Regions and Countries

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p. 44 of 47 BACK | NEXT Developing Asia and the Pacific The global economy Newly industrialized economies Central Asian republics, Azerbaijan and Mongolia People’s Republic of China Southeast Asia South Asia The Pacific Cook Islands Fiji Islands Kiribati Marshall Islands Federated States of Micronesia Nauru Papua New Guinea Samoa Solomon Islands Tonga Tuvalu Vanuatu

Solomon Islands

Economic performance

In 2000, the economy contracted by about 14 percent because of ethnic unrest and social tension. A peace agreement was signed on 15 October 2000, paving the way for reconstruction and rehabilitation. Because of lower domestic demand and import prices, the end-of-period inflation rate in 2000 was 6.6 percent. Exports declined by about 29 percent and imports by 15 percent in US dollar terms because of disrupted export production and low demand for imported goods. Gross international reserves were estimated to be $33.4 million at the end of 2000, sufficient to cover about two months of imports.

Domestic policies: Total government earnings and tax revenues are estimated to have fallen short of the 2000 budget estimates by over 30 percent. The overall budget balance in 2000 was a deficit, equivalent to 4.5 percent of GDP. The stock of central government debt at the end of 2000 reached about 75 percent of GDP, with about 60 percent in external debt. The Government has generally managed to meet its debt service obligations, but arrears in other expenditure areas are rising. Total domestic credit increased by 12 percent in the first nine months to September 2000. Broad money grew 9.5 percent in 2000.

ADB operations

Operational strategy: The social conflict in Solomon Islands disrupted the delivery and impact of development assistance during most of 2000; and from the second quarter of the year, ADB operations were on hold. The sharp economic downturn and the widespread devastation of economic and social infrastructure required reformulating ADB’s operational strategy to respond to immediate needs. Following the signing of a peace agreement in October, ADB operations were partly resumed to facilitate emergency rehabilitation of basic infrastructure.

Policy dialogue: Policy dialogue with the Government focused on measures to stop revenue leakages and sustain basic services amid the public service contraction. Dialogue also focused on various options for promoting devolution and local control over resources.

Loans and technical assistance: In 2000, ADB approved one loan of $10 million for post-conflict emergency rehabilitation. ADB also approved two technical assistance grants totaling $800,000.

Project implementation: Since joining ADB in 1973, Solomon Islands has received 16 loans, of which 2 were active at the end of 2000. No contract awards were made during the year. Cumulative contract awards totaled $53.8 million. Disbursements during the year totaled $450,000, bringing cumulative disbursements to $54.1 million.

One loan—Privatization of State-Owned Enterprises—was ongoing in 2000 and was classified as satisfactory in achieving its development objectives. The Post-Conflict Emergency Rehabilitation was awaiting effectivity.

   

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