Solomon Islands
Economic Development Documents- Medium-Term Development Plan, 2016-20

This report describes Solomon Islands’ macroeconomic, structural, and social policies in support of growth and poverty reduction, as well as associated external financing needs and major source of financing. Solomon Islands’ government Medium Term Development Plan (MTDP) 2016–20 sets out development programs and projects supporting the draft National Development Strategy (NDS) 2016–35 objectives. The MTDP is rolling out five-year plan, revised annually, comprising development programs and projects. The MTDP effectively addresses key issues of the economy which are as follows: existing poverty situation and trends, factors influencing poverty, strategies and policies for poverty reduction, fiscal and debt framework, and safety nets and risk mitigation.

Abstract

This report describes Solomon Islands’ macroeconomic, structural, and social policies in support of growth and poverty reduction, as well as associated external financing needs and major source of financing. Solomon Islands’ government Medium Term Development Plan (MTDP) 2016–20 sets out development programs and projects supporting the draft National Development Strategy (NDS) 2016–35 objectives. The MTDP is rolling out five-year plan, revised annually, comprising development programs and projects. The MTDP effectively addresses key issues of the economy which are as follows: existing poverty situation and trends, factors influencing poverty, strategies and policies for poverty reduction, fiscal and debt framework, and safety nets and risk mitigation.

1 Introduction

This Medium Term Development Plan (MTDP) 2016-2020 sets out development programmes and projects supporting the draft National Development Strategy (NDS) 2016-2035 objectives. The NDS 2016-2035 is under preparation; the framework has been endorsed by Cabinet. The NDS 2016-2035 will be completed by end 2015. Consistent with the Public Financial Management Act 2013, section 45 (2), it is required that at least three months before the start of the financial year, the Minister for Development Planning and Aid Coordination shall table in the National Parliament and officallly publish the details of the Government’s medium term development plan – this was done. This document has been updated following 2016 budget revisions.

The programs and projects included in the MTDP are in line with the emphasis of the Democratic Coalition for Change (DCC) Government policy priorities, as presented in the DCC Policy Statement and Translation Document. The Government has emphasised the need for sustainable economic growth as the way to guarantee a reasonable standard of living for the people of the Solomon Islands. Its focus is on economic growth and effective service delivery. It has emphasised the need for fundamental and sector reform programmes, including in governance and anti-corruption, and in the productive, resource and social sectors. While in line with DCC priorities, many programmes and projects included in this MTDP are carry-over from previous MTDPs and the NDS 2011-2020.

The Budget Strategy for 2016 notes the need to balance investments that stimulate economic growth, while ensuring services to citizens continue to be met, and in a fiscal environment where revenue growth is historically low. The budget needs to be targeted. Increased investment will focus on a number of major infrastructure projects, particularly in the energy and transport sectors.

This MTDP 2016-2020 continues the change introduced in the MTDP2014-2018, from lump sum development budgets to budget proposals fully set out in the Chart of Accounts. Improved details in the presentation of SIG and donor proposals is a key part of the Public Financial Management Reform Roadmap, as is the strengthened alignment and reporting of donor assistance. The key parts of the Roadmap related to the MTDP “to make the MTDP the SIG central multi-year planning document” are discussed briefly in Section 5 and show the way ahead for development of the MTDP. Improvements, however, are still needed in processes and compliance.

2 Government’s Objectives, Priorities and Strategies

2.1 National Development Objectives

Consultations are ongoing in developing the National Development Strategy 2016-2035, which will be completed by end 2015 for approval by Government. Consultations include all provinces, levels of Government, development partners, private sector and civil society. It takes into account the DCC Government Policy Statement and Policy Strategy and Translation documents, and progress on the NDS 2011-2020, but with a longer term vision and emphasis. The NDS includes both long term objectives, together with medium term strategies and priorities aimed at achieving these objectives. The Budget Strategy stipulates that “the National Development Strategy will continue to assist the Government to prioritise and to advance important reforms’.

The overall vision and long term objective of the NDS is to achieve an improvement in the social and economic livelihoods of all Solomon Islanders, through a return to economic growth, by delivering on the following five long-term national objectives:

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A return to economic growth and continued sustainable and inclusive economic and social development will provide the economic and social capital that will enable the improvement in the economic and social wellbeing of all Solomon Islanders. Sustainable and inclusive growth is seen as the key to long term development, necessary for the alleviation and prevention of poverty and hunger, particularly in the rural areas of the Solomon Islands. It will also provide resources for the provision of adequate, accessible and quality social services, including health and education which themselves are essential for developing a heathy and skilled labour force on which growth depends and thrives.

Solomon Islands needs to respond effectively to climate change and the increasing frequency of storm surges and floods. It needs to effectively manage the environment and the risks of natural disasters, improving preparedness and increasing mitigation activities; this cuts across the three objectives noted above. Similarly, improved governance, national unity, public order and safety are essential for a stable environment within which the economy can grow and people’s livelihoods and wellbeing improve.

2.2 Structure of the NDS and the planning system

The structure of the NDS and the planning process is presented schematically in the figure below. It shows the links between the longer term strategic framework of the NDS, medium term strategies included in sector and provincial development plans and ministry corporate plans, and more immediate programs and projects included in the medium term development plan (MTDP) and the annual development budget.

The NDS provides the overall twenty year strategic framework to guide planning. It includes more immediate medium term development strategies that are designed to achieve the NDS Objectives. These medium term strategies and priorities are translated into implementable policies, programs and projects through the MTDP, which is a rolling five year plan comprising development programs and projects. In turn, these projects are included in annual development budgets. The MTDP identifies priority policies, programs and projects consistent with the DCC Policy Statement and Translation Document.

