By EDDIE OSIFELO
SOLOMON Islands will depend on fisheries and mining to fill the gap left behind by the declining logging industry.
Logging is the major contributing revenue earner to the government coffers.
Ministry of Finance and Treasury permanent secretary, McKinnie Dentana told media last Friday that in previous years, they normally recorded two million cubic metres of round logs export.
However, he said now it has reduced below two million cubic metres.
As part of controlling the harvesting of logs, the government came up with a sustainable logging policy.
Dentana said under the policy, a ceiling of below 1.7 million cubic metres is allowed for export to allow for regeneration of the logs.
Apart from that, he said few sectors to fill the gap left by logging are fishery and mining.
He said the government is closely watching Gold Ridge mining as it is expected to commence full commercial production towards end of this year.
According to International Monetary Fund, the current account deficit of the Solomon Islands Government is projected to widen to 15.0 percent of Gross Domestic Product (GDP) in 2023 and remain around 9 percent of GDP over the medium term, reflecting the decline in log production, slowing potential growth of China, the main export destination, and high imports for infrastructure projects.
IFM says foreign reserves are forecast to decline further to 5.8 months of imports by 2027, although they would still be within the adequacy range at this lower level.
Overall, IFM says Solomon Islands economy is recovering from a series of shocks, supported by the reopening of the border and infrastructure spending ahead of the 2023 Pacific Games.
But the recovery has been fragile as Russia’s war in Ukraine has led to higher inflation and a worsening of the terms of trade.
Expenditures related to the Pacific Games and the general elections need to be well controlled to minimize the crowding out of other essential spending. Public investment projects should be phased in line with the economy’s absorptive capacity and accompanying financing arrangements need to be prudently negotiated.
Modernizing legal and regulatory frameworks and strengthening anti-corruption and auditing institutions remains critical for mitigating governance vulnerabilities and corruption risks.
