THE government had decided to guide the development of the 2021 budget from a ‘top-down approach.
Minister for Finance and Treasury Harry Kuma said this when he delivered the 2021 Budget speech in the parliament, Tuesday.
“Let me now turn to the 2021 Budget Strategy Framework
“In times of hardship, it is crucial that all government ministries adhere to government policies and not do their own usual business,” he said.
The 2021 budget process taken by the government was slightly different from the previous years' budget preparation
He told the parliament that the Government has decided to delay the 2021 budget preparation late last year to ensure the government has sufficient time to revise and develop its policy priorities along its Policy Redirection mandate for 2021 and beyond.
“For example, in 2018, the government spent $557.5 million on investment projects in both the productive and resource sectors. This further declined to $412.5 million in 2019 and to $355.5 million in 2020,” he said.
Kuma further added that this downward trend is a concern to the government.
Both the productive and resource sectors are important pillars of the economy.
“If Solomon Islands economy is to grow and provide jobs for the growing population, then adequate financial resources must be allocated to both the productive and resource sectors.
“This explains why the government has redirected resources and increase budget allocations to both sectors to $580.2 million in 2021,” he added.
Kuma said that in this trying time, it is very important that our limited financial resources be prioritised and only focus on economic activities that would provide the highest socio-economic benefits to our people.
In terms of the budget overview, Kuma said the government has planned an overall deficit of $329 million in the 2021 budget.
He said total consolidated revenue is estimated at $3.710 billion and total expenditures at $4.039 billion. Of the total consolidated revenue estimates, total domestic SIG revenue is projected at $3.009 billion.
For other ministries, Kuma said non-tax revenue is estimated at $433 million.
“This is 20 percent below the 2020 original revenue estimates of $546 million and 2 percent below the revised revenue estimates of $441 million in 2020,” he added.
The 2021 budget will be debated in the next parliament sitting
Meanwhile, Minister Kuma also announced in Parliament that based on this independent review, all SIEA tariff rates have been reduced, and will be effective as of 1st May 2021, these includes;
- Domestic or household customers are likely to see a reduction of 22 percent,
- Commercial customers are expected to see a decrease of around 27 percent, and
- Industrial customers are expected to see a fall of 5 percent.
“The government expects an overall reduction averaging by 18 percent. SIEA will provide the details of the reduced rates in the coming weeks before they are implemented,” Minister Kuma said.
Solomon Islands Chamber of Commerce and Industry (SICCI) in a brief statement last night welcomed the news.
“We are understandably heartened by the news that electricity tariff rates are going to be reduced starting in May 2021.
“As the peak body representing the private sector in the country, we welcome the decision by the Government to revise the current Electricity Tariff Regulations as timely and relevant for the long-term economic recovery ahead,” the statement said.