THE Central Bank of Solomon Islands (CBSI) wish to provide the following updates regarding the Corona Virus/COVID 19 impact on the national economy:

• The Coronavirus will likely have a considerable negative impact on the Solomon Islands economy. The spread and considerable disruption of this epidemic will be exacerbated by the increasingly intertwined trade and investment relationships between China and its neighbours in the Asia Pacific region. Being a small open economy, the Solomon Islands will likely be adversely affected through the trade channel and thereafter the economy, and even fiscal operations.
• With respect to the country’s exports; Logs, one of the country’s key exports commodities would be affected. As China is the key destination for our log exports, the epidemic might see a 11% fall in log output to 2.2 million cubic metres. Foreign exchange from logs might decline by 9% to $2.3 billion. There will also be delays in log shipments to China as well as the remittance of the proceeds.
• The negative impact on logs could thereafter affect fiscal operations.  Log duties could fall by 6% to $467 million, leading to a further 1% fall in total domestic revenue to $3.5 billion. On the expenditure side, health spending might soar if the virus spreads in the country. The fiscal balance might deteriorate to negative 1% of GDP or a reallocation and rationing of funds might be required.
• Imports of vital goods could also be affected. This is due to the fact that the country’s key trading partners that account for 40% of total imports are at the centre of the outbreak; China, Hong Kong, Korea, Singapore and Japan. This would disrupt the supply chain of materials for consumption, manufacturing and investment in the country.
• Due to the impact of the virus on the primary, secondary and tertiary sectors, the real GDP outlook for 2020 has been projected to decline by 60 basis points to 2.0%. This decline is likely to emanate from a slowdown in activities associated with forestry, tourism, and transport-related sectors.  
• Depending on the severity and duration of this pandemic, the Solomon Islands economy might contract further to around 1% or even fall into a recession. When this happens, there could be large-scale closure of schools and businesses. The ability of the Government to provide public goods and services could also be affected. More specifically, the health system would be stretched to its limits and government finances to support the containment measures would be under a lot of strain.
• Support from development partners would be crucial to assist the Solomon Islands respond to the pandemic. This would be for both the emergency health response and also grant and short-term concessional debt financing to support the government and the economy.  
• Domestically, the government, statutory agencies and private businesses must be prepared to mitigate the risk and the magnitude of these impacts. Nonetheless, post-Coronavirus containment, economic activity should pick up as in previous pandemics, as the global, Chinese and Solomon Islands economies recover.

–Central Bank of Solomon Islands

BY ALFRED PAGEPITU

SOLOMON ISLANDS is facing a revenue shortfall of $259 million as the fallout from the coronavirus leads to a dramatic deterioration in the state’s economic outlook.
This was revealed by the Minister of Finance and Treasury (MoFT) Harry Kuma on Monday in his parliament address to answer questions by the Opposition Leader Matthew Wale on how the economy is being affected by the coronavirus threat.
Mr Kuma said this revenue shortfall means expenditure will need to be rationed or reprioritised.
Kuma said Health related expenditure was expected to increase by five percent from $2467.7 million to $259.05 million and push total government expenditure by two percent against the baseline of $3.9 billion.
“Overall, the likely impact of this global pandemic will put pressure on government finances and government’s fiscal and might deteriorate.
“Our first priority is to keep up with the difficult task of keeping our people’s health as safe as we possibly can.
“This challenge, the Government is also determined and prepared to lessen the financial and economic fallout of COVID-19 on our domestic economy,” said Kuma.
Kuma said that in this connection, the government has considered a balanced fiscal and economic policy to ensure adequate resources are available to keep our people safe, and to provide fiscal stimuli to our domestic economy in this difficult time.

By EDDIE OSIFELO

PRIME Minister Manasseh Sogavare is urging public not to worry or be afraid of the pandemic coronavirus (COVID-19) that is still to record a case in Solomon Islands.

This came after some people have posted untrue stories of the coronavirus on social media which is causing unnecessary fear on people.

When moving the motion to thank the Governor General Sir David Vunagi on his speech from the throne on Tuesday 17th March, PM Sogavare said he has instructed the Attorney General to liaise with Police Commissioner and Director of Public Prosecution to take actions against people posting untrue statements in media.