Figure 1:
Figure 1:

Structure of the NDS and Planning Process

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

2.3 Medium Term Strategies and Priorities

The medium term priorities for the MTDP are drawn from the medium term strategies and priorities included in the draft NDS 2016-2035. The rationale for these is summarised in section 3 below which sets out programs and projects included in the MTDP 2016-2020 and 2016 development budget.

NDS Objective One: Sustained and inclusive economic growth

Medium Term Strategy 1: Reinvigorate and increase the rate of economic growth

Medium Term Strategy 2: Improve the environment for private sector development and increase investment opportunities for all Solomon Islanders

Medium Term Strategy 3: Build and upgrade physical infrastructure and utilities with an emphasis on access to productive resources and markets, and to ensure all Solomon Islanders have access to essential services

Medium Term Strategy 4: Strengthen land reform and other programs to encourage economic development in urban, rural and customary lands

NDS Objective Two: Poverty alleviated across the whole of the Solomon Islands, basic needs addressed and food security improved; benefits of development more equitably distributed

Medium Term Strategy 5: Alleviate poverty, improve provision of basic needs and increase food security.

Medium Term Strategy 6: increase employment opportunities and improve the livelihoods of all Solomon Islanders

Medium Term Strategy 7: support the disadvantaged and the vulnerable and; improve gender equality

NDS Objective Three: All Solomon Islanders have access to quality social services, including education and health

Medium Term Strategy 8: Ensure all Solomon Islanders have access to quality health care and; combat communicable and non-communicable diseases

Medium Term Strategy 9: Ensure all Solomon Islanders can access quality education and the nation’s manpower needs are sustainably met

NDS Objective Four: Resilient and environmentally sustainable development with effective disaster risk management

Medium Term Strategy 10: Improve disaster risk management, mitigation and preparedness

Medium Term Strategy 11: Manage the environment in a sustainable resilient way and effectively respond to climate change

NDS Objective Five: Unified nation with stable and effective governance and public order

Medium Term Strategy 12: Efficient and effective public service with a sound corporate culture

Medium Term Strategy 13: Reduce corruption and improve governance at national, provincial and community levels

Medium Term Strategy 14: Improve national unity, peace and stability at all levels

Medium Term Strategy 15: Improve national security, law and order and foreign relations

2.4 2016 Development Budget Strategy

The MTDP 2016 templates for on-going and new MTDP programmes, based on the revised templates of 2014, were discussed by MDPAC with line ministries in refresher workshops held in June 2015. Launch of the Budget Strategy for 2016 was delayed until 22 July 2015. The workshops, nonetheless, had emphasised ministries should not delay in developing realistic proposals for 2016, which could be accommodated within the likely available SIG resources. Unfortunately most Ministry budget proposals were still not submitted in a timely manner, seriously undermining the MDPAC and MOFT process for effective scrutiny of proposals, and consultative feedback and amendment.

The strategy for the 2016 budget is set out in the Financial Circular published on 22 July 2015 in accordance with Part 6 of the Public Financial Management Act 2013 (preparation of the annual budget). This is informed for the first time by the inclusion of a Medium Term Fiscal Outlook, as required also under the PFM Act. The economic outlook for 2016 makes it clear that delivering the DCC Government’s policy priorities will require a genuine effort to refocus existing baseline spending and to review the relevance of development projects. The Government will only support new bids in 2016 that align with the National Development Strategy 2016-2035, the DCC Policy Statement and Translation document and deliver on the Government’s agenda, as summarised in 2.3 above. The Government remains committed to pursuing its sectoral reform programmes which include reforms in the economic and finance sector, productive sector, development sector, resource sector and social sector.

The Financial Circular notes that with revenue expected to grow by 3 per cent, expenditure on both the recurrent and the development budget should remain similar to 2015 planned levels. Any new programmes proposed by ministries must be accommodated within this.

A major objective of the reforms of the PFM Act and planning processes is to improve the quality of resource allocation decisions. The MTDP templates provide headings for the ministries to justify their responses to the Government’s financial constraints in terms of rescheduling and re-scoping programme activities to fit within the development budget ceilings. MDPAC and MOFT have emphasised the need for each Ministry to prioritise its programmes and activities and not leave central agencies to make necessary changes to stay within ceilings. Line ministries are the technical experts on their ministry’s subject matter and they are best placed to make informed decisions on priorities and necessary choices between alternatives under constrained resources. In 2014 and 2015, budget bids by ministries exceeded the available development budget, line ministries evading their responsibilities for managing their sector.

Figure 2 below summarises the budget allocations to the ministries for 2014 and 2015 and the proposed budget allocations for 2016. Some of the ministries budget allocation for 2016 are reduced compared to their allocation in 2015 whilst certain ministries have increased allocations. Most Ministries maintained at the 2015 level.

Figure 2.
Figure 2.

Line Ministry 2016 Development Proposals for SIG Funding Compared to 2014 and 2015 Budgets1

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

The allocations to ministries are attributed to both ongoing and new programmes in the Development Budget. This therefore demonstrates the DCC Government’s priorities in infrastructure development, natural resource utilization and management, improvement of the economic sector and productive sector, enhancement of the national security and the implementation of the fundamental and sectoral reforms programmes in governance, economic productive and social services.

