The Solomon Islands’ 2025 National Budget, themed “Building a Resilient and Sustainable Economy,” presents a blend of ambition and restraint. On paper, it lays out plans for growth, improved service delivery, and enhanced public investment. But underneath, the numbers reflect familiar constraints: revenue gaps, rising debt, and heavy donor dependency.

Modest growth, persistent risks

The economy is forecast to grow by 2.4 percent in 2025, up slightly from 1.8 percent in 2024. This modest rebound is expected to be supported by infrastructure activity, a recovering agricultural sector, and potential mining expansion. Inflation is projected at 4.5 percent, down from 5.3 percent, though imported price pressures remain.

The government acknowledges significant downside risks. Global uncertainty, exposure to climate-related shocks, and a narrow export base continue to threaten macroeconomic stability. Domestic risks also persist—particularly around weak tax compliance, implementation delays, and reliance on external financing.

Revenue lags, spending commitments grow

The 2025 Budget projects total expenditure of SBD 5.09 billion against domestic revenue of SBD 3.69 billion. This leaves a financing gap of SBD 1.4 billion, to be covered by donor grants and external borrowing. The budget includes SBD 558 million in expected budget support from development partners and a further SBD 844 million in planned financing.

While the Inland Revenue Division and Customs are undergoing reforms, progress is slow. The tax base remains narrow, and compliance remains weak. Until domestic revenue mobilisation improves, the budget will remain structurally dependent on external support.

Spending priorities remain constant

Education receives SBD 949 million—nearly one-fifth of the total budget. Health is allocated SBD 617 million. Infrastructure and rural development account for SBD 964 million, while public order and safety receive SBD 413 million. These allocations reflect consistent prioritisation of basic services. But translating allocations into impact remains a challenge. Subnational systems remain fragile, and implementation capacity is uneven. As in past years, procurement delays and under-execution will likely hold back delivery.

Development budget dependent on aid

Development expenditure is projected at SBD 1.91 billion, roughly 38 percent of the total budget. Much of this is externally funded. While the government reiterates its intention to reduce aid dependency, few new strategies are proposed. Without stronger domestic financing capacity and public investment systems, these ambitions are likely to remain rhetorical.

Debt remains manageable for now

Total public debt is expected to rise to SBD 2.4 billion, or 14.2 percent of GDP. This remains within safe limits. However, debt is trending upward, and the growing reliance on external sources increases exposure to exchange rate and refinancing risks. The budget speech signals an intent to improve debt management and maintain concessional borrowing, but no major changes to the financing mix are outlined.

A narrow fiscal path ahead

The Solomon Islands’ 2025 Budget is grounded in realism. Revenue is weak, execution remains a challenge, and external financing continues to fill the gaps. The government’s commitment to basic services and infrastructure is clear—but it is not yet backed by reforms that can improve delivery and reduce dependence. Building a resilient and sustainable economy will require more than careful budgeting. It will require credible reforms in tax administration, project execution, and subnational governance. Until then, the fiscal path will remain narrow—and vulnerable.