I generally try to share at least one or two stories of “good news” that I can share with you giving encouragement and hope but today seems to be one of those ‘Black Friday’s when it comes to reports concerning the Solomon Islands.
Here are concerning matters that have been featured locally, and I will give the details.
Sam Sade writing in the Solomon Times Online has said with the already deteriorating economic situation due to the Covid-19 pandemic, things are expected to get worse before they get better.
The cost of general merchandise has sky-rocketed in Honiara following the aftermath of the burning and looting to businesses on the 24th and 25th November 2021.
The rise in price occurred despite warnings from authorities for businesses not to do so.
Shop owners have deliberately taken advantage of the small window of opportunity to boost their profits before any meaningful price control measures are employed.
Prices of basic staples such as rice and locally canned tuna have gone up, in some shops close to 50 percent.
A bale of 10kg rice which was used to be SBD$80.00 now costs SBD$120.00 and a 180g can of locally canned tuna which used to be SBD$10.00 now sells for SBD$15.00.
With the already deteriorating economic situation due to the Covid-19 pandemic, things are expected to get worse before it gets better.
Speaking during the motion of no confidence in parliament, the Prime Minister said that it takes years to build and grow an economy.
“Equally, it would take the country at least ten years to recover from the damages and destructions sustained by the business sector,” he said.
This indicates that Honiara residents and elsewhere in the country must brace for tough times ahead.
Georgina, a market vendor from East Honiara said she now sells her regular parcels of slippery cabbage at SBD$10.00 each.
“I used to sell at SBD$5.00 a parcel but because of the increase in the prices of goods in the shops, I have no choice but to raise my selling price accordingly,” she said.
“Reef fish is now selling at SBD$20 -SBD$25 a pound so I have no choice but to raise my price, how else can I feed my family,” she added.
Locally produced fruits, vegetables and root crops at the Honiara Main Market have seen a price hike as a result of the recent burning and looting incident.
The general rise in the price of goods and services means that families have to dig deep in order to give their children a decent and balanced meal.
The Covid pandemic has caused enough misery to families and the impacts of the recent burning and looting are sure to further exacerbate an already worsening situation.
“I won’t be surprised if families are reduced to eating noodles because affordability is once again tested to the limits,” Georgina said.
The burning and looting (in Honiara) happened after a peaceful protest to call on the Prime Minister Manasseh Sogavare to step down turned violent.
As a result, rioters and looters ransacked China Town and parts of Ranadi burning down properties and shops including a school and a bank.
Separately, the Minister of Finance and Treasury Harry D. Kuma (MP) says the adverse impacts of the recent riot and looting of business and destruction of properties represent the largest man-made economic shock that Solomon Islands has experienced since 2006.
The Minister revealed this last Tuesday when contributing to the Motion of Sine Die in Parliament, a statement issued by Government Communication Unit said.
“Based on the Ministry of Finance and Treasury preliminary assessment, the unlawful events fortnight ago that led to the mass looting of businesses and property destruction, would drastically impact the country’s economic performance in 2021.
Quote.
“Prior to the unrest, the government had expected a positive real economic growth of one percent (1.0%) in 2021, as a result of government policies and programs to boost economic recovery, growth, and continued service delivery throughout the year,” the minister said.
However, preliminary data have now shown that the economy would contract by 0.2% in 2021. The damage done was immense, and would take many years to rebuild and recover from.
The Minister further reported that the forecasted economic contraction for 2021 primarily reflects the significant reduction in sectors such as wholesale and trade, construction, manufacturers, financial intermediation, public administration and other business services.
The multiplier impact will also affect other major sectors like agriculture, transport, and firms that have also cut back on business activities and investments due to decreases in domestic demand for goods and services, supply interruptions, and uncertain future earnings outlook.
The most affected sectors would include the wholesale and trade sector, which is expected to decline by 2.3 percent, manufacturing to decline by 14.5 percent, and public administration to decline by 0.4 percent.
The construction and other business services are also forecast to decline by 1.4 percent and 2.7 percent in 2021, respectively.
In terms of contribution to GDP, construction and wholesales and trade are projected to subtract from growth by around 0.5 percent and -0.3 percent. This primarily reflects the impact of the unrest and riots. Whilst other business services and public administration are forecast to contribute zero percent growth to GDP.
On the upside, both the agriculture and fishing sector are forecast to contribute around 0.4 percent and 0.2 percent point to growth in 2021.
FISCAL IMPACTS
In terms of fiscal operations, the government is expected to lose out on revenues. For example, the government expects to lose about $24 million in revenues from one of the major taxpayers alone for the remaining two months of 2021.
Other revenue sources that will also be adversely affected, include company tax, GST, and PAYE, reflecting the expected loss of more than 1000 jobs.
This will add more fiscal pressures to an already tight fiscal position of the government given the recovery of the country due to covid-19 pandemic-related measures.