3 Programmes Supporting Government Medium Term Strategies and Priorities

Figure 3 below presents a matrix linking each of the proposed MTDP 2016 – 2020 programmes to the NDS Objectives and the Medium Term Strategies and Priorities.

Figure 3.
Figure 3.
Figure 3.

NDS Objectives and MTDP Priority Programs and Projects

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

The programmes are summarised in this section under each Medium Term Strategy. The details of each project are available separately in the individual MTDP templates, the development costs being summarised in an Excel spreadsheet which forms the basis of the Development Estimates included as Ledger 4 in the Budget Estimates. The MTDP templates include: (i) Programme Frameworks – these set out the Impact in relation to NDS Objectives and MTDSs, the Outcome of the programme with the rationale of how proposed Inputs, and the Activities and Outputs designed to achieve the Outcome and contribute to the NDS Objective. Each framework specifies monitorable indicators as the basis for Monitoring and Evaluation; and (ii) Development Costs - these set out the multi-year costs for the MTDP period 2016-2020. The development programme costs are broken down into the Chart of Accounts and have been reflected in the 2016 Development Budget.

These two MTDP templates are the core of the planning templates, and also include descriptions of the proposal, analysis of the assumptions in the Framework, Implementation Schedules, Incremental Recurrent Costs, Procurement Plans and TA Schedule. These will help ensure that programmes are ready for implementation to enable maximum use of the finance provided. The templates provide the basis for objective appraisal and comparison of proposals in terms of rates of return and cost effectiveness as required in the Public Financial Management Act 2013. The multi-year schedules also provide the basis for forward estimates.

3.1 Sustained and Inclusive Economic Growth

A return to economic growth and continued sustainable and inclusive economic and social development will provide the economic and social capital that will enable the improvement in the economic and social wellbeing of all Solomon Islanders. Sustainable and inclusive growth is seen as the key to long term development, necessary for the alleviation and prevention of poverty, provide for basic needs, and improve food security, particularly in the rural areas of the Solomon Islands, and for the provision of adequate, accessible and quality social services.

This requires improvements in economic and financial management and reforms, and development of the private sector. A key strategy is to develop economic growth centres and rural growth centres. The productive and resource sectors need reinvigorating to increase value added and export earnings, and to achieve sustained growth. Development of agriculture, fisheries, forestry, minerals and tourism are key. Infrastructure facilities and utilities to support growth in the productive sectors are a priority. Rural and customary land need to be made available for commercial and agricultural development. Skills of the working population need to be improved.

3.1.1 Economic Growth

Economic and finance sector: Economic stability is needed as a platform for growth. Improvements are needed in economic and financial management, and accountability. National fiscal and monetary policies should facilitate growth. There is a need to create a vibrant and robust economic environment to stimulate growth and investment; private sector led development will be key (MTS 2 below).

Productive sectors: development of the productive sectors is a key element to reinvigorate growth. The agriculture sector is the most important sector for the Solomon Islands national economy. It provides for and sustains 85 per cent of the rural population with food crops, cash crops and livestock for their daily livelihoods, food and social security. Agricultural exports are a major source of export earnings. Enhanced production of staple foods is essential for food security and the wellbeing of the rural population, but a twin track strategy includes the development of commercial agriculture and exports as key to growth. There is a large potential to increase production and export from large-scale plantations. The livestock sector is underdeveloped and domestic production does not meet consumption; the domestic industry is mostly back-yard production, and production could be increased through better animal husbandry and feeding practices, and improved breeds.

Fisheries: offshore and coastal fisheries are both important. Offshore fisheries provide an important source of foreign exchange earnings, and possibilities for expanded on-shore processing and canning of tuna. Coastal and on-shore fisheries, including aquaculture, are important for alleviating poverty, improving food security and providing greater benefits and opportunities to improve the lives of Solomon Islanders (NDS objective two). Sustainability of the resource is essential. Over-fishing and illegal and unregulated fishing are threatening the resource.

Tourism: the tourism sector is currently small and has underperformed in terms of growth but could play an increasingly important role in the economy, increasing foreign exchange earnings and providing direct income and employment.

Resources Sector: the forestry sector currently provides more than half of GDP and a significant proportion of export earnings. However the resource is not sustainable at current extraction rates and value added is minimal. More emphasis is needed on reforestation and plantation development and on downstream processing and value adding.

The projects and programs listed below all contribute towards encouraging and sustaining economic growth. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP. The first 13 projects below are all targeted at increasing agricultural production. Some also focus on livelihoods improvements and food security at the community level and are thus also included in figs 8 and/or 9 below under NDS Objective 2. The fisheries projects listed similarly contribute to both objectives. Tourism provides new opportunities for growth, as summarised in the Appendix. Forestry and mining sector remain important sources of economic activity, but sustainability is a concern.

Figure 4.
Figure 4.
Figure 4.

Programmes and projects encouraging reinvigoration of sustainable economic growth

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.1.2 Private Sector Growth and Increased Opportunities for Solomon Islanders

The private sector is now seen as the principal driver of growth, which has been slow partly as a result of lack of diversification into other productive enterprises outside the resource sector, under investment, and the high cost of doing business. There is a need to improve the institutional and enabling environment for private sector growth, including institutional infrastructure, policies and other legislation. Access to financial services need to be improved with a broader range of financial services being available. The transparency of the legislative and policy environment needs to be enhanced; land and tax policies need to be clearer. Foreign investment policy also needs to be clear, with including any investment protection policies and treaties. Economic growth centers are seen as a priority implementation activity.

