The International Monetary Fund (IMF) Executive Board concluded its 2024 Article IV consultation with the Solomon Islands on February 19, 2025. The consultation assessed the country's economic situation following significant challenges such as civil unrest and the pandemic. Despite these issues, the Solomon Islands successfully hosted the Pacific Games and conducted peaceful general elections, which have contributed to national unity but at a cost of increased public debt and reduced cash reserves.
The IMF projects modest economic growth for the Solomon Islands at 2.8 percent in 2025, slightly higher than the estimated 2.4 percent in 2024. Inflation is expected to rise from an estimated 3.4 percent at the end of 2024 to 3.9 percent by the end of 2025. The fiscal deficit is anticipated to widen marginally from 3.1 percent of GDP in 2024 to 3.3 percent in 2025 due to ongoing spending pressures and infrastructure projects funded externally.
Risks identified include budget execution challenges, climate events, political instability, and commodity price volatility. The economy's reliance on logging and a lack of diversification further constrain growth potential.
The IMF Executive Directors emphasized rebuilding cash buffers and ensuring fiscal sustainability while promoting economic diversification and governance reforms. They highlighted weaknesses in fiscal data and public financial management that need addressing, including ending unfunded spending practices.
Directors suggested tightening the 2025 Budget to recover cash balances gradually and recommended advancing domestic revenue mobilization efforts like introducing a value-added tax. Improving transparency and accountability in public expenditure was also stressed.
Regarding monetary policy, Directors found the current stance appropriate but emphasized preserving central bank autonomy by limiting government bond purchases and implementing Safeguards Assessment recommendations.
Structural reforms are encouraged to support economic diversification with assistance from development partners like the IMF. Addressing governance weaknesses remains a priority for improving anti-corruption institutions' capacity and independence.