THE 2018 budget is aimed at restoring fiscal stability and micro fiscal discipline to ensure the execution of the budget is efficient and effective.
Minister of Finance and Treasury and Deputy Prime Minister Hon Manasseh Sogavare will soon table the 2018 Appropriation Bill 2018 in Parliament in the coming weeks.
He says the number one policy priority for the 2018 National Budget is fiscal stability and re-establishing fiscal buffers to ensure that the execution of the budget is efficient and effective.
The second priority for the 2018 National Budget is to ensure that it provides an effective vehicle for Government to implement its most pressing policy priorities for this year.
The Finance Minister’s announcement followed extensive deliberations by Cabinet Members to agree cohesively on how the budget should be allocated for 2018.
The 2018 Budget has required significant reprioritisation and targeting of scarce resources to ensure that Government accommodates new initiatives such as updating the Biometric Voter Registration Roll for the 2019 National Elections, successfully delivering the Provincial Elections this year, adequately resourcing the London Mission and ensuring the successful delivery of the 40th Year Independence Day Celebrations and the Melanesian Arts festival.
Tough and challenging decisions were made on which initiatives of the Government to stop or delay for more pressing initiatives to be fully funded this year.
“Without available cash reserves or legitimate sources of additional financing, the Government cannot afford a deficit budget for 2018. The Government has addressed outstanding 2017 arrears of around 6% of the total budget by transparently budgeting for them within the 2018 resource envelope, which is outlined in the fiscal table of the 2018 Budget Books,” said Mr Sogavare.
Within the total resource envelope for 2018, $26 million has been ring-fenced for unforeseen spending under the Contingency Warrant provision.
The $26 million will also act as a contingency reserve to assist the Government with additional cash buffers against any potential revenue shortfalls.
Sogavare said although the total revenue collection estimate for 2018 is $3.543 billion, the total expenditure ceiling for 2018 is $164 million below the available resources that Government can secure for this year. Due to overoptimistic fiscal estimates for 2017, there were payment requests towards the end of 2017 that were in excess of available revenue collections by $200 million.
“Corrective measures are being employed for the 2018 Budget to ensure that this does not happen again. That is why the 2018 Budget is built on 2017 actual revenue collections to derive more realistic and accurate estimates. A hard top-down expenditure ceiling of $3.379 billion was also enforced to avoid excessive spending requests or any upward revisions to total expenditure,” says Sogavare.
Sogavare said, “Ensuring macro fiscal discipline for 2018 will be a challenge, given potential pressures across Ministries to increase their budgets due to the general reductions across Ministry Development Budgets, which have almost halved from 2017, however the government has taken full responsibility to address and control the deteriorating cash flow situation to restore sustainability and fiscal stability in the economy through tough sacrifices and tighter fiscal policy.”
“The Development Budget itself has been framed more realistically on the basis that its implementation will occur over only eight months this year and not the full 12 months, which is partly why the allocation has been reduced from 2017 levels.
“Additionally, the allocation to the Development Budget has required that Government forfeit certain ongoing, nonperforming projects in order for Ministries concerned to address impediments to implementation this year and to potentially redesign and rethink certain initiatives that have not been properly designed, scoped and costed from previous years.”
Sogavare reiterated that our number one policy priority is fiscal stability to ensure that the budget can be executed successfully this year with no delays in payments to contractors and backlogs of payments that cannot be met.
The Government, through Cabinet approved certain fiscal measures to regain control of our government finances in November 2017 and is committed to building back the reserves that have been depleted over recent years.
The Government is committed to allocating the budget in the most strategic manner and ensuring it is implemented efficiently and effectively.
The 2018 Budget will be focused on essential services that deliver real impacts to the people of Solomon Islands and delivering on SIDCCG priorities.
–GOVERNMENT COMMUNICATION UNIT