The Economic Stimulus Package policy is initiated, formulated and implemented by government to cushion the negative impact of COVID 19 on our economy.
The government made the reminder this week ahead of the continuation of the processing of applications by the committee charged to overseeing the implementation of the Economic Stimulus Package (ESP).
Government states that the ESP addresses the economy through four different components and they are as follows the first component looks at immediate measures to ensure economic activities continue to function this include tax relief, rental subsidies and youth engagement.
Government adds that the second component which is the immediate recovery measure 1 include investments into productive and resource sector. The third component of the package is the immediate recovery measure 2 which include capital injections and support to SOEs and government institutions (DBSI, Solomon Water, Solomon Airlines, Soltuna etc).
Government further adds that the fourth component is to address medium to long-term growth. This part of the package commits the government to bring forward key unfunded major infrastructures (Kirakira ramp, Maluú wharf, Tabaá bridge and Seghe domestic airport).
Government reveals that at the public calling for applications on 26th May 2020 and ending at July 2020, the number of applications received were overwhelming. The value of applications received exceeds 6 billion dollars.
However, with support from donors and international financial institutions as well as the government only $306m is available for ESP and with such limited resources government has to step up the verification process of the applications.
Government adds that amongst the applications, almost 60 percent of them are start- ups and this already defeat the intention of the ESP as it poses to assist existing businesses only.
The coordination body appointed by government known as the Economic Stimulus Package Oversight and Implementation Committee (ESPOIC) was and is under tremendous pressure to ensure genuine applicants received some funding assistance regardless of the amount each one applies for and gets.
But government states that the verification process of the applications is certain to be stringent and this is affirmed by the inclusion of a steering technical committee that is comprised of government officials whose responsibility includes accessing of data from various institutions.
Government says the technical committee members are tasked with the responsibility of verifying the authenticity of ESP applications utilizing all public and private sector institutions including constituency offices.
Government further adds that since August 2020 to December 23rd 2020, government expended up to $206,542,546.09 and now up to $100 million specific for all the remaining sectors is left in the Central Bank ring fenced accounts.
Government says of the funds expended so far, productive and resources sectors secured the highest funding with $84,685,217.64, equity support to State Owned Enterprises (SOEs) $68,000,000.00, support to infrastructure initiatives $41,678,280.13 and support relief and grants $12,179,048.32.
Government reiterates that the three guiding principles of the ESP are as follows;
- Quick economic return, which means the applicant’s proposed activity for funding should have a quick turnaround preferably not more than six months;
- Significant impact to the rural and national economy by encouraging income generating activities and employment. This means the proposed activity should employ a good number of people and contributes hugely to the national economy through taxes, business licenses and growth in employment;
- Platform for long term economic recovery post covid-19 which sets the foundation for multiplier effect from economic activity, investment and growth.
In the meanwhile, the ESPOIC continues to carry out its monitoring and evaluation exercise as well- this is to ensure that recipients are utilising the funds they have applied for to its intended purpose(s).
Government says the majority of recipients are receiving materials instead of cash money and this is part of the stringent measure for applicants to be honest and also be held accountable.
Government adds that the ESPOIC will continue to review the applications this week and onwards and successful applicants will be notified in the process.
Government Communication Unit