International Monetary Fund. Asia and Pacific Dept
This 2019 Article IV Consultation with the Solomon Islands highlights that the country has made substantial progress since the Tensions in the early 2000s but faces considerable economic and governance challenges and is highly vulnerable to natural disasters. Finding new sources of growth is becoming urgent with the decline in logging. The consultation focused on similar issues to last year—restoring fiscal buffers to build resilience, strengthening public financial management and public investment management, setting a medium-term fiscal strategy, improving governance, improving exchange rate management and building conditions for sustainable growth. The report recommends developing a holistic approach to medium-term fiscal policy by setting a realistic spending envelope and establishing a medium-term revenue strategy. Together with strengthened budget planning and expenditure control, this would provide greater budget predictability and support natural disaster contingency planning. It is also imperative to strengthen enforcement of governance standards, apply the mining fiscal regime rigorously, improve transparency and advance the anti-corruption agenda.
PRGT-eligible members make considerable use of Fund concessional financing. Since 2010, 56 percent of Fund arrangements have involved a PRGT-facility.
This paper examines a number of issues raised by Executive Directors and the International Monetary and Financial Committee (IMFC) since the issuance to the Board of the June 2015 staff paper on enhancing the financial safety net for developing countries (IMF, 2015a).
This paper concludes that there is a need to clarify guidance in some areas pertaining to PRGT policies. This will be done through an early revision of the LIC Handbook, which is already underway. The paper does not propose changes to the Fund’s concessional facilities at this juncture. A comprehensive review of PRGT (Poverty Reduction and Growth Trust) resources and facilities is planned for 2018.
Building on initial discussions of the proposed framework in February/March 2004, and further considerations in September 2004, this paper responds to remaining concerns that need to be resolved to make the framework operational. These concerns relate to the indicative debt-burden thresholds (Section II); the interaction of the framework with the HIPC Initiative (Section III); and the modalities for Bank-Fund collaboration in deriving a common assessment of sustainability (Section IV). This note should be read in conjunction with the original proposal, which presented the wider issues on the use of the indicative thresholds, the evaluation of policies and institutions, and the need for discretion when assessing sustainability on a forward-looking basis.