Home Economy Kuma outlines key guiding principles for 2020 budget

Kuma outlines key guiding principles for 2020 budget

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Last week, the Finance Minister Honourable Harry Kuma presented the 2020 National Budget for second reading in Parliament.

Hon. Kuma says government sees the 2019 Budget as the beginning of a series of budget that will refocus its resources on the economic potential of Solomon Islands, as the nation is at the crossroads of its development challenges and opportunities.

The theme of the 2020 Budget is, “Together, Towards Growing Our Economy”.

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Mr. Kuma says the theme is built on the lessons learnt from the past and present, and calls for refocusing of resources to develop Solomon Islands into a nation, one that is economically strong, fair and sustainable.

“The theme also calls for a collective support and participation from the government, civil society organisations, development partners and the general populace of the Solomon Islands.”

The Finance Minister then outline key guiding principles for the 2020 Budget as below:

  • First, the number one policy guide for the 2020 National Budget is maintaining responsible and prudent macroeconomic and fiscal management as Government resources are directed towards productive and resource sector. While the needs are significant, the government will continue to take a disciplined and prudent approach to the allocation and usage of public resources.
  • The second policy guide for the 2020 Budget is to improve the quality of expenditure and improve services by refocusing resources to targeted investments and front line service delivery to ensure that within our fiscally constrained period, we do not disrupt essential service delivery to our citizens.
  • The third policy guide is to build a strong and sustainable economy, one that will provide economic growth and opportunities for our people to realise their full potential.

“….We need to move away from business as usual and actually getting things done over the next four years. Turning around public sector behaviour and achieving this will not be that easy, but as responsible leaders, we choose to make some difficult decisions for the long-term benefit and development of our beloved nation.”

Reflection on development challenges the country has gone through over the last 40 years, Mr. said that since the independence in 1978, Solomon Islands continue to face significant and diverse development challenges over the last 40 years.

Major challenges facing our nation remains eminent despite our progress as an independent Sovereign nation, which include;

a. Low economic growth

b. Weak governance at all levels and

c. Frequent socio-political instability

“At the global stage, the ongoing trade war between USA and China is causing deepening uncertainty and instability in global financial markets, raising key risks to the outlook of Solomon Islands in the short to medium term since most of our trade receipts comes from China.

“Domestically, the expansionary fiscal policy previous governments have undertaken over the past 8 years increased total spending by 21 per cent. This is a significant investment targeted to rural areas where 80 per cent of the people live in Solomon Islands.

“Total budget allocation towards the resource and productive sectors over the recent years have dropped from 15 per cent of the total SIG consolidated budget in 2012 to 6 per cent in 2019. This decline is consistent with the fall of nominal GDP growth by 5 per cent from 9.5 percent in 2013 to 4 percent in 2019 despite increased government spending over the same period.”

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