Solomon Islands Preliminary 2010 Year End Financial Results

Preliminary 2010 Year End Financial Results

The Ministry of Finance today released the preliminary Solomon Island Government (SIG) financial results for the 2010 year end. The 2010 year end financial information is unaudited and the reported figures are the best currently available and may change marginally as more information comes to hand. Care needs to be taken when comparing monthly or cumulative data as revenues and expenses vary from month-to-month.

Summary of 2010 Year End Financial Results
Original Annual
Budget
$m Adjusted Annual Budget (incl Reservation)
$m YTD
Budget Adjusted
(Dec)
$m
YTD Actual
December
$m
Variance
Budget/Actual
$m
Revenue 1,744.0 1,744.0 1,744.0 1,865.3 121.3
Expenses 1,874.5 1,997.1 1,997.1 1,671.8 -325.3
Budget surplus(deficit) -130.5 -253.1 -253.1 193.5

Note: all figures reported exclude Budget Support (NZAID & AUSAID - Education & AUSAID-Health, ADB and EU)

SIG recorded a surplus of $193.5m for year end December 2010 against an estimated overspend of $253.1m. Revenue was $1,865.3m for this period, which exceeded expenditure of $1,671.8m.

Revenue collection was $1,865.3m against the budget estimate of $1,744.0m. This represents a $121.3m increase over the budget. Customs and IRD collected revenue above budget estimates, whereas Other Ministries revenue collection was lower than budget estimates.
Donor Consolidated development receipts were $110.8m, with the major portion of this representing ROC grants of $81.5m and $16.8m NZAID development grant for the Education Recovery and Rehabilitation Program. This NZAID grant is separate from the NZAID Budget support component.
Donor budget support receipts were $407.2m, against anticipated support of $173.0m, $234.0m greater than expected. $157.2m of this relates to EU budget support received late December 2010.
Actual expenditure was $1,671.8m against pro-rata adjusted estimate of $1,997.1m, under budget by $325.3m. Expenditure includes Standing and Special Imprests payments (advances) of $63.0m of which the majority relates to election funding.
Donor consolidated expenditure was $108.2m, comprising mainly RCDF payments. This also includes the disbursement of NZAID development grant of $16.8m.
The budgeted expenditure figure for December year end includes an additional $177.8m that has been funded by $38.8m in contingency warrants and an additional supplementary budget amount of $139.0m.

Inland Revenue Division (IRD)
Collections for IRD were $1,121.7m against the annual projection of $1,018.9m, being greater than budget by $102.8m. Major income for IRD includes Goods Tax $419.1m, Personal Taxation (PAYE) $293.5m, Company Tax $217.3m , Sales Tax of $52.3m and Withholding Tax of $124.5m and licenses of $6.6m

Customs & Excise Division
Collection by Customs for the year was $491.8m against a budget of $433.1m, $58.6m better than budget. Major collections were in the following major broad categories:
1. Export Duty on logs/timber $243.8m, with the month of December recording $35.5m the highest for 2010.
2. Excise Duty $100.6m
3. Import Duty $141.3m
4. Export Duty (excluding log/timber) $4.8m
5. Other $5.4m which includes penalties of $3m

Other Ministries
Collection of revenue from other Ministries for the year was $136.5m, against an estimate $211.9m. Foreign Fishing Licenses, activity fees and FFA receipts accounted for $102.3m against a budget of $115.3m of the revenue collected. Fisheries collection for the month of December was $35.8m.

Payroll Expenditure
Payroll expenditure for the year was $562.9m against the budget estimate of $576.9m. The overall payroll budget was increased by $81m from the supplementary budget to cover the full year impact of the 7.5% cost of living adjustment awarded at the beginning of the year and other payroll pressures.

Other Expenditure
Other Charges for the year totalled $573.5m against adjusted estimates of $899.7m, this reflects under budget spending of $326.2m. Spending was under budget due to the reservation placed on Other Charges expenditure mid-2010. Areas of major expenditure for 2010 are:
• National Debt Servicing- $111.4m
• Education Grants (SIG)-$66.6m, of which $38.8m is for Fee free Education.
• Tertiary Universities/Colleges contribution - $25.6m
• Provincial Grants -$35.8m
• Health Services Grant (SIG)- $16.9m
• Utilities -$78.5m
• Overseas training under scholarship- $30.0m
• House Rent -$64.1m
• Office Rent - $18.8m
• Office Rent (Overseas Missions)-$2.0m
• Repair and upkeep of government buildings- $30.8m
• Maintenance of equipments/infrastructures - $15.0m
• Overseas Travel MPs -$9.7m
• Overseas Travel Public Servants-$10.0m
• MP’s cost under National Parliament -$21.2m includes Terminal/Micro/Ex-gratia grants
• Fuel - $15.6m

SIG Development Expenditure
Expenditure for SIG funded Development Expenditure for the year was $248.2m against estimated budget of $320.3m. This represents an under spend of $72.1m. Major expenditure includes the Canberra Chancery $43.7m, Rural Livelihood payments of $55.1m, forestry projects of $14.1m, replacement of navigation equipment and airfield upgrades of $11.6m, tourism related projects of $11.3m which include the new Tourism SICHE School. SIG RCDF contribution of $10.1m of which $5m was released in December. Road maintenance and provincial rehabilitation was $16.5m, other major spending was for agriculture projects of $17.1m, Mines and Energy projects of $14.3m, SIG contribution to SIRIP of $5.6m and SIG contribution to Tsunami rehabilitation under RARP project of $5m.

SIG Budget Support

NZAID- MEHRD $55.3m received and $58.5m disbursed of which $18.8m was for school Fee Free Education Grants. The difference being some residual funds remaining from prior years.

AUSAID – MEHRD $29.4m received and disbursed $26.9m for Fee Free Education $22.3 and $4.6m on school infrastructure Projects.

ADB $40m received and $39.9m disbursed as budgetary support to Ministry of Health ($15.0m), Ministry of Infrastructure ($10.2m) and Ministry of Education ($14.7m).

HSSP SWAP – MHMS $83.4m received of which $73.4m was from Ausaid and $5.4m from other Donors. $81.3m was disbursed, $26.8m was for drugs and medical supplies. Grants of $53.2m for 2011 support were also received in December.

EU Budget Support of $157.1m was received towards the end of December. These funds increased the cash stock at the end of the year.

Fiscal Measures

The above information demonstrates that significant improvements in financial management were achieved by the Solomon Island Government in 2010. This resulted from financial management reforms focused on increased revenue collection as well as more effective expenditure controls. As a result, the Solomon Islands Government had sufficient funds to rollover into 2011 and to meet financial obligations early in the new year.

The Solomon Island Government has settled all valid accounts and arrears in 2010 with only a small number of late or irregular payments carried forward into 2011. This too is a significant improvement on the previous year.

ENDS

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