The projects and programs listed below contribute towards encouraging and sustaining economic growth through improving the environment for private sector development. Economic growth centers in particular are a key priority of the government. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP.

Figure 5.
Figure 5.

Programmes improving the environment for private sector development and increased opportunities for Solomon Islanders

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.1.3 Infrastructure and Utilities

Infrastructure plays a critical role in achieving the objectives of the NDS. However infrastructure needs in the Solomon Islands are great and given limited resources, priority should be given initially to those investments that are targeted at initiatives in key productive sectors. A national infrastructure investment plan (NIIP) has been prepared and revised to highlight such key priority investments over the next 5-10 years. Investments in the Provinces are needed also to meet needs of the population (NDS objective two) but these should be considered in the context of such provincial and rural needs, with the NIIP focusing on key national infrastructure projects focused on reinvigorating economic growth.

Access to key utilities is also an essential factor in both economic growth and meeting the needs of the people The continuous reforms of the Solomon Water, SIEA, Ports Authority and other authorities pave the way of improving and providing effective and efficient services and ensuring proper management of the organisation.

The importance of maintenance should not be overlooked. Infrastructure investments need to be sustainable, and be resilient to natural disasters and; design must take into account the potential impacts of climate change.

The projects and programs listed below are key infrastructure and utility projects on which growth depends. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP. Development Partners contribute significantly to some projects, as shown in figs 20 and 22 below.

Figure 6.
Figure 6.

Programmes targeting improved Infrastructure and Utilities

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.1.4 Land Reform and Increased use of Rural and Customary Lands

Many government development projects and private sector initiatives are constrained by the need to obtain land, whether by purchase or leasehold. There is a lot of unproductive and unused land in both urban and rural areas, including customary land, which could be more productively used. Policy changes and land reform efforts need to be enhanced to help remove land as an obstacle to development and allow land owners to share in the benefits of development. Customary land reform remains an issue that the government is still trying to solve. Analysis is being conducted on how land owned by land owners can be utilized by private sector, government, donors and others; how it can be sold, leased or occupied through proper, transparent and appropriate prices and possible regulations; and the processes of land agreement appicable to various communities in the provinces. Current approaches and policies will not solve all problems, but will assist in developing appropriate land valuation and land market prices. Availability of land for housing is an equally pressing problem.

The three projects and programs listed below address issues relating to urban and semi-urban land management, governance, planning and development are key to helping remove constraints to development, increasing availability of land, improving institutional and legislative capacity, and improving the planning process. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP. However, additional policies and programs are needed to address availability and usage of rural and customary lands.

Figure 7.
Figure 7.

Programmes Improving Land Use

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.2 Poverty Alleviation, Basic Needs, Food Security

The NDS 2011-2020 prioritised alleviation of poverty and improvements in the lives of all Solomon Islanders, particularly in rural areas. This remains a priority, but economic growth is needed to provide the resources to meet this objective. Basic needs such as provision of essential services including water, sanitation and public health services, and social and community development will improve the social wellbeing of all Solomon Islanders. Increase efforts will be directed at poverty alleviation, improved food security, food safety and nutrition, and increased diversification of employment and livelihoods.

3.2.1 Poverty Alleviation, Food Security, Basic needs

The projects and programs listed in fig 8 below include several projects targeted specifically at increasing food supply to improve food security, and increasing livelihood opportunities for those in rural areas. These latter programs are also shown in fig 9, covering improved employment and livelihoods. Public health and water supply programs providing basic needs are also important activities in achieving this objective. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP.

Figure 8.
Figure 8.
Figure 8.

Programmes Impacting on Poverty, Food Security and Basic Needs

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.2.2 Increased Employment and Improved Livelihoods

Increasing employment opportunities and improving livelihoods is important to help ensure a more equitable distribution of benefits across the Solomon Islands. This includes generating jobs and increasing employment opportunities for the growing population across all Provinces, improving rural livelihoods and the wealth of all Solomon Islanders, and promoting agricultural services to support small scale farmers.

The projects and programs listed below are targeted at increasing livelihood and employment opportunities in rural areas. They include a program specifically targeting rural growth centers, a key priority of the current government. Projects provide support to farmers to open up their land to the niche market products. They provide incentives to assist farmers to venture or develop the niche products for local consumption and export for the demand of international and domestic users. Such incentives provide livelihood for the people - income generating activities. They also encourages farmers to look into new tools, equipment and crops that increase the yield of their crops and enables better productivity of their land and resources, encouraging innovation and promoting awareness and understanding on quality control of goods that could be exported domestically and internationally. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP.

Figure 9.
Figure 9.

Programmes Impacting on Employment and Livelihoods

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.2.3 Support for the Disadvantaged and Vulnerable, Women and Youth

Development should benefit all the people of Solomon Islands, and SDG emphasise the importance of including the disadvantaged, including the disabled and other vulnerable groups. The drift of the population from rural to urban areas and the increasing number of unemployed youths is creating tensions that could undermine the improvements in social cohesion and security in the past few years. The role and place of women in society is an essential element of any country and promoting gender equality and empowering women was a critical MDG and remains so as SDG.

The projects and programs listed below include programs addressing concerns of the youth and women and children. The sports development program will provide greater opportunities for youths to gainfully use their time, and improve their health and welfare. The national centers similarly provide opportunities for women and others to get together, and learn about and develop employment opportunities. These programs are combined with policies for more equitable involvement in development. No specific programs are currently in process targeting other disadvantaged groups, but NGOs are increasingly involved in this. Protection and understanding of cultural concerns is included here as part of the museum and archives portfolio, preservation of culture being seen as important for people’s wellbeing. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP.

