2009年-世界发展银行全球_Debt_Management_Performance_Assessment___Solomon_Islands_26页_8mb

Debt Management Performance Assessment (DeMPA) Summary - Solomon Islands

Core Content

The Debt Management Performance Assessment (DeMPA) was conducted by a World Bank team in February 2009 in Honiara, Solomon Islands. The mission aimed to evaluate the country's public debt management performance using a set of 15 indicators. The assessment highlighted both the progress made and the areas needing improvement in the country's debt management framework.

Main Views

The assessment found that the Solomon Islands meets the minimum requirements for debt management in the following areas:

• Legal framework
• Coordination with monetary policy
• Debt reporting

However, the country does not meet the minimum requirements for the following indicators:

• Debt management strategy
• Managerial structure
• Coordination with fiscal policy
• Domestic borrowing
• Debt records
• Debt administration and data security
• Segregation of duties, staff capacity and business continuity

Key Information

1. Debt Management Context

• The Solomon Islands is part of the Melanesian island chain in the South Pacific, and a Commonwealth member.
• The country has been poorly performing in terms of economic development and slow progress towards the Millennium Development Goals.
• The economy is highly dependent on agriculture, fishing, forestry, and services, with logging and gold mining being key contributors to GDP and exports.
• The banking sector is well capitalized, but capital markets and microfinance are underdeveloped, limiting access to financial services in rural areas.
• The country has a no new borrowing policy, which is in place to manage debt sustainability and fiscal responsibility.

2. Debt Sustainability and Debt Management

• Public debt fell from 57% of GDP in 2006 to 32% of GDP in 2008, with external debt making up ~85% of this total.
• The Honiara Club Agreement (2005) led to substantial debt forgiveness and restructuring, and the government aims to reduce the NPV of external debt-to-GDP to 30% before resuming new borrowing.
• Debt Service Fund (DSF) is used to allocate a portion of government revenues to service debt.

3. Technical Assistance and Institutional Support

• Commonwealth Secretariat has provided technical assistance since 1989, with regional advisors in Port Moresby and Suva.
• Australia has been a key partner, with technical advisers supporting the Debt Management Unit (DMU) and debt restructuring efforts since 2003.
• New Zealand Aid contributed to the Honiara Club in 2005 to negotiate debt relief.
• The World Bank has a country office in Honiara and has supported debt management through missions and assessments.

4. DeMPA Assessment Results

The DeMPA tool evaluates 15 Debt Performance Indicators (DPIs) across five categories:

• Governance and Strategy Development
• Coordination with Macroeconomic Policies
• Borrowing and Related Financing Activities
• Cash Flow Forecasting and Cash Balance Management
• Operational Risk Management
• Debt Records and Reporting

The scores for the key indicators are as follows:

5. Areas for Improvement

The mission identified several areas requiring improvement:

• Evaluation of debt management operations
• Auditing
• External borrowing
• Loan guarantees, on-lending, and debt-related transactions
• Debt administration and data security
• Segregation of duties, staff capacity, and business continuity

These areas are considered priorities for capacity building and reform.

Conclusion

The DeMPA assessment underscores the importance of sound debt management practices in maintaining debt sustainability in the Solomon Islands. While the country has made significant progress, it still faces challenges in implementing a formal, cohesive debt management strategy, ensuring effective coordination with fiscal and monetary policies, and strengthening its institutional capacity in debt management. The ongoing financial crisis and declining export revenues further complicate the situation, emphasizing the need for prudent fiscal policy and transparent debt management practices.