The Central Bank of Solomon Islands (CBSI) has conducted an initial impact assessment over the damage to the economy caused by the recent unrest and riots in Honiara since Wednesday.
The findings have revealed that the loss to the local economy is estimated to be around SBd$227 million at a minimum.
Domestic economic activity, including employment, was significantly impacted with a broad contraction in the economy estimated for 2021. This will see a reverse in the revised 0.4% growth projected for 2021. A complete picture of the contraction will be provided in the coming days.
Honiara being the nation’s capital accounts for around 30% of the country’s overall GDP, and more than half of this was destroyed both by fire and by pillaging. The sectors that were mostly impacted were the wholesale and retail, manufacturing, and services.
A total of 56 buildings were burnt and looted; some buildings house more than one business. Jobs affected is estimated to be close to 1000 employees.
In terms of fiscal operations, the Government is expected to lose, in the near term, around SBD$36 million from tobacco excise taxes alone.
Other revenue sources that will also be affected, but are yet to be verified, include company tax, GST and PAYE. This will add to an already tight fiscal condition.
On the external side, the impact will be felt through higher imports to compensate for the damaged goods which will result in widening the current account deficit.
The Central Bank Governor, Dr Luke Forau, stated that the Solomon Islands economy is already in a weakening state, and is struggling to recover from the COVID-19 pandemic and its adverse impact on the economy. However, the unfortunate events that occurred over the past few days have further exacerbated this weakening state of the economy.
Governor Forau expressed that it will take at least, at a minimum, 12 months for most of those businesses that have been affected to recover, although this will depend on the extent of their resilience and financial resources.
CBSI will make a thorough assessment of the cost of the riot in the coming days.
Sources: CBSI Press Release and Solomon Times Online.
In separate news reports today, Saturday, the RSIPF has more than 100 suspects arrested for looting and rioting.
Also, today, the Leader of the Opposition, Hon. Matthew Wale, has announced that he was filing a notice of a vote of no confidence in the Prime Minister.
Hon. Wale has reportedly claimed without a political solution the tragic situation will remain, even with foreign forces supporting the RSIPF to regain control and maintain order in Honiara, and I quote.
The leaders must make a decision, they cannot avoid it or postpone it. This is the moment for leaders to stand up, and not run away and hide. The level of anger in the public has reached levels worse than in 2006, and if leaders are deaf and insensitive to it, they will condemn us to more trouble. The anger is still here.
Hon. Wale said he has reached out to as many Members of Parliament as he can to seek dialogue on ways forward.
Hon. Wale calls on those protesters who have engaged in violence and looting to stop. Let us now allow the political process to resolve the situation in our search for a solution.
Furthermore, Hon. Wale has expressed great dismay at the burning of the Hon. Prime Minister’s private residence at Lunga.
In addition the Leader of the Opposition said he thanked the Commissioner of Police and his hardworking officers who had committed themselves to save lives. It is unfair to expect the police to find a solution to this situation. Hon. Wale said.
He also gave thanks to Australia and PNG for sending forces to support the RSIPF. But he said Australia and PNG cannot give us a solution either.
End of quote
Source: Opposition Press