Facing up to the challenges of development in Solomon Islands

Since its arrival in Solomon Islands in July 2003, the Australian Government-led Regional Assistance Mission to Solomon Islands (RAMSI) has made a number of significant achievements, including restoring peace in the nation and discipline to the budgetary process. Budget deficits have been contained, foreign reserves have recovered to healthy levels, inflation is down to single digits, and interest rates on domestic credit are trending down. These are no mean achievements, but the economy is as yet to show significant signs of a rebound. Even with the large fiscal stimulus provided by donor funds, per capita income over the past two years has only grown at an annual rate of 1.7 per cent. At this rate, it will take some 19 years to recover the ground lost during the crisis. It is indeed time for the Solomon Islands government to face up to the challenge of raising the rate of growth of output if the current generation is to see discernable improvements in their wellbeing.