Volume 01 Issue No.

6 June 2009

Monthly Economic Bulletin

Content Page

Data published in this Bulletin are subject to revision 1.0 Monetary Development 1
and the Bank cannot guarantee the accuracy of 2.0 Balance of Payments
3.0 Government Finance 2
information obtained from outside sources.
4.0 Domestic Economy 3

I. MONEY AND BANKING however, remained constant during the

month. Meanwhile, other deposits (time and
Money supply savings) increased slightly by 0.4% to $876.1
million at the end of the month.
Broad money supply (M3) in June 2009
recorded an slight increase of 2.1% to $1502.9 Net Foreign Assets increased by 9.2% to $991.9
million from the previous month. This was million in June following an increase in the
driven by a rise in net foreign assets as a result preceding month. This was the result of both
of increased foreign inflows, despite decline in large increases in the official reserves of the
domestic credit. Central Bank by 6.7% to $797.9 million, an
increase of $50.3 million from the previous
month. Likewise a similar large increase in the
net foreign asset held by the commercial banks
Graph 1 from $161.1 million at the end of May to $194.0
Monetary Survey
million by the end of this month. This caused
1650
1500
a large movement in the net foreign assets at
1350 the end of June.
1200
1050 Domestic Credit.
900
750
Total domestic credit in June fell by 2.4% to
600
$1294.8 million from that in the previous
450
300
month. This was caused by a fall in
150 government deposits by $9.8million, resulting
0 in net credit to government increasing minus
-150 $19.0 million. However, credit to the private
J FMAM J J A SOND J FMAM J J A SOND J FMAM J sector rose by 1.3% to $1301.3 million from the
previous month. In addition, credit to other
2007 2008 2009
financial sector also slightly dropped during
Net Foreign Assets Net credit to Government this period.
Credit to Private Sector Money supply

II. BALANCE OF PAYMENTS

Narrow money (M1) rose by 4.6% to $626.8 Solomon Islands’ balance of payment position
million, reflecting an increase in demand sourced from the weekly inflows through the
deposits with the commercial banks, by 7.5% commercial banks registered a surplus of $37.7
to $395.9 million. Currency in circulation, million in June, relatively higher than $12.7

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Volume 01 Issue No. 6 June 2009

million in May. This positive outcome funding agencies, NGOs, foreign embassies
stemmed from an increase in exports, other and the Solomon Islands Government. On the
receipts, aid grants and foreign exchange other hand, transfers to RAMSI declined
revaluation gains of $12.7 million. during the month.

Total exports rose 5.4% in June to $103.1 The gross external reserves rose by 6.8% in June
million, reflecting stronger production. There to $791.45 million. The positive development
was a marginal 0.7% increase in log export came on the back of improved export
receipts to $64.3 million. Cocoa receipts, aided performance and foreign exchange revaluation
by rising export prices and volumes, rose by gains of $12.7 million during the month. This
7.8% to $8.1 million, and copra receipts surged level of reserves is equivalent to approximately
to $5.3 million from $3.9 million due to high 3.4 months of imports of goods and non-factor
prices despite the fall in production. Other services.
services receipts also rose to $6.4 million from
$4.8 million, and palm oil receipts registered Exchange Rate
$8.1 million. On the other hand, fish export
receipts declined to $5.8 million from $13.9 The Solomon Islands dollar (SBD) remained
million despite the increase in fish prices and stable against the US dollar in June, trading
volumes due to time lag between shipments on average at $8.06 per USD.
and actual payments received. Alluvial gold
receipts also went down by 1.4% to $1.4 million
during the month.
Graph 3:
Exchange Rate
(SI$ Per Foreign Currency)
Graph 2: 18.0
Gross International Reserve & 16.0
Import Cover
14.0
1000 4.5
12.0
900 4.0
10.0
800 3.5
8.0
700
3.0
600 6.0
2.5
500 4.0
2.0
400 2.0
1.5
300 0.0
200 1.0 J F M A M J J A S O N D J F M A M J
100 0.5
08 09
0 0.0
USD AUD STG
J F M A M J J A S O N D J F MA M J
YEN NZ EURO

08 09

Gross Reserves Import Cover

Total transfers rose by 36.5% to $55.0 million
during the month. The considerable increase
represented a rise in transfers to ‘private
enterprises and individuals ’, churches,
The SBD however, continued to depreciate
against most the other major tradable
currencies with the exception of Japanese Yen
which remained unchanged at $8.34 per 100
JPY. The SBD depreciated by 5.3% against the
Australian dollar to $6.46 per AUD, by 6.5%
against the British Pound to $13.19 per GBP,

