The Pacific Region Infrastructure Facility (PRIF) conducted a public investment management (PIM) diagnostic in close cooperation with the Solomon Islands Ministry of Development Planning and Aid Coordination (MDPAC). PRIF has adapted, within the context of the Pacific region, a diagnostic framework that was developed by the World Bank, as well as a publication based on a framework developed by the International Monetary Fund (IMF, 2015), focusing on infrastructure investment. The aim of the framework is to enable the systematic analyses of eight of the key stages of the public investment management (PIM) system to observe the current practices of the Government of the Solomon Islands (GoSI). This report presents the PIM diagnostic methodology and its findings. It also discusses ways in which to strengthen the PIM of the Solomon Islands.
A rapidly growing population, poor human development indicators, and climate change risk exposure demand a public investment policy that is effective so as to ensure the sustainable growth and development of the Solomon Islands. The trends in investment spending for physical and social infrastructure, to date, manifest a rapid increase in the level of domestic and externally funded public investment. There are vital concerns, however, about the quality, effectiveness, and sustainability of these investments in relation to the capacity of the Government of Solomon Islands to carry out sound decisions related to public investments.
The significant rise in public spending has supported the country’s economic activity and has improved the delivery of services, with prior reforms supported by development partners making an important contribution (ADB, 2015). Nevertheless, the quality of public spending remains mixed. The government spends a high per capita amount on education and health compared to the rest of the region; yet the Solomon Islands lags behind in terms of results in many areas, suggesting that there are challenges to its technical efficiency and spending effectiveness. Despite significant funds being spent on subsidies for water and electricity, provided by state-owned enterprises, 80% of the population lacks electricity access and only 30% has access to improved sanitation services (PRIF, 2016). At the same time, development expenditures suffer from weak execution.
This report first describes the institutions and funding channels that exist for public investment, and identifies the processes applicable to domestic, external, and community investments. It then applies a diagnostic framework that is adjusted to assess how well current processes achieve the key functionalities of an effective public investment management (PIM) system.