P. 1
Solomon Islands - Cyril Teboua

Solomon Islands - Cyril Teboua

|Views: 24|Likes:
Presentation by Solomon Islands Ministry of Finance and Treasury on DeMPA PROCESSES AND IMPLICATIONS - The Solomon Islands Experience
Presentation by Solomon Islands Ministry of Finance and Treasury on DeMPA PROCESSES AND IMPLICATIONS - The Solomon Islands Experience

More info:

Published by: Asian Development Bank on Apr 12, 2010
Copyright:Traditional Copyright: All rights reserved


Read on Scribd mobile: iPhone, iPad and Android.
download as PDF or read online from Scribd
See more
See less




Solomon Islands Experience Presented at the Asian Regional Public Debt Management Summit 3rd – 5th November 2009 Kuala Lumpur, Malaysia By: Cyril Teboua

Presentation Outline

I. 2. 3. 4. 5. 6. 7.

Map of Solomon Islands Some Facts about the Country Debt Situation DeMPA Processes DeMPA Mission I Results Implications Conclusion

1. Solomon Islands

Source : University of Texas Library Website, Perry-Castañeda Library Map Collection

2. Some Background Facts
Population (2009 Estimate) - 518, 338 Independence – 7th July 1978 GDP –USD 642 million (USD $1,266 per capita) GDP Growth (CBSI prediction for 2009) – 1% Inflation (CBSI July 09) – 5.9% Major Export Commodities and Revenue Earners
Logs, Copra, Fish, Palm Oil, Cocoa and Tourism Gold mining production is expected in 2010 Nickel and other minerals are also expected in a couple of years

Major Imports
Fuel and Manufactured goods

Classified as LIC

Some Background Facts Cont…..

Solomon Islands is a Non-HIPC country Not qualified under G8 for Debt Relief Some of the initiatives to contain the level of debts includes;
No further borrowing until “Green Light” status under WB/IMF debt distress rating system is achieved Setting aside 15% of government revenue (reduced to 10% in 2009) for debt servicing Fiscal strategy built around balanced recurrent budgets and bias against borrowing to fund the losses of state owned enterprises.

DeMPA Mission February 2009

3. Debt Situation

Official Public Sector Debt SBD$’ million
1,800.0  1,600.0  1,400.0  1,200.0  1,000.0  800.0  600.0  400.0  200.0  ‐ Domestic Debt External Debt


1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040

Debt Situation Cont…..
Debt sustainability indicators

2005 Debt/GDP Debt/exports Debt/Government revenue Debt Servicing/Government revenue Debt Servicing/Exports
53% 210%

47% 168% 189% 9% 11%

38% 128% 129% 11% 11%

31% 101% 95% 11% 11%

25% 95% 88% 6% 6%

22% 94% 79% 5% 6%

19% 90% 70% 5% 7%

16% 91% 63% 5% 8%

* These are Ministry of Finance and Treasury estimates * Projections for 2009‐2012 assume that the Government does not undertake any further borrowings and that no contingent claims against the Government are realised.
SIG WB/IMF DSA Targets: Debt service in percentage of Exports 15 Revenue 25 SIG WB/IMF DSA Targets: Debt in percentage of Exports 100 GDP 30 Revenue 200

Debt Situation Cont…..
4% 5%

13% 31%





Currency Composition External Debt

4. DeMPA Process
In the application of the DeMPA Tool in Solomon Islands, it was clear from the mission that, the tool is a; Standardized metric used to assess how public debt management is performed. Objectives were to:
Assess debt management performance and monitor progress Support design of actionable Capacity Building (CB) programs Strengthen coordination with service providers

Synergies with PEFA
There is a direct link between PEFA and DeMPA PEFA assesses critical aspects of Public Financial Management including some aspects of debt management. DeMPA is more focused on debt management operations, functions and institutional environment

DeMPA Process Cont…..
Coverage and Scoring encompasses
Central Government debt management and connected activities Provides a set of rating from A to D

The DeMPA report was developed and finalized in close consultation with host country authorities Highlights strengths and areas where improvements in debt management capacity and institutions are needed

No conditionality No specific recommendations Disclosure driven by country authorities – openness encouraged Divergent views cited – no secrets, no hidden agenda

5. DeMPA Mission I Findings

DeMPA Mission I Findings Cont…..

Establishment of formal Debt Management Unit (DMU) in MoF&T to carry out debt restructuring and consolidate DM functions Improvement in macro coordination resulting in the country’s adoption of the 2009 fully funded Recurrent Budget and the development of a Medium Term Fiscal Strategy (MTFS)

In terms of the Changing Context , mission recognizes that;
Growth in macro imbalances with imports outpacing exports Reduction in key export sector and forex and revenue earners – mining sector slow in getting started Unsustainable harvesting of logs and its impact on the environment Strong search for alternative source of growth Tightening in monetary and fiscal policy that calls for sharp reduction in current expenditure levels

DeMPA Mission I Findings Cont…..

6. Implications

The DeMPA mission findings have under its 6 broader categories of assessment, clearly identified where the strengths of DeM activities and operations lies in Solomon Islands, and at the same time, highlights areas for improvements. Of significant importance, the priority areas most needing attention were:
1. 2. 3. Formal Debt Management Strategy Strengthening of audit framework, including mandating performance audits Strengthen DMU in terms of ; staff capacity, functions and, procedures & expertise, particularly with: Analytical capacity (incl. DSA) Primary responsibility for external debt recording and reporting to be handled by DMU and Integration of cash-balance forecasting with DeM Data integrity and secure access and backups Preparations for future borrowing

4. 5.


DeMPA is a very useful tool particularly for countries like Solomon Islands where DeM is in its infant stage and lacks the necessary expertise to advance DeM operations and functions. Sets out a road map on which strengths and weaknesses can be identified and highlighted for appropriate actions Provides flexibility in use depending on a country needs that leads towards adopting internationally recognized ‘best/sound’ DeM practices Enables a country full freedom to decide on policy directions A comprehensive assessment tool that provides avenues for better utilization of a country’s energy and resources. WB’s Debt Management Facility (DMF) – mechanism for supporting further enhancement of DeM

Thank you

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->