{
  "title": "Solomon Islands: Selected Issues",
  "publication": "IMF Staff Country Reports, March 8, 2018",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2018/03/08/solomon-islands-selected-issues-45710",
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  "summary": "This Selected Issues paper sets out options to demonstrate how the authorities could supplement their cash balance target and public debt limit with an anchor to help discipline annual budget decisions.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- This Selected Issues paper sets out options for how the authorities could supplement their cash balance target and public debt limit with an anchor to help discipline annual budget decisions.\n- The paper introduces the current fiscal framework and effective fiscal rules based on international experiences, including the characteristics of each rule.\n- It discusses the need for a new fiscal anchor given high revenue volatility, high infrastructure needs, and the country’s exposure and vulnerability to natural disasters.\n- Contingency warrants for unforeseen expenditures, including from natural disasters, should be included in the budget in line with international best practices.\n- If a disaster does not occur, the allocation could be saved in a contingency fund for natural disasters, enabling swift disbursement in the aftermath of a disaster.\n- The fund would be set up once fiscal buffers have been rebuilt.\n- IMF Staff suggests a target for the overall fiscal deficit of 1.5 percent of gross domestic product as a possible fiscal anchor, balancing debt sustainability and addressing the severe infrastructure gap."
    },
    {
      "heading": "Fiscal framework, rules, and motivations for a new anchor",
      "content": "- Current policy tools described: cash balance target and public debt limit.\n- Identified weaknesses motivating a new anchor:\n  - High revenue volatility.\n  - High infrastructure needs.\n  - Exposure and vulnerability to natural disasters.\n- Discussion includes international experiences with effective fiscal rules and the characteristics of each rule."
    },
    {
      "heading": "Contingency warrants and natural disaster financing",
      "content": "- Recommendation: include contingency warrants for unforeseen expenditures (including natural disasters) in the budget in line with international best practices.\n- If disasters do not occur, recommend saving the allocation in a contingency fund for natural disasters to allow swift post-disaster disbursement.\n- Operational sequencing: the contingency fund would be established once fiscal buffers have been rebuilt."
    },
    {
      "heading": "Suggested fiscal anchor and policy balance",
      "content": "- IMF Staff suggested target: overall fiscal deficit of 1.5 percent of gross domestic product.\n- Policy rationale: strike a balance between safeguarding debt sustainability and addressing the severe infrastructure gap.\n\n---\n\n Content in this bundle\n\n- Country Report\n  - Country Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Country Report (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: March 8, 2018",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781484346174.002",
    "This Selected Issues paper sets out options for how the authorities could supplement their cash balance target and public debt limit with an anchor to help discipline annual budget decisions.",
    "The paper introduces the current fiscal framework and effective fiscal rules based on international experiences, including the characteristics of each rule.",
    "It discusses the need for a new fiscal anchor given high revenue volatility, high infrastructure needs, and the country’s exposure and vulnerability to natural disasters.",
    "Contingency warrants for unforeseen expenditures, including from natural disasters, should be included in the budget in line with international best practices.",
    "If a disaster does not occur, the allocation could be saved in a contingency fund for natural disasters, enabling swift disbursement in the aftermath of a disaster.",
    "The fund would be set up once fiscal buffers have been rebuilt.",
    "IMF Staff suggests a target for the overall fiscal deficit of 1.5 percent of gross domestic product as a possible fiscal anchor, balancing debt sustainability and addressing the severe infrastructure gap.",
    "Current policy tools described: cash balance target and public debt limit.",
    "Identified weaknesses motivating a new anchor:",
    "Discussion includes international experiences with effective fiscal rules and the characteristics of each rule.",
    "Recommendation: include contingency warrants for unforeseen expenditures (including natural disasters) in the budget in line with international best practices.",
    "If disasters do not occur, recommend saving the allocation in a contingency fund for natural disasters to allow swift post-disaster disbursement.",
    "Operational sequencing: the contingency fund would be established once fiscal buffers have been rebuilt.",
    "IMF Staff suggested target: overall fiscal deficit of 1.5 percent of gross domestic product.",
    "Policy rationale: strike a balance between safeguarding debt sustainability and addressing the severe infrastructure gap.",
    "**Country Report**"
  ],
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