CBSI estimates loss of $ 227 million SBD due to unrest
Central Bank Governor Dr Luke Forau said the Solomon Islands economy is already in a weakened state and struggling to recover from the COVID-19 pandemic and its negative impact on the ‘economy.
The Central Bank of the Solomon Islands (CBSI) has conducted a first impact assessment on the damage to the economy from the recent unrest and riots in Honiara since Wednesday.
The results revealed that the loss to the local economy is estimated to be around SBd $ 227 million as a minimum.
National economic activity, including employment, has been strongly affected by a general economic contraction estimated for 2021. This will lead to a reversal of the revised 0.4% growth forecast for 2021. A full picture of the contraction will be provided in the next few days.
Honiara, the country’s capital, accounts for around 30% of the country’s overall GDP, and more than half of it has been destroyed by both fires and looting. The sectors most affected are wholesale and retail trade, manufacturing and services.
A total of 56 buildings were set on fire and looted; some buildings house more than one business. The jobs affected are estimated at nearly 1,000 employees.
In terms of fiscal operations, the government is expected to lose, in the short term, approximately $ 36 million SBD just for excise taxes on tobacco.
Other sources of income that will also be affected, but still need to be verified, include corporate tax, GST, and PAYE. This will add to an already tight tax situation.
Externally, the impact will be felt through an increase in imports to compensate for damaged goods which will result in a widening of the current account deficit.
Central Bank Governor Dr Luke Forau said the Solomon Islands economy is already in a weakened state and struggling to recover from the COVID-19 pandemic and its negative impact on the ‘economy. However, the unfortunate events of the past few days have further compounded this weakened state of the economy.
Governor Forau said it will take at least, at a minimum, 12 months for most affected businesses to recover, although this depends on the extent of their resilience and financial resources.
The CBSI will conduct a thorough assessment of the cost of the riot in the coming days.
Source: CBSI press release
Disclaimer: Solomon Times Online may edit or delete your comment and cannot guarantee that all submissions will be published or will remain online. Comments on this page are those of the authors and do not necessarily reflect the official policy or position of Solomon Times Online.