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HONIARA, Solomon Islands (September 4, 2002 - SIBC/PINA Nius Online)---The Solomon Islands government continues to experience a budget "blow out" as its actual expenditure continues to exceed its revenue.

Addressing a luncheon hosted by the Solomon Islands Chamber of Commerce and the Economic Association of Solomon Islands in Honiara, Permanent Secretary for Finance Lloyd Powell said: "The only answer to this is for the government to reduce its payroll and stop compensation payments."

Mr. Powell revealed that up to the end of July government spent more than Sol$ 100 million (US$ 14,200,000) on payroll compared to a budgeted amount of Sol$ 71 million (US$ 10,082,000).

The Government also recorded a shortfall in revenue collecting only Sol$ 135 million (US$ 19,170,000) compared to a budgeted amount of Sol$ 145 million (US$ 20,590,000).

"The challenge for the government now is to get the payroll down and control payments on compensation claims," said Mr. Powell.

Mr. Powell revealed that "the government has now received the tick aid donors were waiting for following the recent visit by a team from the International Monetary Fund. But this does not mean that aid funds will come flowing in.

"The aid donors will now have to watch how the government implements plans to reduce the pay roll and control compensation payments and, of course, control its budget for this year and implement what has been agreed on with the IMF for next year's budget."

Mr. Powell said government is now working on reducing the number of ministries from the current 20 to 10 and reducing its workforce by 1,300 employees.

"I will be disappointed if it doesn't happen within the next two weeks," he said.

But he said the government needs Sol$ 52 million (US$ 7,384,000) to pay for the redundancies.

"The government does not have this money and no aid donor will come forward with such money," he said. "So what it will do is repatriate the workers and pay them over some time."

Asked whether he sees a light at the end of the tunnel as far as the state of government finances is concerned, Mr. Powell said: "It's not a matter of not knowing what to do, but having the political will to do it."

Mr. Powell revealed that he and other government workers continued to be harassed by people frustrated over payments.

"In actual fact I had to get a security officer to escort me to get out of the office to come to this meeting," he said.

The government has continued to fail to pay public servants and teachers on time.

Teachers, who are in their sixth week of boycotting classes, have at least three pay days outstanding. The education of 30,000 school children is being affected.

Health and medical services are also affected with the absence of very basic drugs at hospitals and clinics. Medical staff are stepping up a campaign of cutting back on services.

Prices of goods in shops and fuel seem to be increasing every second week.

Meantime, Finance Minister Laurie Chan is currently in Taipei in a last ditch effort to bring borrowed money for lost property payments from Taiwan's Exim Bank.

The payments are compensation for property said to have been lost during the more two years of ethnic conflict, which sparked the current financial crisis.

The government has been under pressure in recent days to get the money into the country as hundreds of lost property claimants began arriving in Honiara.

To date, there are no signs that the money has arrived.

Members of the Cabinet and Parliament are understood to have finalized their lists for the lost property payouts. But SIBC understands many claims have been reduced to cater for every claim.

The coming payment is the last tranche under the more than Sol$ 100 million (US$ 14,200,000) loan from Taiwan struck by former Prime Minister Manasseh Sogavare in 2000.

For additional reports from the Solomon Islands Broadcasting Corporation, go to PACIFIC ISLANDS REPORT News/Information Links: Radio/TV News/Solomon Islands Broadcasting Corporation.

Pacific Islands News Association (PINA) Website: 

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