A Solomon Islands government advisor, Sir George Lepping, says the finance minister, Laurie Chan, resigned because the government gave in to police threats to be paid unscheduled allowances.
His move came shortly after he presented his first budget and said wasteful spending had to end and the government had to live within its means.
It also followed violence by special constables who last week trashed a police ministry office and a vehicle.
In another incident about 50 of them stole goods from a shop in full view of its owner.
They had wanted allowances for taking part in a police disarmament exercise, even though they had been told such allowances would not apply.
Last Friday, cabinet agreed to the demands, prompting Mr Chan to resign.
Sir George says the government had no choice.
"If we don't pay them that one we'll have problems, special constables got theirs because they were on that peaceful operation and then the regulars it just came from, you know, the whole police force, the advisers, everybody so that there's no real way we can say no."
Mr Chan has moved to foreign affairs and Snyder Rini has taken over the finance portfolio.