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HONIARA, Solomon Islands (Solomon Star, March 15) - The Solomon Islands Department of Finance and Treasury and the Central Bank of Solomon Islands have made a commitment to launch reform measures to improve access to finance in Solomon Islands.

"These reforms will make it easier for a business to use its existing assets to secure a loan to finance investment projects," the Central Bank of Solomon Islands Governor, Rick Hou said.

He added, "This will help grow our private business sector, providing jobs and services for Solomon Islanders."

The Department of Finance and Treasury, and the Central Bank of Solomon Islands have agreed to work with the Asian Development Bank to improve the legal and technical framework that enables borrowers to pledge collateral as security for loans.

"By using collateral, businesses will find it easier to access low-cost, long term loans from lenders to finance investment," Hou said.

"These reforms will allow businesses to use movable property - machines, cars, boats, equipment, inventory, or other valuable items - as collateral or security for loans. Typically, the more and better the collateral offered by the borrower, the lower the interest rate, the longer the time to repay, and the larger the loan relative to income," the Central Bank of Solomon Islands Governor said.

The announcement of this reform follows a conference on "Revitalizing Rural Finance" that was organized by the Central Bank of Solomon Islands in April last year.

Setting up a collateral framework is part of a series of reforms that will help to remove barriers to the expansion of financial services.

Reform of taxation and foreign investment as well as improvements to state owned enterprises and transportation services will also reduce barriers to increased financial services in Solomon Islands.

March 15, 2006

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