Government may seek subsidies on fuel


GOVERNMENT may resort to assistance from International Monetary Fund to subsidise high fuel costs in the country if the war in Ukraine continues.

This after Member of Parliament for East Honiara, Douglas Ete has questioned the government’s strategy to make exemptions on imported fuel in Parliament yesterday.

Ete asked what steps have been taken by government to negotiate available facility with multilaterals like IMF for fiscal package to subvent current fuel prize.

He said this is to avoid exempt tax as the country is actually losing revenue by taking this strategy.

Recently, Ministry of Finance and Treasury has made zero exemptions on imported fuel as relieve to public and businesses due to global fuel rise impacted by the Ukraine war.

In June, Ministry of Finance and Treasury has imposed 50 percent exemption on imported fuel.

This saw the government removed sales tax of 10 cents per litre and reduced import duty of 50 cents per litre to 25 cents per litre.

Finance Minister, Harry Kuma said Central Bank of Solomon Islands (CBSI) has singed off with IMF during Covid to support Balance of Payment and foreign exchange as well.

“If prize continues to rise to such a level that will exhaust Balance of Payment or Foreign Exchange, we can call on that as standby position,” he added.

However, former Prime Minister, Rick Hou said to depend on Foreign Exchange holding, as far as they are concern, exchange rate is not sustainable to depend on Foreign Exchange.

He said CBSI Governor (Dr Luke Forau) said Foreign Exchange holdings from donors is not sustainable.

“We have to look for other sustainable means to support prize ceiling of fuel,” he added.

Minister of Mines, Energy and Rural Electrification, Bradley Tovosia said he supported the idea not to give exemption on fuel imports.

He said the Ministry will meet with fuel suppliers, Markwath and South Pacific Oil to look on the prize margins next week.

Parliament meeting continues at 9.30am today.

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