Solomon Islands: Strengthening the Implementation of the National Development Strategy

Public sector management / Public expenditure and fiscal management

The TA supports the further implementation of the National Development Strategy (NDS) 2010-2020 which is the first long term development strategy adopted by Solomon Islands. The NDS was the product of nationwide consultations and has enjoyed the support of successive government since its adoption in 2010.

The expected impact of the proposed TA is effective policy and strategy implementation.

The expected outcome is improved public expenditure management, planning, and reporting.

The main TA activities are grouped into four outputs as follows:

(i) Implementation of development planning improved.

(ii) Integration of the recurrent and development budgets is improved.

(iii) Multi-year budget projections are strengthened.

(iv) Development partner assistance is better reported and aligned with the NDS.

A key aspect of effective development management is the formulation and implementation of a national development strategy. For Solomon Islands, this is particularly important, because development challenges are daunting, and priorities must be set. ADB previously provided TA for the development of the national development strategy, 2010-2020. ADB followed up this with further TA for NDS implementation which included support for monitoring and evaluation (including an M&E framework), capacity building for planning and line ministry staff, a medium term development plan (MTDP, a rolling 5 year implementation plan for the NDS) and the development of a medium term expenditure framework. On 1st January 2014 the new Public Financial Management Act became effective as a major step in the reform process and to which previous ADB TA had provided inputs.

Despite progress in improving development planning and budget processes, this work remains at an early stage and further assistance is required to maintain the reform momentum. The PFM Act requires further regulation to support the MTDP and its implementation. Coordination between the recurrent and development budgets remains poor as has been noted by the Forum Compact Peer Review Report. Budget processes for the recurrent and development budgets remain largely separate and the recurrent costs of development projects are rarely included in the recurrent budget which affects their sustainability. Multi-year budget estimates are at an early stage and there is limited capacity to produce the medium term expenditure framework and link it to the budget documents. Alignment and reporting of donor assistance within the NDS remains poor. There is a need for more regular, standardized reporting of donor activities and for their compilation into a database so the government has the information it requires to effectively manage its own development agenda.

1. Regulations giving effect to planning provisions of the new PFM Act developed and implemented

2. Integration of recurrent and development budgets improved

3. Multi-year budget projections strengthened

4. Coordination between aid management, M&E, and development planning in MDPAC improved

ADB approved a minor change on 23 March 2017 to amend Output 1, reflecting the government's request to have the central focus on improving implementation of development planning, rather than developing and implementing new planning regulations. This is aligned to the Public Financial Management Act of 2013 that became effective as of January 2014, and represents a series of major reforms in Solomon Islands' public financial management, including reforms designed to integrate the recurrent and development budgets, strengthen multi-year budget projections and strengthen the alignment and reporting of donor partners' development assistance. While the NDS and MTDP reflect multi-year planning, approval of the SIG development and recurrent budgets are done on an annual basis. Development and recurrent programs are multi-year and uncertainty and irregularity in availability of annual funds can seriously impact programs, potentially reducing benefits and synergies across programmes. The MTDP, therefore, seeks to be a link between multi-year development plans and the annual budget process, helping to strengthen multi-year budget projections in anticipation of the introduction of the medium-term budget framework foreseen in the PFM Act.

The TA is being extended to 31 December 2018 to support ongoing training to strengthen the macroeconomic and fiscal forecasting skills of staff in the Ministry of Finance.