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Annual Report 2002 : Pacific

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Solomon Islands

Economic performance

In 2002, GDP in Solomon Islands declined by 4%, continuing a trend begun in 2000. Annual average inflation was about 9% in 2002, around the same level as in 2000 and 2001.

The Government continued to face fiscal difficulties, recording a budget deficit of about 12.2% of GDP. Official arrears amounted to about 19% of GDP. The national debt was 110% of GDP at the end of 2002. The current account recorded a surplus of about 3% of GDP; the overall balance of payments was positive due to a high capital account surplus. The country’s foreign exchange reserves amounted to about
1.5 months of imports of goods and services.

ADB operations

Operational strategy: Because of the Government’s overdue and outstanding arrears, ADB suspended its operational program in February 2002.

Policy dialogue: As part of a multidonor effort, ADB continued to follow developments in Solomon Islands in 2002 through close contact with the Government and civil society. ADB emphasized the need to prioritize law and order; good governance; sound fiscal management, including a debt management strategy; and public sector, economic, and financial reforms. However, the continued suspension of country operations has limited the efficacy of policy dialogue.

Loans and technical assistance: In 2002, no loans or technical assistance were approved.

Project implementation: Since joining ADB in 1973, Solomon Islands has received 16 loans totaling $79.3 million, of which 2 were active at the end of 2002. Cumulative contract awards totaled $54.8 million and cumulative disbursements totaled $54.1 million (see tables 14–23 in the Statistical Annex).

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