Lilo Challenges Solomon Star Editorial On Prices

Minister Lilo Challenges Solomon Star Editorial On Prices

The Minister for Finance and Treasury, the Hon Gordon Darcy Lilo, today challenged an editorial published by the Solomon Star on Monday, 10 September, which complained about the rising price of basic goods, particularly chicken and rice, and questioned whether the Minister is truthful about the impacts of economic reform on the economy.

"I am very much aware that rising prices of basic consumer goods always concern the community and I have always been truthful and confident about the likely impacts of economic reform on the economy," the Minister said.

"I believe that without the Government's reforms, particularly import duty reform, prices would be even much higher, and businesses would be under much more cost pressure."

"As a matter of fact, since the Government lowered import duties early this year, there has been a steady decrease in the inflation rate. Consumer price inflation, as measured by the Consumer Price Index, has eased from 8.2 per cent in January 2007 to 4.8 per cent in July. This is the lowest rate of inflation for more than two years. Price inflation for imported items has also eased from 9.4 per cent to 6.5 per cent over the same period," the Minister said.

The Minister said that with regards to rice, it should be noted that the increase was not directly impacted by import duty reform. Rice imports receive a partial exemption from import duty of 5 per cent which was in place before and after the reforms. Rice is also subject to price controls administered by the Price Control Unit which aims to protect consumers from unwarranted price increases.

"The increase in the price of rice that occurred in mid-2007 was the first such increase in 12 months and was due to a number of factors outside of this Government's direct control, especially the increase in global grain prices and the drought in Australia which resulted in smaller than expected crop yields," the Minister said.

"These increased cost pressures attributed to Solrice's request for a price increase in May 2007, as required under the Price Control Act.

The Minister said, "It is important to bear in mind that import duty reform is just one step in the move to reform Solomon Islands' tax system to the benefit of all Solomon Islanders. The Government has also implemented a wide range of other reforms, such as the new Foreign Investment Act, State Owned Enterprise reform, Work and Residency Permits, Small Business Finance Schemes and Rural Banking Expansion".

"These reforms are aimed at boosting business confidence, providing economic and financial stability; support the investment environment and improving the standard of living for ordinary Solomon Islanders. And that is the truth," the Minister said.

ENDS

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