Solomon Islands riot cost US$66million

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    Last month’s riots has put the nation on a “development in reverse” trajectory, according to the Solomon Islands Central Bank (CBSI), which released an updated assessment on the cost of damage Friday, 03 December.

    “The extent of the adverse impact on the economy is extensive and estimated to have reached SB$534 million (US$66m), up from the SB$227 million (US$28m) initially estimated.

    There are around 63 buildings being burnt and looted, revised up from the initial 57. With this level of damage, economic growth for 2021 is now estimated to contract by 0.6 percent, with growth for 2022 expected to weaken subsequently. This reverses the positive 0.4 percent growth projected earlier,” CBSI said.

    Other sectors are expected to feel the brunt in the coming months and the central bank is forecasting a bleak economic scenario as government stands to lose a third of its monthly revenue, inflation will rise, driven by a shortage of food and tobacco, while external reserves will be stretched thin by high imports and outward remittances related to rebuilding activities.

    CBSI also warned that non-performing-loans will rise, as affected businesses held a total of SB$43m (US$5.3m) in loans from financial institutions.

    “With cash buffers already stretched, and a pessimistic revenue outlook, it will be a challenging fiscal task to maintain critical services and at the same time provide stimulus support to affected businesses in 2022 and beyond. More budget support or debt financing will be needed for this,” it said.

    Last week, an Australian-led defence mission made up of police and soldiers from Australia, New Zealand, Papua New Guinea, and Fiji was deployed to Honiara where it is expected to stay for a few weeks.

    SOURCE: ISLANDS BUSINESS/PACNEWS