IMF Staff Completes 2026 Article IV Mission to Solomon Islands

IMF News, March 19, 2026

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Canonical URL: IMF Staff Completes 2026 Article IV Mission to Solomon Islands

Staff estimates that the economy grew by 3.5 percent in 2025, driven by agriculture and gold production.
The conflict in the Middle East is projected to slow growth to 2.7 percent in 2026 and raise inflation to 4.8 percent on average.
The current account is estimated to have registered a surplus in 2025—a first since 2012—but is expected to return to a deficit in 2026 due to rising import prices.
Staff expects the fiscal deficit to remain wide in 2026.
A prolonged conflict in the Middle East could significantly dampen economic activity and raise inflation.
A potential freeze in the execution of the 2026 budget due to financing shortfalls could further weigh on activity.
Risks of extreme climate events and political instability persist.
An expansion of gold mining—if supported by robust resource management, limited fiscal incentives, and strengthened revenue administration—could boost economic activity.
Climate change is expected to have incremental but meaningful cumulative effects on the debt trajectory over the long term, underscoring the need for adaptation policies, particularly for populations vulnerable to sea-level rise.

Reducing fiscal deficits and rebuilding liquidity buffers remain critical.
The 2026 budget marks progress, including the presentation of a medium‑term fiscal framework.
Realistic and fully financed budgeting, aided by simple, top-down guidelines, is needed to avoid disruptive budget freezes and rebuild buffers.
A potential freeze in budget execution due to financing shortfalls would weigh on activity.
Further delays in introducing a value‑added tax should be avoided.
Efforts to strengthen tax enforcement and rationalize exemptions should be accelerated.
Persistent delays in fiscal reporting, audits of government financial statements, and the completion of the Pacific Games audit continue to weaken accountability.

The central bank should continue to monitor developments in the Middle East and adjust its monetary policy stance as warranted.
Staff advises against ad‑hoc exchange rate adjustments to address inflation; strict adherence to the fixed exchange rate regime anchored to the currency basket is imperative to ensure policy credibility and foster market development.
Staff welcomes the central bank’s readiness to respond to inflationary risks stemming from the Middle East conflict.

The financial sector remains broadly sound.
Legislation to upgrade the governance and regulatory frameworks of financial institutions and to establish a robust system for anti-money laundering and combating the financing of terrorism should be expedited.
Completing the rollout of the outstanding National Payment System components would support financial inclusion.
Addressing longstanding governance weaknesses—by advancing legislation in the extractive sectors and resuming implementation of the National Anti‑Corruption Strategy—would help foster investor confidence and support more resilient and inclusive growth.

The quality of key statistics, including national accounts and government finance statistics, needs to be improved.
The resource of statistical agencies should be strengthened.

If the government introduces measures to help mitigate the impact of the Middle East conflict, such measures should:
- be targeted to the most vulnerable;
- be strictly temporary;
- be closely coordinated with donors.

IMF staff mission visit: March 9 to 20, 2026; Press Release No. 26/081; March 19, 2026.