BY GEORGINA KEKEA
IN the SIG 2018 Budget, government has anticipated to implement the provision of SBD14 million for State Owned Enterprises (SOE’s).
This has been reduced from $25 million from the 2017 budget for Community Service Obligation (CSO) payments.
Initially in the government’s 2018 budget allocation, the 2018 CSO allocations are based on their 2017 CSO proposal.
Solomon Airlines Limited $6m, Solomon Islands Broadcasting Corporation $2.5m, Solomon Water Authority $1.5m, Solomon Electricity Authority $1m, Solomon Islands Postal Corporation $2m and Commodity Export Marketing Authority $1m.
These CSO provisions are to ensure key essential services such as electricity, water, transportation, and communication services are provided in the provincial areas.
The 2018 CSO provision reflects positive progress of financial and service delivery of the SOEs.
The implementation of the CSO framework has benefited SOEs in terms of funding their non-commercial activities.
The CSO payment subsidise mostly operational cost of SOEs to keep essential services operational.
In the past, governments have provided fiscal transfers to SOEs to address losses from poor financial and business performance.
The SOE Borrowing Policy is an important recent development in the fiscal relationship between SOEs and the shareholder.
This policy provides limits to SOEs borrowing provision and enhances government to make viable decision on lending.
It also protects the government from excess debt arears.
Owing to the poor debt history of Solomon Islands SOEs, SOEs come within the scope of the Government’s Debt Management Framework.
Yesterday six of the SOEs are said to sign a contract agreement with the Ministry of Finance and Treasury.