Data on state enterprise and provincial government debt are not available. Therefore, the public debt sustainability analysis is limited to central government debt data.
These include the NPV of debt in percent of exports (100 percent), GDP (30 percent), and revenue (200 percent), and the debt service in percent of exports (15 percent) and revenue (25 percent).
The operation of the gold mine, initially scheduled for 2008, has been significantly delayed, due mainly to land ownership issues, as well as problems with securing political risk insurance.
Under the baseline scenario, the government is assumed to maintain its policy of no new borrowing. However, starting in 2014, we assume that borrowing to finance development needs will resume, and that the ratio of external debt to GDP will stabilize at its projected end-2013 level.
The Sumitomo Metal Mining Company is expected to invest about US$2 billion in the Solomon Islands, and plans to start the first phase of nickel production in 2014.
The Honiara Club is a multilateral forum convened by the government in October 2005 to seek debt relief from its official creditors. Four creditors participated in the Honiara Club, namely, the Export Finance and Insurance Corporation (EFIC), the European Commission, the European Investment Bank, and the International Fund for Agricultural Development.
This analysis assumes that the government remains current on all debt obligations from June 2008, and that all debt in arrears (at end-2007 a total of SI$ 115 million was in arrears, with about SI$24 million each to the EU and EIB, and SI$12 million to OPEC) are treated as current short-term obligations with NPV equal to face value.
The thresholds (see footnote 2) apply to countries with weak policies and institutions, and are discussed in Operational Framework for Debt Sustainability Analysis in Low Income Countries—Further Considerations. Although improving, the Solomon Islands’ 3-year average CPIA (2005–2007) of 2.8 remains the lowest among the Pacific Island Countries.
See IMF Country Report No. 07/304.
Real GDP growth was significantly affected by the civil conflict, which resulted in an average growth rate of negative 4 percent over the period 1997–2002.
Reported contingent liabilities of SOEs are SI$75 million, but the government has undertaken an extensive audit program for all SOEs which are expected to further clarify the financial position of this sector.