2023): US$2200.\n- Population (2023): 768,690.\n- Quota: SDR 20.8 million."
    },
    {
      "heading": "Fiscal outcomes and debt",
      "content": "- Fiscal deficit (net lending/borrowing):\n  - Net lending (+) / Net borrowing (-): -3.1 percent of GDP in 2024; expected -3.3 percent of GDP in 2025; -3.2 percent in 2026.\n- Central government operations (percent of GDP):\n  - Total revenue and grants: 32.7 (2024), 32.5 (2025), 32.6 (2026), 32.8 (2027).\n  - Revenue: 23.2 (2024), 23.0 (2025), 23.3 (2026).\n  - Grants: 9.5 (2023) (table lists grants across years).\n  - Total expenditure: 35.8 (2024), 35.7 (2025).\n  - Expense: 27.9 (2024), 27.2 (2025), 27.3 (2026), 27.4 (2027), 27.5 (2028).\n  - Net acquisition of nonfinancial assets: 8.4 (2024).\n- Central government debt 1/:\n  - 20.3 (2023), 22.3 (2024), 24.4 (2025), 26.2 (2026), 29.5 (2027), 31.0 (2028).\n- Public domestic debt and public external debt series provided in table.\n- Note: 1/ Includes disbursements under the Rapid Credit Facility (RCF)."
    },
    {
      "heading": "External sector and reserves",
      "content": "- Current account balance (percent of GDP):\n  - -4.2 (2024), projected -7.7 (2025), -7.5 (2026), -7.4 (2027), -7.4 (2028).\n- Trade balance (goods and services): -11.6 (2024), -15.3 (2025), -15.6 (2026), -16.1 (2027), -16.5 (2028).\n- Exports and imports (percent of GDP) examples: Exports 32.1 (2024), 30.7 (2025); Imports 48.6 (2024), 47.7 (2025).\n- Gross remittances: 4.1 (2023).\n- Capital and Financial Account: 6.9 (2023), 7.5 (2024).\n- Overall balance (+ = increase): 0.1 (2023).\n- Gross official reserves (in US$ millions, end of period) 2/:\n  - 682.0 (2023), 679.1 (2024), 664.3 (2025), 661.0 (2026), 662.8 (2027), 663.2 (2028), 664.6 (2029).\n  - Reserves cover 9 months of imports (text); table entries (in months of next year's imports of GNFS): 9.1 (2023), 8.0 (2024), 7.7 (2025), 7.4 (2026), 7.0 (2027).\n- Exchange rate (SI$/US$, end of period) entries: 8.1 (2019), 8.3 (2020), …\n- Note: 2/ Includes SDR allocations made by the IMF to Solomon Islands in 2009 and in 2021."
    },
    {
      "heading": "Risks and constraints",
      "content": "- Risks to the outlook are tilted to the downside, including:\n  - Under execution of the budget.\n  - Extreme climate events.\n  - Political instability.\n  - Commodity price volatility.\n- Structural constraints:\n  - Declining logging activity.\n  - Undiversified economic base.\n  - Weak governance.\n- Both the current account and fiscal deficits are expected to persist over the medium term."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Directors concurred with staff appraisal: economy weathered multiple shocks, benefited from Pacific Games and peaceful elections, but public debt is increasing, medium-term growth prospects are moderate, and per capita income growth remains stagnant.\n- Fiscal policy recommendations:\n  - Rebuild cash buffers and ensure fiscal sustainability.\n  - Improve effectiveness of fiscal policy by addressing weaknesses in fiscal data and public financial management, including ending the practice of unfunded spending.\n  - Tighten the 2025 Budget to start a gradual recovery of cash balances.\n  - Create fiscal space to accelerate investment in development priorities by advancing domestic revenue mobilization, such as introducing a value added tax.\n  - Enhance quality, transparency, and accountability of public expenditure, including undertaking the Public Expenditure and Financial Accountability assessment.\n  - Introduce a simple, ex-ante guideline for annual budget formulation as an interim step toward a fiscal rule.\n- Monetary and financial sector recommendations:\n  - Current monetary policy stance and exchange rate regime judged appropriate.\n  - Preserve the central bank’s autonomy, including by limiting purchases of government bonds and implementing the remaining Safeguards Assessment recommendations.\n  - Keep the exchange rate fully aligned with the value of the updated currency basket and enhance transparency and communication with market participants.\n  - Strengthen regulatory and supervisory frameworks to boost financial intermediation and inclusion.\n  - Strengthen the AML/CFT framework, in light of the planned introduction of the Citizenship by Investment program.\n- Structural and governance recommendations:\n  - Accelerate structural reforms to support economic diversification and private sector development, with capacity development support from the IMF and other development partners.\n  - Address governance weaknesses, including by improving the capacity and independence of the anti-corruption institution.\n\nSource: IMF Executive Board Concludes 2024 Article IV Consultation with Solomon Islands (Press Release No. 25/042, February 25, 2025).\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/2025/02/25/pr25042-solomon-islands-imf-executive-board-concludes-2024-article-iv-consultation"
    }
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    "Published: February 25, 2025",
    "On February 19, 2025, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Solomon Islands.",
    "Solomon Islands has experienced civil unrest and the pandemic, successfully hosted the Pacific Games, and conducted peaceful general elections.",
    "Consequences: public debt has nearly tripled since before the pandemic, and the government’s cash reserves have been significantly depleted.",
    "Real GDP growth:",
    "Inflation:",
    "GDP deflator entries: 1.2 (2019), -1.3 (2020), -5.5 (2021), 2.0 (2022), 1.3 (2023), 1.4 (2024).",
    "Nominal GDP:",
    "Per capita GDP (2023): US$2200.",
    "Population (2023): 768,690.",
    "Quota: SDR 20.8 million.",
    "Fiscal deficit (net lending/borrowing):",
    "Central government operations (percent of GDP):",
    "Central government debt 1/:",
    "Public domestic debt and public external debt series provided in table.",
    "Note: 1/ Includes disbursements under the Rapid Credit Facility (RCF).",
    "Current account balance (percent of GDP):",
    "Trade balance (goods and services): -11.6 (2024), -15.3 (2025), -15.6 (2026), -16.1 (2027), -16.5 (2028).",
    "Exports and imports (percent of GDP) examples: Exports 32.1 (2024), 30.7 (2025); Imports 48.6 (2024), 47.7 (2025).",
    "Gross remittances: 4.1 (2023).",
    "Capital and Financial Account: 6.9 (2023), 7.5 (2024).",
    "Overall balance (+ = increase): 0.1 (2023).",
    "Gross official reserves (in US$ millions, end of period) 2/:",
    "Exchange rate (SI$/US$, end of period) entries: 8.1 (2019), 8.3 (2020), …",
    "Note: 2/ Includes SDR allocations made by the IMF to Solomon Islands in 2009 and in 2021.",
    "Risks to the outlook are tilted to the downside, including:",
    "Structural constraints:",
    "Both the current account and fiscal deficits are expected to persist over the medium term.",
    "Directors concurred with staff appraisal: economy weathered multiple shocks, benefited from Pacific Games and peaceful elections, but public debt is increasing, medium-term growth prospects are moderate, and per capita income growth remains stagnant.",
    "Fiscal policy recommendations:",
    "Monetary and financial sector recommendations:",
    "Structural and governance recommendations:",
    "[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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