An International Monetary Fund (IMF) team, led by Masafumi Yabara, conducted discussions in Solomon Islands from November 11 to 22 for the 2024 Article IV Consultation. Following the visit, Mr. Yabara issued a statement addressing several key areas of concern and progress within the nation.
Yabara acknowledged recent successes, saying, "Staff commends the landmark successes of the Pacific Games and the peaceful general elections, which have raised the country's profile and strengthened national unity." He emphasized that these achievements should be leveraged for sustainable growth.
The IMF projects modest economic growth rates of 2.5 percent in 2024 and 2.8 percent in 2025, with inflation expected to rise slightly by end-2025. The fiscal deficit is anticipated to remain over three percent of GDP for both years due to spending pressures and infrastructure investments. Concerns were raised about depleted cash reserves posing liquidity risks.
Medium-term growth is constrained by factors such as declining logging activity and an undiversified economic base. The report highlighted vulnerabilities including climate events and commodity price volatility.
Strengthening fiscal policy resilience was identified as urgent. "Strengthening the resilience and effectiveness of fiscal policy is an urgent priority," Yabara stated, recommending improved public spending quality and tighter fiscal discipline.
Reforms in taxation are also suggested with emphasis on passing a Value Added Tax Bill by early 2026. Enhancements in transparency through new legislation like the Constituency Development Funds Act were noted positively.
The Central Bank's decision to ease monetary policy was supported but advised against further bond purchases under current conditions. Financial inclusion remains a focus area alongside anti-money laundering efforts.
Long-term growth could benefit from reforms in transport connectivity and governance improvements in minerals and forestry sectors. Strengthening anti-corruption measures is deemed critical.
The IMF expressed appreciation for open discussions with local authorities during their mission.