FINANCE Minister Hon Harry Kuma says the Debt Management Framework (DMF) will guide any new borrowing proposal of the Government.
Minister Kuma highlighted this during his 2021 Budget Speech in Parliament on Tuesday this week.
The Finance Minister said this framework provides the guidelines for the National Government to enter into new borrowing.
Mr Kuma said the Framework does not encourage large, one off borrowings, as they limit the Government’s ability to:
a) Adapt to economic shocks; and
b) Fund yet to be identified development initiatives that may exhibit high economic and social returns.
“A Debt Management Advisory Committee (DMAC) has also been established to review borrowing proposals and make recommendations to the Minister for Finance,” Mr Kuma told Parliament.
He said at the end of 2020, the level of official Government debt was $1.226 billion.
Minister Kuma said this consists of $774.9 million in external debts, $451.2 million in domestic debts and $30 million in other debts.
The Finance Minister said the government plans to spend $84.8 million in debt servicing in 2021.
“At present, the Debt to GDP ratio is currently around 11.7 percent at the end of December 2020. This is a sustainable level. However, at this level of debt, the Solomon Islands has limited capacity to borrow to fund its needed development. To ensure that debt remains at a sustainable and affordable level, the government has resolved that new debt should only be incurred incrementally, in a steady and predictable manner,” he said.