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Volume 01
by 6.7% against the New Zealand dollar to
$5.14 per NZD, and by 3.6% against the Euro
to $11.37 per EURO.
III. GOVERNMENT FINANCE
SIG Debt
The Solomon Islands Government debt stock
at the end of June 2009 stood at $1,430.1
million, compared to $1,438.1 million in May.
The external component of the total debt was
$1,069.0 million, while total domestic debt
accounted for the rest. The movement in the
external debt stock during the period was due
to both debt repayment and movement in the
exchange rate. The decline in the domestic debt
was mainly due to redemption of matured
Bonds during the month.
Graph 4
SIG Debt Stock (CBSI)
(June 2009)
1600
1200
800
400
0 to 1,519 tons. The sharp decline was caused
Series1 Series2 Series3
Debt servicing in June totaled $16.5 million,
3.4% higher than the revised repayment
schedule of $15.97 million for the month. This
was above debt repayments in May. The major
portion of the external debt repayment was
Issue No. 6 June 2009
mainly to Exim bank. The rest was paid to the
Asian Development Bank, Bank of Kuwait, the
World Bank and the Organization of
Petroleum Exporting Countries. On the
domestic debts, repayments were mainly for
maturing Bonds. Total debt servicing during
the month represented 17.1% of total export
for the month.
Debt arrears rose slightly from $24.8 million
to $25.0 million during the month of June.
IV. DOMESTIC ECONOMY
Logs
Total log volumes exported in June sourced
from the Customs & Excise Division and used
as proxy for log production, increased
significantly by 37.1% to 124.2 cubic meters
following the 11.6% rise seen in May.
Contrasting a year ago, this total is more than
double that of June 2008 output (46,506 cubic
meters). The positive turnaround in log exports
was driven by improvements in weather
conditions and large accumulations in log
ponds around the country. Average
international price of logs rose 4% to US$278
per cubic meter relative to the 3% rise in the
previous month. Compared to the same month
last year, log prices this month are up by 4.8%.
Copra
Copra production in June 2009 as proxied by
export copra volume plunged 33.6% in May
by low international prices since the beginning
of the year and bad weather conditions.
Average contracted export price for copra
during the month remained at US$318 per ton
while the contracted domestic price saw a
22.9% rise to $2.15 per kilogram from $1.75
per kilogram. International average price of
copra, on the other hand, dropped 14% to
US$480 per ton, reversing the rise seen in the
preceding month.
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Volume 01 Issue No. 6
Fish
Total fish catch during June more than doubled
to 1,905 tons from 875 tons reported a month
ago. This compares to the 1,347 tons recorded
12 months ago and 47% higher than the year
before that. The expansion in the production
was driven mainly by favourable fishing
conditions during the month. Average world
fish price in June levelled off at US$1200 a ton,
a 9% increase.
Palm Oil
Palm oil products reversed the upward trend
witnessed since January 2009 with fresh fruit
bunches (FFB) reporting a fall to 10,821 tons
from 11,234 tons, albeit 5% higher than June
2008 production. The fall in output is
attributed to low crop yield expected at this
time of the year. Out-grower contributions
were down by 14%. As a result, palm oil
output in June trended downward to 2,193
tons from 2,289 tons; palm kernel fell 5% to
642 tons; palm kernel oil dropped by 8% to
279 tons; with palm expeller (meal) falling from
350 tons to 340 tons. Continuing the negative
performance, average world price for palm oil
fell 9% to US$730 per ton from US$799 per
ton.
June 2009
Cocoa
Cocoa export volume used as proxy for
production in June soared to 1,095 tons from
the May total of 195 tons. This was a surge of
more than 90% over the same month in 2008.
The sharp turnaround is credited to high
stockpiles for the last two months combined
with lower export shipments as well as a peak
harvesting season during the month. Average
domestic price for cocoa grew by 6% to
SBD$13.50 per kilogram. Contrary to this,
contracted export prices dipped 6% to £1,363
per metric ton after the 1.7% rise in the
previous month. The average international
price on the other hand increased 9.1% to
US$2,704 per metric ton, as opposed to the
4.1% dip seen in the previous month.
Inflation
June inflation data measured using a three
months average (3mma) dropped to 9.3%
from 13.6% in the previous month. This is
associated with falls in both imported and local
inflation which dropped from 14.7% and
12.6% to 8.5% and 9.7% respectively by the
end of June. The food and fuel categories in
particular fell significantly during the month.