According to a news story in today’s edition of the Solomon Star newspaper, the Governor of the Central Bank of Solomon Islands (CBSI) Dr. Luke Forau says this year is the recovery phase of our economy and the country needs to get the economic fundamental rights.
He made this sentiment in a serious tone to the Public Accounts Committee (PAC) Inquiry on the 2021 Appropriation Bill 2021.
Interestingly, Dr. Forau said he had not seen the Government’s recent policy redirection but hoped that it captures some of the things he mentioned he would comment on.
He said that the 1.5 percent growth projected for this year 2021 will not be sufficient enough to take the country back to the pre-2021 level.
“The economy needs to grow by at least 5 percent to 6 percent before we reach the pre-2020 level.
“By our (CBSI) estimation this may occur in around 2024-2025,” Dr. Forau told PAC.
He further stated that seeing that international travel and border restrictions remain uncertain to reopen soon, the Government should focus on spacing out its policy priorities into short to medium term and long-term priorities.
“In the short term which is the recovery phase the focus should be on boosting the domestic demand.
“In doing so, policy attention should focus on ensuring that the existing companies are supported to get back to their pre-2021 level,” he said.
He went on to express that simultaneously, policies relevant for medium to long-term development should also be looked at to ensure continuity.
Meanwhile, in terms of outlook and risks, the CBSI has projected the economy to recover to 1.5 percent in 2021 in line with global growth and on the back of an anticipated recovery in the fisheries and construction sectors and key national projects in the pipeline.
The Governor told the PAC that over the medium-term (2022-2025) growth is anticipated to pick up to an average of 3.5 percent with high growth concentrated in 2022-2023 of between 5 percent and 6 percent from booming construction activities.
However, Dr. Forau said post-Pacific Games 2023 in 2024 would be more challenging as growth drop considerably to around 1 percent when infrastructures and facilities are completed.
He added that a gradual decline in forestry is also anticipated over the medium term.
“However, risks to this forecast are tilted to the downside especially with the on-going pandemic-related disruption,” he added.
Meanwhile, PAC member and Leader of the Opposition Mathew Wale expressed shock as to why the Government left the Governor in the dark on the very important matters when it came to the country’s economy and budget.
In a separate news report in the Solomon Star newspaper, today, Tuesday, it is claimed Dr. Luke Forau told the PAC yesterday this year’s budget is expected to hit a deficit of around $300million.
Dr. Forau was cited as adding that with the current revenue flow there are at least two immediate risks to the fiscal outlook.
“First is the government’s cash reserves are limited to finance the fiscal deficit.
“And secondly following from the first the financing options would be crucial for the government,” he added.
On a serious note, Dr. Forau said that on the budget his crude estimation of what he called “dead money” is around more than $300 million.
“These are monies already due to the Government but have never been collected.
“These include taxes such as exercise tax, company tax, etc, and other fees,” he added.
Dr. Forau said if the government collected all such monies this year then the deficit would be securely financed.
Source. Solomon Star News.
Yours sincerely
Frank Short
