Solomon Islands Government to borrow for growth projects while restraining payroll hike

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The Government will seek concessional debt financing to implement the Tina Hydro and the Under Sea Internet cable projects in 2017, while, at the same time restrain the increase in payroll cost for public servants.

These are elements of a series of measures outlined by the Minister of Finance and Treasury Hon. Snyder Rini when launching the 2017 budget preparation process in Honiara on Monday.

The Tina River Hydro Project and the Under Sea Internet Cable are expected to boost the local economy immediately and in the medium to long term. Investing in the Tina River Hydro Electric program would deliver cheaper and more sustainable electricity to Honiara to stimulate economic activities. 

The Under Sea Internet Cable would have less immediate impact during construction, but the World Bank estimates that in the first 5 years of operation it will boost economic growth by 1 per cent in each year when in becomes operational by the end of 2017.

“For such large investment projects that stimulates businesses and bring sustained economic growth opportunities into the future, the Government will seek concessional debt financing to implement them,” Mr Rini said.

Meanwhile, as part of its cost saving measures, the Ministry of Finance will work closely with the Ministry of Public Service to control the increasing payroll cost for public servants in 2017.

The payroll has been growing at more than 10 per cent for the past six years and the Minister has highlighted that the payroll budget including COLA will be capped at $1.0285 billion in 2017.

Under this measure, more efforts will be instituted in remuneration and payroll reforms, and there will be a general freeze on recruitment until the reforms are implemented.

To achieve this, there are a number of measures that Government will take including a general freeze on recruitment in 2017, except for essential services and for positions that are important to deliver on the priority policies of the DCCG.

These special cases of recruitment must be approved by Cabinet before the recipient ministry commences the recruitment process and at the same time there will be stringent measures for overtime costs.

These measures are expected to make significant savings by reducing the payroll below $1 billion in 2017, and will create a permanent and lasting structural adjustment to budget settings.


ENDS///

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