Figure 10.
Figure 10.

Programmes Impacting on the Disadvantaged and Vulnerable

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.3 Access to Quality Social Services

3.3.1 Health and Medical Services

Access to quality health and medical services and to quality education is essential for the wellbeing of all Solomon Islanders. Development needs a healthy population with an education that can meet the needs of a growing country. The Ministry of Health and Medical Services is developing a new sector strategy –stressing that the quest for health goes beyond fighting disease, reducing sickness, preventing the loss of young lives and relieving suffering. The vision for health is to contribute to the wellbeing of all the Solomon Islands people. The overall goal is to achieve universal health coverage. This means that all people can access use of the preventive, curative, rehabilitative and palliative health services they need and which the country can afford, and that they are of sufficient quality to be effective. At the same time, it ensures that the use of these services does not expose the community to financial hardship. Sustainability of services and whether charges should be introduced/increased needs to be examined.

Priority health issues being targeted include: (i) improved child survival; (ii) improved maternal health; (iii) improved health and wellbeing of youth and adolescents; (iv) reduced incidence of non-communicable diseases and impacts; and (v) reduced burden of communicable diseases.

Enhanced access to and delivery of public health services and interventions is the second key priority area. Six key objectives for implementation have been identified: (i) strengthen Healthy Village initiative as a priority; (ii) strengthen collaboration with all stakeholders and partners to expand the reach of quality health services and public health initiatives; (iii) expand partnerships with resource developers, private health care providers, churches and NGOs across all provinces; (iv) improve affordable access to quality health services and interventions for priority critical reference groups and individuals; (v) improve support for coverage; and (vi) all facilities delivering universal health coverage service packages and interventions are adequately resourced.

Improvement of the quality and support of health services is essential, with an emphasis on effectively spending resources: (i) improved quality and support of health services: (ii) strengthened health systems and governance; and (iii) better preparedness for disasters, outbreaks and emerging population health issues.

The relocation of NRH is a high priority, while other medium term priorities include rehabilitating, reconstruction and construction of new medical infrastructures in rural and urban centres.

The projects and programs listed below include several ongoing programs essential for delivering on the new strategy, with some reorientation within programs. The relocation of the National Referral Hospital is seen as a key government priority. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP. Development Partners contribute significantly to some health sector projects, including both budgetary support and individual projects, as shown in figs 20 and 22 below.

Figure 11.
Figure 11.

Programmes Impacting on Health and Medical Services

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.3.2 Education and Human Resource Development

The Ministry of Education and Human Resource Development is developing a new education sector strategy. The draft proposes three strategic goals:

  • achieve equitable access to education for all Solomon Islanders;

  • improve the quality of education in Solomon Islands; and

  • manage and monitor resources efficiently and cost effectively.

The draft strategy includes several specific objectives and targets for 2030: achievement of minimum proficiency standards in reading and mathematics; completion rates; access to quality early childhood development, care and pre-primary education; equal access for all women and men to affordable and quality technical, vocational and tertiary education, including university; number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship; elimination of gender disparities in education and ensure equal access to all levels of education and vocational training for the vulnerable, including persons with disabilities, indigenous peoples and children in vulnerable situations; adult literacy and numeracy skills.

The projects and programs listed below include several ongoing programs essential for delivering on the new strategy, with some reorientation within programs. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP. Development Partners contribute significantly to the education sector, including both budgetary support and individual projects, as shown in figs 20 and 22 below.

Figure 12.
Figure 12.
Figure 12.

Programmes Impacting on Education and Human Resource Development

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.4 Resilient and Environmentally Sustainable Development

3.4.1 Disaster Risk Management, Mitigation and Preparedness

Solomon Islands needs to respond effectively to climate change and the increasing frequency of storm surges and floods. It needs to effectively manage the environment and the risks of natural disasters, and this cuts across the three objectives noted above. An increased emphasis on disaster risk preparedness and on efforts focused on disaster risk mitigation are immediate priorities.

The projects and programs listed below are ongoing projects that focus on improved disaster risk management and disaster response. While the SIMS program targets early warning of oncoming typhoons, other disasters such earthquakes are not yet easy to predict, although early warning systems for tsunamis generated by underwater earthquakes have improved. As noted above, more needs to be done on disaster preparedness. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP. Regional Partners contribute significantly to some environment projects, as shown in figs 20 and 22 below.

Figure 13.
Figure 13.

Programmes Impacting on Disaster Risk Management and Mitigation

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.4.2 Environmentally Resilient Development and effective Response to Climate Change

Increased efforts are needed to effectively develop and manage the environment sustainably and in the longer term, and be responsive to, and increase efforts directed at, climate change mitigation and adaptation. The Ministry of Agriculture and livestock will make an important contribution to both these strategies through: (i) shielding farmers from impacts of natural disasters and climate change through disaster and risk management and climate change mitigation; (ii) enhancing soil conservation and management; (iii) improving land fertility and productivity, and land use planning; and (iv) enforcing the regulatory framework.

The projects and programs listed below are ongoing projects that focus on responding to future climate change and other environmental concerns, including improving the government’s capacity to support integration of environmental issues into projects, making physical investments more resilient to climatic changes. Recent floods have emphasised the need for such resilient development. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP. Regional Partners contribute significantly to some environment projects, as shown in figs 20 and 22 below.

Figure 14.
Figure 14.

