economic stability

Solomons progresses in restoring macro economic stability

THE Solomon Island gov ernment, which took office in August 1997, has made progress in restor ing macro-economic stability, says the Asian Development Bank.

It says that this has been done by servic ing domestic debt and paying arrears, which the government plans to clear by the end of this year.

“Debt and non debt arrears were reduced by a total of $lB million, primarily through external concessional borrowing from the Asian Development Bank and securitisation of arrears to the National Provident Fund.

As a result, the overall level of public debt decreased slightly from $l9B million at the end of 1997 to $195 million at the end of 1998,” the Bank says.

Of that figure, domestic debt was $B3 million, external debt $lO5 million, and trade creditor and other arrears $7 million.

ADB says GDP fell an estimated 10 per Continued overleaf

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cent last year “as the collapse of log export markets in Asia compounded the adjustments forced by years of economic

mismanagement”.

The inflation rate accelerated from 8.1 per cent in 1997 to 12.3 per cent in 1998 as a result of the 20 per cent devaluation in December 1997 and increases in indi rect taxes.

It said the value of log exports, in the first three quarters last year, was about 60 per cent below the 1997 level. But, pro duction was still a third higher than the estimated sustainable level of harvesting.

It says, the most important concern was that the policy framework and man agement regime, essential for ensuring sustainable development of natural forest resources, was yet to be put in place.

Last year, fish became a major export earner, and palm oil and palm kernel exports grew because of price and produc tion increases. The Bank says that the Solomons government needs to accelerate the progress on privatisation. ■