THE Solomon Islands Government is operating a robust and resilient debt management system and there is no cause for alarm in view of recent media reports claiming the government is attempting to obtain a US$100 billion loan from a Chinese individual.
A statement from the Ministry of Finance and Treasury on Thursday said the government’s borrowing is well managed and strictly guided by the Public Financial Management Act (PFMA) and the Debt Management Framework (DMF).
Under these guidelines, the Ministry of Finance and Treasury is operating a robust and resilient debt management system that is based on global debt management modules and cannot accept any borrowing that is beyond our capacity to service.
In view of recent speculations that the Solomon Islands is at risk of the so-called “China Debt Trap”, the Ministry of Finance and Treasury is proud to announce the Solomon Islands Government National Debt portfolio has not recorded a single loan from the People’s Republic of China (PRC).
“It’s important to note that our SIG debt is well within the affordable and sustainable level and the threshold has not been breached to date and as a responsible government, we cannot accept loan funding that is not affordable and are careful to only accept loans that will generate returns which the government has the capacity to repay,” the statement said.
The government is aware that any financial commitment should not undermine our sovereignty or cause any adverse impact on the economy which includes inflationary risks.
Contrary to media speculation, these are areas of concern to the government which the current SIG Debt Management system is designed to safeguard.
The Ministry of Finance and Treasury has rejected media reports in relation to a US$100 billion loan introduced by the promoter of the financing proposal Mr. Terry Wong.