Overall, the government is expected to lose more than $84.03 million in total revenues in November and December 2021 alone, as a result of the recent riots and business destruction. This will result in a fall in the overall Government’s expected fiscal revenues from $3,008.63 million to $2,924.6 million in 2021.
IMPACTS EMPLOYMENT AND TRADE
In terms of employment, labor market performance is expected to decline in 2021, as a result of the recent anti-social behavior that led to recent riots and business destruction. According to CBSI Survey, a total of 1,000 employees is expected to lose their jobs in various sectors, wholesale and trade, and other services.
On the external side, the impact will be felt through higher imports to compensate for the damaged goods. This will result in widening the current account deficit. Pre-unrest Current Account Deficit is forecast to increase to 10.8 percent of GDP in 2021.
However, the impact of the recent riot and unrest is forecast to further widen the current account deficit to around 10-15 percent of GDP in 2021 and over the near term.
In terms of inflation, the recent riot is expected to increase the rate of inflation above 3.2 percent, as a result of an anticipated shortage of goods.
2022 OUTLOOK
Before the recent riots and destruction of businesses, Solomon Islands economy was forecast to grow by 2.5 percent in 2022.
However, this was now revised downward to 1.7 percent, and 2.8 percent in 2023.
The Ministry of Finance and Finance will thoroughly assess and revise the full economic impacts of the recent riots and destruction of properties and businesses.
This will form part of the government’s overall efforts to revise the 2022 budget in the months ahead.
End of quote
Source. Solomon Star NEWS.
Out of 230 countries new research has found that Solomon Islands has the World’s most expensive power supply.
In a study that explored the relationship between electricity prices and economic growth, the empirical findings reveal that high electricity prices do in fact stifle economic growth.
The research, which analyzed 3,883 tariffs across 230 countries, found that Libya offers the cheapest electricity in the world at just USD 0.007 per kWh while the most expensive electricity in the world can be found in the Solomon Islands, where one KWh is a staggering USD 0.692.
That means Solomon Islanders are paying ninety-eight times more than what Libyans are paying for electricity.
Within the region New Caledonia is the cheapest (USD 0.091), closely followed by Fiji (USD 0.144), New Zealand (USD 0.153), and Australia (USD 0.172). The Solomon Islands (USD 0.692) is the most expensive, both in Oceania and in the world.
On average, the cost of electricity in the Solomon Islands is seven times more than what others are paying in the region.
In a study that explored the relationship between electricity prices and economic growth, the empirical findings reveal that high electricity prices do in fact stifle economic growth.
South African academic Dr. Hlalefang Khobai, in an article published by the Journal of Energy Economics and Policy, say studies indicate that a 1% increase in electricity prices is associated with an approximately 0.05% decrease in economic growth.
He says this assumption was confirmed by a study on the impact of electricity prices on economic growth in South Africa, which showed that a 1% increase in electricity prices caused the economic growth to drop by 0.036%.
The Solomon Islands Chamber of Commerce and Industry (SICCI) and the Economic Association of Solomon Islands (EASI) have been calling for a reduction in the price of electricity, saying current prices are disruptive to business operations and constrains resource allocation, resulting in an increase in the cost of production.
Finally, in this ‘Black Friday’ summary of news, comes a report that (alleged) excessive restrictions on civic freedoms imposed by the government under the guise of preventing COVID-19 led to the downgrade of the Solomon Islands," CIVICUS Asia-Pacific Civic Space research Josef Benedict has claimed
Restrictions to media freedoms, access to information, and the right to protest have hurt Solomon Islanders' civil rights, according to a new report.
Residents in the Solomon Islands have had their civic freedoms downgraded from "open" to "narrowed", according to a new report.
The People Power Under Attack 2021 report was released on Wednesday by online research platform CIVICUS Monitor, after examining the civic rights and freedoms of people in 196 countries around the world.
The CIVICUS Monitor combines several different sources of data looking at things like the freedoms of association, peaceful assembly, and ‘expression’.
Countries are then given a ranking ranging from closed, repressed, obstructed, narrowed, or open.
The report said restrictions to media freedoms, access to information, and the right to protest were all indicators that led to the Solomon Islands' downgrade.
“Excessive restrictions on civic freedoms imposed by the government under the guise of preventing COVID-19 led to the downgrade of the Solomon Islands," CIVICUS Asia-Pacific Civic Space researcher Josef Benedict said.
"Constant threats to ban Facebook and attempts to vilify civil society have also resulted in the failure of the Solomon Islands to retain a top spot in our global rights rankings."
The report also revealed nine out of 10 people in the world are living with their civil rights restricted.
The most concerning violation CIVICUS has reported is the detainment of protesters around the world, followed by intimidation, restrictive laws, and attacks on journalists.
Source: CIVICUS Monitor and sbs.com.au
Yours sincerely
Frank Short
