30 Oct 2002

Solomon Islands economy still fragile

12:33 pm on 30 October 2002

The Governor of the Solomon Islands Central Bank, Rick Hou, says the country's economy remains in a fragile state, despite an improvement in the level of foreign reserves.

Mr Hou says the reserves have stabilized and there is now nearly two months of import cover.

He says this is a product of stringent exchange controls, a significant fall in import demand, a restart of the fish and copra exporting industries, and an increase in log and cocoa exports.

Mr Hou says this means the foreign exchange aspect of the economy is sustaining itself, but he says the underlying situation is very precarious.

He says there has been little improvement in the government's revenue while it is still struggling to control its expenditure.

"So these issues, the underlying issues, are still very fragile. So overall, the economy although showing some improvement on the external sector is still very fragile."