Programmes Impacting on resilient development and response to climate change

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.5 Unified Nation with Stable and Effective Governance and Public Order

Good governance at national, provincial and community levels, including maintenance of law and order, is essential for achieving a better future and achieving the full potential of the country. Improved governance cuts across all the NDS objectives and has many facets. It is an essential enabling environment for development and social cohesion and wellbeing. The RAMSI support has helped improve security and law and order, and has also strengthened government accountability, efficiency and effectiveness. More needs doing however, and a sound corporate culture needs to be instilled within and outside the public service to reduce and eventually eradicate corruption, which is holding back development. The 4 medium term strategies set out below to achieve this objective are mostly interrelated, and work as a whole in meeting this objective.

3.5.1 Efficient and Effective Public Service

Several ministries, including the MPS, have programs targeted at improving the working and living environment of public servants through improvements in office accommodation and housing, as set out in fig 15 below. Increased housing is a concern raised by almost all ministries, but provision of housing, while important for improving staff morale and wellbeing, must be balanced with the need to focus on reinvigorating economic growth. Improvements in the efficiency and effectiveness of the public service are also very dependent on policies and codes of conduct that should help develop an improved corporate culture. The programs included in fig 16 below on improved governance also impact on this strategy. The Appendix to this MTDP provides summary details of each project and program, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP.

Figure 15.
Figure 15.

Programmes Impacting on Efficiency and Effectiveness of Public Service

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.5.2 Eradication of Corruption and Improved Governance

The PMO reform program shown below includes components to address corruption (an Anti-corruption Act is being prepared and targeted for implementation in 2016), and consultations on a new national constitution. The Appendix to this MTDP provides summary details of these two programs, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP.

Figure 16:
Figure 16:

Programmes Impacting on Corruption and Good Governance

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.5.3 Improved National Unity, Peace and Stability

Several programs are listed below that target improvements in national unity and peace and stability. The Appendix to this MTDP provides summary details of these programs, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP.

Figure 17:
Figure 17:

Programmes Impacting National Unity, Peace and Stability

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.5.4 National Security, Law and Order, and Foreign Relations

Public order and safety are key for stability and growth. Each of the three ministries implementing on-going programmes under the Public Order and Safety priority has made proposals for continuation of the activities. Each programme involves construction of office, court, station facilities and staff housing. The Appendix to this MTDP provides summary details of these three programs, drawn from the programme framework included in the line Ministry submission for the 2016 budget and MTDP.

Figure 18:
Figure 18:
Figure 18:

Programmes Impacting on National Security, Law and Order, and Foreign Relations

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

4. Development Expenditure

4.1 SIG Funded Development Expenditure

The SIG development budget for 2016 is higher than the 2014 levels and slightly surpasses 2015 baseline planning level by 0.23 percent. This is due mainly to the ongoing programmes and the expansion of the programmes as these include programmes and activities stipulated in the DCC Government Policy Statement and Policy Strategy and Translation documents.

Figure 19:
Figure 19:
Figure 19:

2016 Bids for SIG Development Funds

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

SIG total recommended allocation in the 2016 Appropriated Development Budget is SBD 1,143,927,137. This total proposed budget also includes RoC Support to constituency development SBD 70 Million under Head 498, EU Support to RWASH Programme under Head476 and DFAT support of SBD 4,160,000 million under Head 373. Moreover, development partners provide budget support to assist in the 2016 Recurrent Budget.

Figure 20:
Figure 20:

Total 2016 Development Budget, Budget Support and Non Appropriated Assistance- All Sources

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

3.6 Development Partner Funded Development Expenditure

The 2014 Development Budget provided SBD 921 million of non-appropriated donor development activities. Review of the data suggests SBD 161 million of this was double counting. Other errors were not so simply checked. Hence, it is inappropriate and inaccurate to suggest an actual level of donor development support. The donor funds indicated to MDPAC by ministry and by programme are likely to be a significant under-estimate of such funding.

The data was supplied in response to requests to both donor and line ministry to report expected levels of support. Some data were supplied directly to MDPAC by NZAID, UNDP and WHO with data broken down into the Chart of Accounts in the templates supplied by MDPAC. EU totals were provided by EU in their template and breakdown. Other data on donor funding including on AusAID/DFAT, JICA, GEF, ADB and WB had been supplied by the line ministries. Others provided data in the required Chart of Accounts breakdown while others such as the NTF in MID, provided the data as lump sums.

Despite the incompleteness of the data, this is a first significant step on the Public Financial Management Reform Roadmap to bring such funding into line with SIG policies and within the SIG planning processes of MDPAC and the MTDP.

Figure 21:
Figure 21:
Figure 21:
Figure 21:
Figure 21:
Figure 21:

SIG Development Expenditure by Programme and Ministry

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

Figure 22:
Figure 22:
Figure 22:
Figure 22:
Figure 22:
Figure 22:
Figure 22:

Development Partner Development Expenditure by Programme and Ministry

Citation: IMF Staff Country Reports 2016, 091; 10.5089/9781484304303.002.A001

4 MTDP in the Public Financial Management Reform Roadmap

The Public Financial Management Act of 2013 became effective in January 2014 and represents a series of major reforms in Solomon Islands’ public financial management. Included within the reforms are requirements for planning processes, centred on the Medium Term Development Plan, to play a more effective, coordinated role in the governments financial decision making processes. The PFM was promoted by MOFT but concerns all line ministries, including MDPAC in particular. The respective roles and responsibilities of MOFT and MDPAC need review.

