Solomon
pp. 38-39 · Read in the full issue
Islands
THE Solomons is another country fortun ate enough to straddle the mineral rich “Rim of Fire”, and eventually, its future will be far wealthier than could have been expected. The country already has $S2m worth of gold exploration in the pipeline and more should follow as mining com panies perfect their techniques to recover epithermal deposits.
According to the Australian National University Pacific Economic Bulletin , the
country could well be “the greatest ben eficiary in the region from the current in flux of foreign investment associated with minerals exploration and development” on a per capita basis.
It is believed the exploration fees paid to the Government of the new Prime Min ister, Mr Ezekiel Alebua, this year and next year, for permission to search for gold could equal the amount the country is cur rently paid in aid.
The Solomons, also a “Melanesian Growth Model”, had been in the enviable position of having almost enough export generated revenue to pay for their imports, although demand for imports was modest until two devastating cyclones struck.
“Until then, the Solomons had a favour able balance of trade, based on their palm oil industry,” Mr McCabe said. “The cy clone wiped out their rice harvest and much of the county’s infrastructure has not yet been rebuilt.”
The Solomons is still trying to recover and development planning has had to be diverted to reconstruction. The develop ment budget this year is the biggest ever at $Sl76m plus an additional SS7m allo cated for cyclone rehabilitation.
The Government maintains a flexible exchange rate policy to allow for the flow on of international price and interest rate changes. The Solomon Islands dollar has been depreciating against its Australian and US counterparts.
One cloud on the economic horizon is the growth in the deficit and the conse quent growth in international borrowing, due both to the cyclones and the sluggish performance of commodity prices.
The Solomons is the least densely pop ulated of the Pacific island states with
Bougainville Copper’s Panguna Mine in PNG.
250.000 people sharing a land area of 28.000 square km. The GNP is a respect able $S22Bm and while that is already SS9OO per capita, it is certain to increase in coming years. The Solomons also has the most diverse agricultural base with ex port returns from copra, fish and timber as well as palm oil. It is the largest pro ducer of fish in the region and will benefit strongly from the fishing treaty with the United States.