## Enhancing Effectiveness of Solomon Islands' Fiscal Framework

_Selected Issues Papers, May 16, 2025_

## Source details

**Canonical URL:** [Enhancing Effectiveness of Solomon Islands' Fiscal Framework](https://www.imf.org/en/publications/selected-issues-papers/issues/2025/05/16/enhancing-effectiveness-of-solomon-islands-fiscal-framework-567014)

## Other formats

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## Bibliographic details
- Authors: Masafumi Yabara
- Published: May 16, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229010207.018

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### Immediate fiscal challenges
- Rebuilding cash reserves.
- Improving the quality of public spending.
- Imposing fiscal discipline on domestic borrowing.
- Need to finance necessary investments while addressing the above challenges.

### Staff analysis and medium-term anchor
- The current debt ceiling of 35 percent of GDP remains broadly appropriate as a medium-term debt anchor.
- Weak public financial management (PFM) foundation and absence of effective operational fiscal rules constrain fiscal policy effectiveness.

### Proposed interim measure: ex-ante guideline for annual budget formulation
- Introduce a simple ex-ante guideline for annual budget formulation as an interim measure given weak PFM and absent operational rules.
- The proposed guideline sets a ceiling on the domestically financed primary budget deficit.
- The guideline is intended to be consistent with a potential fiscal rule covering both domestic and external sources.

### Implementation and monitoring
- The government should assess ex post whether the budget was implemented in line with the guideline.
- The government should also assess whether the fiscal outlook is consistent with the medium-term anchor.

*Masafumi Yabara. "Enhancing Effectiveness of Solomon Islands' Fiscal Framework", Selected Issues Papers 2025, 063 (2025), accessed 9/20/2026, https://doi.org/10.5089/9798229010207.018*

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## Content in this bundle

- **Enhancing Effectiveness of Solomon Islands' Fiscal Framework; IMF Selected Issues Papers No. 2025/63**
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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2025/05/16/enhancing-effectiveness-of-solomon-islands-fiscal-framework-567014_