To support the implementation of the Act, a Public Financial Management Reform Roadmap for the period July 2014 to June 2017 was published by MoFT in June 2014. The core reforms in planning and development budget processes are set out in the Roadmap extract in 5.5 and matrix 3.4 below. Recognizing long term public investment as a major source of economic growth and social development, the Roadmap intends the MTDP to become SIG’s central multi-year planning document.

Matrix 3.4.

Integration of recurrent and development budget

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The Act requires that the MTDP be tabled in Parliament before the end of September each year, a deadline which has guided the preparation of the 2016 MTDP, despite the delayed budget launch. The Roadmap aims for coordination of the MTDP, fiscal and budget strategies, which should be “published at the same time”, in practice by the end of June. This has not been possible in 2015 due to the changes in Government and delayed budget preparation process. However it is planned that in 2016, MTDP preparation will be brought forward, with initial preparation activities commencing in March - this should enable a draft MTDP to be published with the Budget Strategy and Operational Rules, which can thus include a development budget strategy. An updated final MTDP could then be published and tabled in Parliament in September. Line Ministry proposals would be needed no later than the end of May.

The Roadmap intends to strengthen the links between the MTDP and corporate plans and sector policies as well as the budget and MTEF documents. At present, the partial implementation of MTDP processes produces an expenditure oriented document with more detailed presentation of the use of the funds and the intended outcomes than the other documents. The distinct contribution which planning should provide is a benefit orientation to compare with the expenditures and assess the cost effectiveness and returns to each programme. In this way planning more effectively contributes to the budget processes and resource allocation decisions. To fulfil its role, the MTDP processes need to complete their intended scope to include appraisal of proposals.

The following sections discuss the present status and Roadmap required development under each of the subheadings of the Roadmap Matrix 3.4.

4.1 Implementing the requirements of the PFM Act

In this first year under the Act, MDPAC should have completed MTDP preparation so that the MTDP can be tabled in Parliament before the dissolution of the 8th Parliament Meeting. The Act specified requirement of at least 3 months before the start of the new financial year. Line Ministries, however, have not submitted budget proposals in a timely fashion, which is substantially undermining the MTDP process and reducing its effectiveness. This must be addressed.

The Roadmap, at 3.4.01, also intends that the MTDP be consistent with budget and fiscal strategies and this MTDP strives to meets this requirement particularly in the application of the Budget Strategy’s bid ceiling, ministry by ministry.

At 3.4.02, the Roadmap indicates the need to develop regulations to support the MTDP and development budget. The non-response of several agencies to the request for updated MTDP’s and the non-compliance by some ministries with the MDPAC and MoFT required bid ceilings, indicates the need for such regulations as well as for enforcement of such requirements as responsible bids in order to give credibility to the process.

4.2 Integrating the recurrent with the development budget

MDPAC’s recent planning and budget reforms have included the conversion of development budget bids from lump sums to the Chart of Accounts breakdown shared with recurrent budgets and in the MTDP templates, required proposals to indicate the incremental recurrent costs resulting from programme implementation.

Item 3.4.03 proposes greater consultation and coordination between MDPAC and MoFT in budget preparation, continuing the developments already begun. The effective coordination of development and recurrent budgets will require changes by all ministries rather than MDPAC and MoFT alone, and this may take some time to effectively achieve.

3.4.03 also highlights the need for a clear definition of “development” and “recurrent” and 3.4.07 raises the specific issue of payments to programme staff. Many of the costs proposed for the development budget appear to be recurrent in nature whilst many asset purchases - housing, offices, IT - are clearly capital expenditures but are tenuously linked to “development”. Definition may be difficult but is needed to support consistent, objective decisions on allocation of resources, as in the MTDP, and is necessary to give effective control of recurrent expenditures.

The MTDP’s inclusion of projected incremental recurrent costs is not simply to support MTEF and budget projections but is a necessary input to the intended appraisal process involving cash flow analysis to determine cost effectiveness and rates of return. However much more training is required to achieve this, and simplified templates need to be developed.

4.3 Strengthening multiyear budget projections

The origin of the MTDP in the NDS is to create a link between NDS strategic objectives and allocation of resources to activities which contribute to achievement of the national objectives. The MTDP process has focused on linking planning and budget processes but to be fully effective in aligning activities to serve national objectives it is necessary that the MTDP and MDPAC planning also be closely involved with the corporate and sectoral planning processes, as proposed in item 3.4.10 in the Roadmap.

Whilst the budget process is primarily an annual cycle the NDS, MTDP, corporate plans and sectoral policies and plans are all multi-year. Indeed, significant development expenditures are multi-year and can be seriously delayed and benefits forgone due to irregularity and uncertainty in available annual funds. The MTDP, therefore, needs to be a link between multi-year plans and annual budget process in order to strengthen multi-year budget projections and support development of the MTEF, as intended at 3.4.11.

Probably influenced by the annual budget cycle several multi-year investment programmes seem to be planned on an annual basis so that their MTDP proposals are actually a single year from an on-going programme. This is the case with clearly multi-year programmes including: MID’s Rural Transport Infrastructure, MPNS Infrastructure, MCILI’s Private Sector and MSME Development, MCA’s International and Provincial Airports Programmes, and both of MMERE’s Renewable Energy Programmes. It would be impossible to appraise proposals in the absence of full development costs and the incremental recurrent costs.

Multi-year planning and budgeting require complete data on a proposal and the rejection of proposals with incomplete information - probably supported by regulations.

