OVER 50 businesses of the Solomon Islands Chamber of Commerce & Industry (SICCI) were presented a post analysis study of the 2018 National Budget.
This is the first forum to be organized in the country for businesses to hear an independent and in-depth analysis of the National Budget and the implications it has for the private sector, growth and the economy.
The initiative to understand the Budget is driven by SICCI in partnership with Deloitte, a professional service provider that also do private sector national budget post analysis studies in Papua New Guinea for the private sector.
Those attending the discussions were given the opportunity to ask questions to the Panel of four speakers; Donald Kiriau (Treasurer of the Economics Association of Solomon Islands [EASI]), Andrew Harris (Partner Deloitte Tax & Business Services), Frank Wickham (General Manager of National Fisheries Development [NFD]) and Tony Hughes (a freelance consultant and Transparency Solomon Islands Board Member).
The panel brought an in-depth overview of how the private sector and economy will be affected by the budget cuts – occurring mostly in the Development Budget. Most significant is the decreased expenditure in the Development Budget, which has been subject to more than $400 million cut from 2017.
One of the issues discussed is on forecasted revenue growth, envisaged to grow by around 10% in 2018 compared to 2017, with new IRD measures and the increase in import duty on fuel contributing to the revenue growth.
The Budget has certain implications which may impede future long-term growth due to the reduction of capital expenditure, the rise in tax burden and cost to businesses and lesser support for key growth industries.
Nonetheless, some key positive aspects of the national budget include, a greater focus on fiscal consolidation and achieving a balanced budget, while rebuilding cash buffers over the medium term.
EASI Treasurer and Panel member, Mr Kiriau further explained.
“After the past couple of years of budget deficits, the fiscal consolidation in the 2018 budget has been anticipated. It is indeed welcome as it would contribute to rebuilding the buffers and ensuring fiscal discipline.
“However, there are also issues surrounding the quality and efficiency of the development budget.
“In the near term, the reduction in the capital expenditure could lessen the impact of government spending on the economy and the private sector. In the long term, the concern is that sharp reductions in suitable public investments might hamper the country’s productivity and future growth prospects.”
There was also strong emphasis for reform to the current tax system to support growth.
Wickham reflected on his expertise in the fisheries and education sectors when providing comments on the Budget, while veteran economist Hughes supported the panel dialogue with his wealth of experience in development policy.
SICCI CEO Dennis Meone, said he was satisfied with the analysis and depth of discussions.
He emphasized SICCI’s continued partnership with the government and assured businesses that SICCI will use existing platforms such as the MOU with the government and the Advisory Committee to push for more private sector consultation and involvement in shaping government policies and important reforms.
“This budget presentation was an important session to help inform the business sector about the Budget and what it may mean for business activity,” the CEO acknowledged.
“The yearly Budget is the key fiscal tool that guides government expenditure each year, so we see increased dialogue around the Budget as a positive thing.”