The objective: To ensure the financial position of the Solomon Islands Government is stable and sustainable over the longer term.
RAMSI advisers are working with their Solomon Islands counterparts to improve public financial management systems within the Solomon Islands Government. These improvements are designed to support more sustainable management of public money over the long-term and ensure that improved financial procedures, audits, budgets and reporting systems are implemented across the whole of government.
The work has already had a significant impact. Government employees are now being paid on time, the extensive backlog of uncompleted government financial statements has now been cleared, government debts are being managed more sustainably and fully-funded budgets are now being delivered by the Solomon Islands Government. The Government’s cash management processes and cash balances have been significantly improved, new controls on expenditures have been implemented and new budget processes are helping the Government improve the quality of its spending.
The strategy
RAMSI will work with the Solomon Islands Ministry of Finance and Treasury to:
- Upgrade financial management systems.
- Establish a functioning, efficient Solomon Islands Government Accounting Service.
- Improve budget processes, presentation and economic forecasting.
- Modernise government financial rules and regulations to improve the delivery of government services.
- Stabilise government finances.
- Improve the capacity for internal auditing within the Solomon Islands Government.
- Improve professional skills of Ministry of Finance and Treasury staff.
To learn more about some of the specific targets that have been set for each strategy, download the Partnership Framework document.
The challenges
Despite progress, there are still substantial challenges in the work to improve the Solomon Islands Government’s public financial management practices.
Many of the financial systems used across the Solomon Islands Government require major upgrades and new systems involve a great deal of training and development to guarantee their long-term benefit.
The expected decline of one of the country’s major revenue sources – logging – will place pressure on the national budget.The Solomon Islands Government will need to manage its spending and revenue carefully to ensure that basic services are delivered to people across the country.
In addition, information on public expenditure was previously very difficult to access, and very little financial information, such as statistics and financial data, has been available to measure the effectiveness of public expenditure in delivering outcomes.
RAMSI's work
RAMSI advisers work alongside their Solomon Islands colleagues in the Solomon Islands Ministry of Finance and Treasury's Budget Unit, Debt Management Unit and Treasury Division to help build long-term stability within the Government's finances, by improving the financial management systems within the Solomon Islands public service. Their work covers the following key areas:
1. Upgrading financial management systems
Implementing financial management systems across the entire Solomon Islands Government remains a key priority for planning and stability of Government finances. Key targets for this work include:
- The implementation of a Budget Management System in the Ministry of Finance and Treasury and the Solomon Islands Ministry of Development, Planning and Aid Coordination.
- The upgrade of the Solomon Islands Government's Financial Management Information System.
- The replacement of the Solomon Islands Government payroll system.
2. Solomon Islands Government Accounting Service
The strengthening of the Solomon Islands Government Accounting Service is a priority for the Solomon Islands Government. The reinvigoration of the Government Accounting Service aims to improve core financial management skills across Government, by providing training in all aspects of financial management such as budgeting, cash management and general accounting skills. The key targets for this work include:
- Adequate numbers of appropriately qualified staff recruited to the Accounting Service throughout Solomon Islands Government Ministries.
- Training in Solomon Islands Government Accounting Service procedures across all Ministries.
- Greater consistency in employment conditions for Government Accounting Service staff.
3. Budget
Assisting the Solomon Islands Government to deliver a clear, costed and financially-responsible budget remains at the core of RAMSI's assistance to the Ministry of Finance and Treasury. The key targets for this work include:
- The implementation of a more user-friendly budget format.
- Higher levels of capability in Ministry staff of analysis, economic forecasting and budgeting.
- Improved budget planning and decision-making processes.
4. Debt management
Creating long-term strategies to stabilise the Solomon Islands Government's finances and manage debt remain key priorities of RAMSI's assistance. Key targets for this work include:
- Development of a medium-term fiscal and debt management strategy, which is updated annually.
- Sustainable management of Government debts.
5. Financial rules and regulations
RAMSI is assisting the Solomon Islands Government to review and maintain its financial rules and regulations. Key targets for this work include:
- The establishment of a financial framework function within the Ministry of Finance and Treasury to ensure that financial legislation and financial expenditure guidelines remain relevant to the changing environment and needs of Government and ministries.
- Solomon Islands financial reporting is compliant with international accounting standards.
- Revision of the Solomon Islands Government 'Financial Instructions'.
- Improved compliance and training with Ministry of Finance and Treasury corporate policies and financial instructions.
6. Audits
RAMSI advisers will be assisting with the strengthening of the Ministry of Finance and Treasury's Internal Audit Division. Key targets for this work include:
- Internal Audit Division systems and processes are established and operating effectively.
- Internal Audit Division undertakes internal audits of all Solomon Islands Ministries.
Achievements so far
RAMSI's assistance to the Ministry of Finance and Treasury in the area of public financial management has seen a number of key achievements. Some of these include:
- Solomon Islands debt has been reduced from over 100% of Gross Domestic Product to 24% over the eight years of RAMSI's assistance.
- Government employees are now being consistently paid on time, and a new government payroll system has been implemented for payment of all Solomon Islands Government employees.
- Monthly and annual government financial reports are now being consistently undertaken in a timely fashion.
- The Solomon Islands Government Accounting Service support team has now been renewed within the Ministry of Finance and Treasury, with a strong focus and purpose.
- Budgets have been fully financed without additional borrowing since 2004.
- A new budget management system, implemented in 2009, is now being used to produce and deliver the Solomon Islands national budget.
- A Solomon Islands Government Medium-Term Fiscal Strategy is now published annually.
- The financial impact of the Global Economic Crisis in 2008-2009 was minimised through a range of revenue and expenditure measures implemented by the Ministry of Finance and Treasury, with RAMSI assistance.
- International donors are now able to channel funds, including budget support, through Ministry of Finance and Treasury systems.
- The significant backlog of uncompleted Government financial statements has been cleared.