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Government’s anticipated budget up 26 percent

By Joy A. Rikimae

HONIARA, Solomon Islands (Solomon Star, March 27, 2008) – The Solomon Islands’ domestic revenue this year is forecast to increase by 15 percent from what was achieved in 2007, says Minister of Finance Snyder Rini.

This year’s budget is estimated to reach SB$1.4 billion [US$200.9 million] – a 26 percent increase over last year’s spending plan.

Mr Rini said following adoption of the new revenue measures, revenue will increase to $1.4 billion. This includes anticipated budget support from development partners.

He said total Recurrent Expenditure in 2008 is expected to rise by 19 per cent.

Mr Rini said Government’s preliminary estimate for the national economy in 2008 is for real economic growth of 6 percent.

He, however, said Government expected inflation will remain steady at about 8 per cent.

"This bright economic outlook stands us in good stead to implement the reforms necessary to ensure the prosperity of our national economy in the long term," he said.

But he warned that while the outlook for the national economy in 2008 is broadly positive, there are a number of risks and potential shocks to our economy.

He said our small islands economy is highly vulnerable to external factors, influences and pressures.

He said compounded with domestic problems these could present major challenges for a developing nation like Solomon Islands.

One of those is further increase in oil prices.

There are also two interlocked challenges that Solomon Islands have to face.

Currently, logging makes up around 18 per cent of Government revenue. In 3 to 5 years time revenue from this sector will be insignificant.

"We will, therefore be confronted with a slowing economy. Because of this Government will have to cut real expenditure to maintain a balanced and sustainable budget," Mr Rini said.

The Finance Minister said Government will not shy away from this challenge and is approaching it responsibly and with careful analysis.

But Opposition Leader, Manasseh Sogavare said while they are yet to analyse this year’s budget, it is expected to reach such an increase.

Mr Sogavare said he sees no difference in the increase of this year’s budget compared to last year and the previous year because the increase is caused by the fall of our dollar.

He explained that the main reason for this huge increase is because of the fall of the rate of our dollar compared to other foreign currencies.

Mr Sogavare said the increase would not make any difference if we compared it to other foreign currencies.

"It is the fall of our dollar that increases the volume of the budget for this year," he said.

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