An incentive to encourage Line Ministries to more seriously adopt multi-year programmatic approaches to development would be through a move to multi-year programme budgeting rather than simply projections. It would not be possible to guarantee availability of SIG funds but priority could be given on an objective basis - as has been given to on-going programmes over new bids in this MTDP. Similarly, multi-year priority could be given to provision of counterpart funds for development partner supported programmes, as with the “new” proposals by MID for support to donor programmes and by MDPAC for counterpart funds for the Rural Development Programme.

4.4 Strengthening alignment and reporting of donor assistance

At 3.4.13, the Roadmap notes that “alignment of donor assistance to the MTDP through donor policies and SIG strategies has been weak with donors dictating their areas of assistance. Donors go directly to LMs and offer assistance in their chosen area”. It is suggested “development partners provide multi-year allocation of assistance according to budget classification”.

The bypassing of central agencies is inappropriate and inconsistent with international agreements but has become a characteristic of donor behaviour which, as noted in the Roadmap, needs to be changed so that aid becomes more effective in achieving the benefits sought in national plans and strategies.

The Roadmap indicates MDPAC as the responsible agency and needs to contribute towards changed behaviour in two ways. First, completing development of a comprehensive aid coordination strategy and then implementing it in partnership with donors. Second, through the involvement of sector and planning staff in the preparation of proposed programmes to optimise their design in relation to SIG objectives and benefits to Solomon Islanders.

4.5 Roadmap Extract

This section is an unrevised quotation of section 14.3.4 in the Roadmap. As is clear, the dates proposed are no longer realistic and need to be revised.

14.3.4 Integrating the preparation, monitoring and reporting of recurrent and development budgets

Recognizing that the development budget contribute significantly to economic growth through long term public investments such as the building of physical infrastructure like roads and bridges, over recent years the contents of the development budget and its linkages to the recurrent budget have been improved to build on what has already been achieved by having MDPAC and the Budget Division in MOFT work together in the preparation, monitoring and reporting of the total SIG budget. This will include holding joint budget consultations and the determination of the development budget resources early in the budget process.

The PFM Act requires the tabling in Parliament and the publishing of the Medium Term Development Plan (MTDP) by end September every year. In this respect the MTDP which contains the list of costed projects with the fiscal and budget strategies will be tabled and published at the same time. It is the intention to make the MTDP the central multiyear planning document and link this closely with the Medium Term Expenditure Framework (MTEF) which will be completed within this PFM Reform Roadmap. It is also aimed to strengthen the alignment of the donor assistance to the MTDP and improve the flow of information from development partners to help the multiyear budgeting.

Appendix: Development Programmes and Projects Proposed by Ministries

Summaries of the 2016 development budget projects, drawn from the programme frameworks, are presented below. These set out the project objectives, and anticipated outputs, outcomes and impacts. These are monitored as part of the regular Ministry and MDPAC monitoring process. This is further discussed in the NDS M&E performance Framework. Full project details are available in MDPAC, while budget details are set out in Ledger 4 of the 2016 Development Estimates, including projections for 2017- 2019.

70 Ministry of Agriculture and Livestock

70-1 Field Experimental Station and Biotechnology Infrastructure Development
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70-2 National Food Security Enhancement Programme
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70-3 Solomon Islands Coconut Industry Support
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70-4 Livestock Programme (Cattle Industry)
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70-5 National Bio-security Strengthening Programme
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70-6 Solomon Islands Coconut Industry Support Programme
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70-7 National Honey Development Programme (Honey in Rural Households)
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70-8 National Cocoa Industry Development Programme
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70-9 Agriculture Livelihoods Improvement and Export Based Expansion Programme
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70-10 National Oil Palm Development Programme
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70-11 National Agriculture Census
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70-12 Small Livestock Industry Development Program
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70-13 Extension Infrastructure
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71 Office of the Auditor General

71-1 Development Programme
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72 Ministry of Education and Human Resources

72-1 SICHE Transition to University Programme
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72-2 Education infrastructure
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73 Ministry of Finance and Treasury

73-1 MoFT Development Programme
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74 Ministry of Foreign Affairs and Trade

74-1 MFAET Infrastructure Programme
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75 Office of the Governor General

75-1 Government House Improvement and Rehabilitation Programme
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76 Ministry of Health and Medical Services

76-1 Public Health Programme
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76-2 Primary Health Care Programme
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76-3 Secondary Health care Programme
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76-4 Tertiary Care Services Programme (National Referral Hospital Rehabilitation Program)
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76-5 Water Supply & Sanitation
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76-6 Medical Supplies and Logistics Development Programme
76-7 National Program (cross cutting)
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77 Ministry of Infrastructure Development

77-1 SIG Obligation to Transport Donor Funded Projects Programme
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77-2 Disaster Housing Programme
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77-3 SIMSA Hydrographic Strengthening Programme
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77-4 Office and Green Terrace Redevelopment Programme
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77-5 Rural Transport Programme
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77-6 National Transport Fund Programme
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77-7 Navigational Aids Installation Programme
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77-8 Shipping Initiatives Programme
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77-9 Development Infrastructure Programme
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79 National Parliament

79-1 National Parliament Development Programme
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80 Ministry of Forestry and Research

80-1 Downstream Processing Programme
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80-2 National Forestry Resources Development Programme
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80-3 National Herbarium & Botanical Garden Fencing & Landscaping
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80-4 National Herbarium Research Laboratory Programme
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80-5 Native Forest Enrichment and Research
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80-6 Identification & Establishment of REDD+ Pilot Sites
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81 Office of the Prime Minister and Cabinet

81-1 PMO Reform Programme
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