RAMSI: How to blow $2.6 billion in a decade 23 May 2014 4:27PM A pointed joke used to do the rounds in Honiara: if you needed to call on the Australian police you could usually find them in the Lime Lounge, a swanky cafe at the west end of the main street that serves silky flat whites and a range of delights including the RAMSI breakfast. The cappuccino cops were in town as part of the Regional Assistance Mission to the Solomon Islands (RAMSI), which aimed to support security, the economy and government following the period of political instability and conflict between 1999 and 2002 known as the Tensions. The Lowy Institute has for the first time calculated the cost of Australias contribution to RAMSI: a staggering $2.6 billion from 2003-13. The Lowy analysis implies that this sum amounts to one-third of gross domestic product, and more than the Solomon Islands government spent over the decade. For a donor to spend more than the host government over such a long period may be without precedent in the Pacific region, if not the world. Such huge public spending also contradicts the advice of RAMSI government advisers, which was to lower expenditure. Given the amount of money invested, youd think the economy would be purring like a finely-tuned Holden (maybe not a Ferrari, given that the economy was starting from such a low base). But after some initial success in restoring growth and calming the political situation, the economy stagnated, losing ground to its regional neighbours. Income per head is now among the lowest in the Pacific region. The following graph, using the World Banks official Pacific island small states category, shows income per head using the Atlas Method, which takes inflation into account and averages three years of exchange rate data so as to iron out short term fluctuations. Whichever measure you use, the rest of the region has pulled away from the Solomon Islands.
Posted on: Wed, 28 May 2014 06:24:07 +0000
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