Volume 01
Issue No. 6
June 2009
Monthly Economic Bulletin Content Data published in this Bulletin are subject to revision and the Bank cannot guarantee the accuracy of
1.0 Monetary Development 2.0 Balance of Payments 3.0 Government Finance 4.0 Domestic Economy
information obtained from outside sources.
I.
Page 1 2 3
however, remained constant during the month. Meanwhile, other deposits (time and savings) increased slightly by 0.4% to $876.1 million at the end of the month.
MONEY AND BANKING
Money supply Broad money supply (M3) in June 2009 recorded an slight increase of 2.1% to $1502.9 million from the previous month. This was driven by a rise in net foreign assets as a result of increased foreign inflows, despite decline in domestic credit.
Net Foreign Assets increased by 9.2% to $991.9 million in June following an increase in the preceding month. This was the result of both large increases in the official reserves of the 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 from $161.1 million at the end of May to $194.0 million by the end of this month. This caused a large movement in the net foreign assets at the end of June.
Graph 1 Monetary Survey 1650 1500 1350 1200 1050 900 750
Domestic Credit. Total domestic credit in June fell by 2.4% to $1294.8 million from that in the previous month. This was caused by a fall in government deposits by $9.8million, resulting in net credit to government increasing minus $19.0 million. However, credit to the private sector rose by 1.3% to $1301.3 million from the previous month. In addition, credit to other financial sector also slightly dropped during this period.
600 450 300 150 0 -150 J FMAM J J A SOND J FMAM J J A SOND J FMAM J 2007
2008
2009
Net Foreign Assets
Net credit to Government
Credit to Private Sector
Money supply
II.
BALANCE OF PAYMENTS
Solomon Islands’ balance of payment position sourced from the weekly inflows through the commercial banks registered a surplus of $37.7 million in June, relatively higher than $12.7
Narrow money (M1) rose by 4.6% to $626.8 million, reflecting an increase in demand deposits with the commercial banks, by 7.5% to $395.9 million. Currency in circulation, 1
Volume 01
Issue No. 6
June 2009
million in May. This positive outcome stemmed from an increase in exports, other receipts, aid grants and foreign exchange revaluation gains of $12.7 million.
funding agencies, NGOs, foreign embassies and the Solomon Islands Government. On the other hand, transfers to RAMSI declined during the month.
Total exports rose 5.4% in June to $103.1 million, reflecting stronger production. There was a marginal 0.7% increase in log export receipts to $64.3 million. Cocoa receipts, aided by rising export prices and volumes, rose by 7.8% to $8.1 million, and copra receipts surged to $5.3 million from $3.9 million due to high prices despite the fall in production. Other services receipts also rose to $6.4 million from $4.8 million, and palm oil receipts registered $8.1 million. On the other hand, fish export receipts declined to $5.8 million from $13.9 million despite the increase in fish prices and volumes due to time lag between shipments and actual payments received. Alluvial gold receipts also went down by 1.4% to $1.4 million during the month.
The gross external reserves rose by 6.8% in June to $791.45 million. The positive development came on the back of improved export performance and foreign exchange revaluation gains of $12.7 million during the month. This level of reserves is equivalent to approximately 3.4 months of imports of goods and non-factor services. Exchange Rate The Solomon Islands dollar (SBD) remained stable against the US dollar in June, trading on average at $8.06 per USD.
Graph 3: Exchange Rate (SI$ Per Foreign Currency)
Graph 2: Gross International Reserve & Import Cover
18.0 16.0
1000
4.5
900
4.0
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3.5
700
14.0 12.0 10.0 8.0
3.0
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6.0
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300 200
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0.0 J F M A M J J A S O N D J F M A M J 08 USD YEN
J F M A M J J A S O N D J F MA M J 08 Gross Reserves
09 AUD NZ
STG EURO
09 Import Cover
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,
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, 2
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Issue No. 6
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.
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.
June 2009
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.
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%.
Graph 4 SIG Debt Stock (CBSI) (June 2009) 1600
1200
800
Copra 400
Copra production in June 2009 as proxied by export copra volume plunged 33.6% in May to 1,519 tons. The sharp decline was caused 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.
0
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 3
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Issue No. 6
June 2009
Fish
Cocoa
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.
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.
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.
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.
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