Sogavare said this people who crossed the line have to be held accountable for causing unnecessary fear.

He said even some people questioned him why not coming out in public to lead the awareness on the COVID-19.

“Iam not a media buddy to jump to anything that come across my path without thinking and make a statement just to be hear and to be running the risks to make mistakes.

“I don’t know anything about it,” he said.

Sogavare said the last thing they want to entertain in this country is mis-information and politically motivated statement that is sensitive.

He said “our people want comfort and not fear.”

Further to that, Sogavare said he is confident to run a consistent cabinet government that functions and collective decision making processes.

As such, he want to thanked the depth of wisdom which cabinet handled this matter through the guidance of Minister of Health and Medical Services and his permanent secretary and the special oversight committee that continue to provide the advice to government.

Contrary to what people said, Sogavare said the government has been working tirelessly to COVID-19 by taking a systematic whole of government approach to issue that also involved activation of internal mechanisms and safeguards combined with the assistances of donors and bilateral partners.

Despite lack of capacity to date to address a potential nationwide outbreak with decent mind, Sogavare said the government has taken precautionary measures to prevent the virus from arriving on our shores and remain one step ahead with cabinet imposed restrictions to tune up with initial outbreak in China a month ago.

Sogavare said Solomon Islands is the first to take the action to prevent people arriving on land and seas after Cabinet made the decision.

He said government is collaborating with China to counter this virus.

The debate continues on Wednesday 18th March at 9.30am.

THE noni revolution continues to benefit a rapidly growing number of rural communities.

Member of Parliament for Northwest Guadalcanal, Bodo Dettke paid a courtesy visit to the Governor General, Sir David Vunagi at the Government House on Tuesday 17th March for a brief touch base on the noni industry and how it is progressing.

Mr Dettke’s visit comes as a follow-up on his Excellency’s speech from the Throne at the opening of the 3rd Meeting of the 11th Parliament on Monday.

In his speech, Sir David highlighted the need for an aggressive approach to stimulate and harness interest in our rural areas in new local root crops, like kava, ginger and noni, which he said, can become major commercial commodities for the country.

Dettke briefed the Governor General on how far the young noni industry has come and the many challenges it faces with the government.  While it is clear that the potentials are for the industry to grow and benefit our rural people, it can do even better if the government seriously back it up with appropriate incentives.

He also presented the Governor General with some of the products made out of noni which were produced locally in his factory in Honiara and Australia.

During the hour-long meeting, Dettke explained the process involved in this industry, starting from harvesting in the farms, transportation to the factory, separation of white fruits from green fruits, washing and the processing and packaging in the factory.

Dettke also explained the positive spinoffs this pioneer industry has brought to his people of Northwest Guadalcanal compared to copra and cocoa, which requires hard work and small returns from their sweat.

He said a lot of families and individuals from other constituencies have also benefited from this initiative because they sell their noni products every Tuesdays and earned thousand dollars.

Unlike in the past, women nowadays have to wait for days to earn money from their produces sold at the Honiara Central market, or to compete for space with other vendors to sell their products.

He goes on to say, today even students and school drop outs are now heavily involved in harvesting of noni and earning their own money after the sales.

Dettke strongly believes that the noni industry can address the high unemployment rate in the country, and the urban drift to Honiara if it is supported by the government to eventually branch out to the provinces.

This will allow people who plant noni in the provinces to sell their products to proposed factories in the provincial centres rather than coming to Honiara.

Despite the hype around noni, the Northwest Guadalcanal MP however points out that the industry is currently faced with so many challenges.

In sharing the Governor General’s sentiments on the serious need to take an aggressive approach to bringing the highlighted crops to the forefront of our agricultural sector, Dettke further stressed that noni should be seen as a fine example of how viable this industry can be, as it has already been proven to have helped improved so many lives of people in both rural and Honiara.

In reply, Sir David, who is fond of planting noni in his village in Isabel, welcomed the initiative made by Dettke.

He said this is the kind of initiative which directly benefits the people in the rural areas who continue to struggle to earn money.

In addition, he said the government must also support such initiative to grow in the country. In exchange of the visit, the Governor General is showing interest to visit the noni factory.