Top Down – gov’t introduces new approach to $4b budget

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THE Government has introduced a ‘top down’ approach in this year’s $4 billion budget.

Minister of Finance and Treasury, Harry Kuma told Parliament yesterday the 2021 budget process taken by the government was slightly different from the previous years’ budget preparations.

The theme of this year’s budget is “Towards A Path to Economic Recovery: Advancing   Growth     and     Service   Delivery   through    Better Partnerships”.

He said in 2021, the government decided to guide the development of the budget from a top down approach.

“In times of hardship, it is crucial that all government ministries adhere to government policies and not do their own usual business.

“As you would recall, the Government has decided to delay the 2021 budget preparation late last year to ensure government has sufficient time to revise and develop its policy priorities along its Policy Redirection mandate for 2021 and beyond,” he said.

Furthermore, Kuma said many have questioned the rationale for the current government’s Policy Redirection.

He said anyone who questions governments Policy Redirection initiative must be blind to what covid-19 has done to the global economy, and to us in 2020.  

“As I said earlier, the Solomon Islands economy had suffered tremendously because of covid-19.  

“Its negative impacts are real and must be addressed,” he said.

Kuma said Government’s Policy Redirection is to prioritise budget spending on specific targeted objectives in all sectors, with specific focus on the productive and resource sectors.  

He said the aim is to support the economy in response to negative impacts of covid-19, while maintaining a continued long-term focus on developing Solomon Islands into an economically strong and vibrant nation and advance the livelihood of our people.

“Government had decided to redirect its policy after thoroughly reflecting on our past drawbacks and using this experience to set the basis for future growth and further development in our country.

“Actual government spending on investment projects in both the productive and resource sectors had drastically declined over the last three years,” he said.

“For example, in 2018, government spent $557.5 million on investment projects in both the productive and resource sectors.

“This further declined to $412.5 million in 2019 and to $355.5 million in 2020,” he said.

Kuma said this downward trend is a concern to the government.

“Both the productive and resource sectors are important pillars of the economy. 

“If Solomon Islands economy is to grow and provide jobs for the growing population, then adequate financial resources must be allocated to both the productive and resource sectors,” he said.  

Kuma said this explains why government has redirected resources and increase budget allocations to both sectors to $580.2 million in 2021.

He said in this trying time, it is very important that our limited financial resources be prioritised and only focus on economic activities that would provide the highest socio-economic benefits to our people.