The government incurred a fiscal deficit equivalent to 1.9% of GDP in
2012, reversing a surplus equivalent to 5.1% of GDP in 2011. It financed the
deficit by running down fiscal reserves that had been...
built up as a buffer against volatile revenue flows. The deficit reflected both lower revenues
and increased spending. Revenue in 2012 increased by 17% over 2011 in line
with strong nominal GDP growth, but this was less than the government
budgeted, as lost revenues from doubling the income at which personal
taxes are levied were higher than expected. Rises in spending were related
to hosting the Festival of Pacific Arts—whose cost equaled 2.5% of GDP—
and increasing constituency funds paid to members of Parliament, which
have doubled in recent years to 4% of GDP.
Public debt continued to fall from the equivalent of 19% of GDP in
2011 to 15% in 2012 (Figure 3.34.5). The country resumed concessional
borrowing in 2012 to finance the sovereign component of the Broadband
for Development Project, which will connect the country to an undersea
fiber optic cable.
Sources: Central Bank of Solomon Islands; ADB estimates ( http://www.cbsi.com.sb/index.php?id=105 )
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