The Government maintains that the $309m Economic Stimulus Package in 2020 has reached its policy objectives.
The ESP was heavily criticized by the public on the way it was handled as many claimed that it was a waste of government resources— and only benefited cronies of those of the ruling coalition.
Nearly two years later, the issue was brought to the fore again this time in a press conference held yesterday. Journalists had asked if the ESP really worked? And was it helping the economy now, as amplified by the government.
In his explanation, Permanent Secretary of Finance and Treasurer McKinnie Dentana did not directly answer the questions.
He instead went at length to explain projects that were implemented under the ESP and how they have contributed towards the economy.
“Yes of course it reached its policy objectives as some of these support have helped the country’s economy recover in the medium to long term,” said the PS.
He stressed that one of the main reasons for the ESP was to prevent the economy from deteriorating due to COVID.
He said they initially estimated around 4.5% negative growth of the economy due to COVID in 2020. Against that backdrop, Dentana said the government put in place a policy to stop the deterioration of the economy.
“At the end of the year we saw that the deterioration of the economy was not severe as we had expected during the initial assessment.
We reached negative growth but of 3.8% compared to what we expected which was -4.5.
Yes, we have achieved the object of the policy. We prevented the economy from further deteriorating,” said the PS.
Also, Dentana said the policy was also to ensure there was domestic economic activity happening despite of COVID.
He recalled that trading had continued as there was supply of cocoa, timber, copra and others into the market.
Dentana highlighted that in 2020, for example, copra production had increased significantly.
In comparison, a total of 8,000 metric tonnes of copra were produced in 2019 whilst in 2020, 12,000 metric tonnes were exported.
Copra was one of the commodities that the ESP supported through the stabilizing of the price via subsidies and support in transport so as assistance to farmers to harvest their products and brought it to the market.
The other was timber.
Dentana said the reaction of timber in the market happened in 2021 as most of the support was for exporters.
He said that in 2019 around 542,000 cubic metres of timber was exported in 2020 around 500,000 cubic metres whilst 763,000 in 2021.
As for kava, around 30,000 tonnes was exported in 2020.
Dentana said besides that they were also supporting State Owned Enterprises, private companies and commitment to infrastructure projects.
He pointed out Taba’a, Kware’e and Kwai bridges on Malaita that are now fully operational as amongst those that benefited.
Additionally, Seghe and Taro airport upgrades should commence this year and the ramp in Kirakira.
“So those are the mid infrastructures that we supported under the policy that helped to drive economic activity to support the recovery effort that we faced due to COVID-19,” he said.