Solomon Islands

Key trends and development challenges

Solomon Islands is an archipelagic state situated in the Pacific sub-region of Melanesia. With a GDP of $1.6 billion, Solomon Islands is the third-largest economy in the Pacific, and accounts for 4% of regional GDP. The country has a population of 724,000 (2022), resulting in a GDP per capita of $2,200, ranking 13th in the Pacific. Its Exclusive Economic Zone (EEZ) covers more than 1.58 million square kilometres, the 22nd-largest globally, and is comparable in size to the EEZ of the Philippines.

Solomon Islands has the seventh-highest Official Development Assistance (ODA) to Gross National Income (GNI) ratio in the Pacific Islands region, with aid accounting for 16% of national income. In a global context, Solomon Islands remains among the most aid-reliant countries in the world, ranking 12th among 127 developing countries for its ODA/GNI ratio. The Solomon Islands government’s development agenda focuses on infrastructure investment and economic diversification. At 0.562, Solomon Islands’ Human Development Index score ranks 156th out of 193 ranked countries.

Between 2008 and 2022, annual Official Development Finance (ODF) disbursements to Solomon Islands — including grants, loans, and other forms of assistance — averaged $331 million. Around 5% of the development finance received by Solomon Islands between 2008 and 2022 came in the form of loans. The share of loans in Solomon Islands’ total incoming development assistance has increased slightly over the past half-decade. Loan assistance peaked at 22% of total ODF in 2019, but declined in successive years to less than 10% in 2021. However, in 2022 the Solomons’ government signed a $66 million loan with China to build 161 mobile communication towers. The International Monetary Fund ranks Solomon Islands’ risk of debt distress as moderate.

Development partners and sector trends

The vast majority (84%) of ODF support to Solomon Islands has come from five development partners, led by Australia (61%), New Zealand (9%), Japan (7%), the Asian Development Bank (4%), and EU Institutions (4%). Since switching recognition from Taiwan to China in 2019, Chinese financing has played a growing role in the ODF mix of Solomon Islands. By 2021, China had become the country’s second-largest aid partner, financing a number of projects, from building stadiums for the 2023 Pacific Games in Honiara, to upgrading university facilities and policing support.

ODF disbursements in Solomon Islands were largely consistent with regional trends in terms of sector distribution. The government and civil society sector featured prominently, accounting for close to half (47%) of incoming financing. Human development spending has remained higher than infrastructure spending in Solomon Islands since 2008, with the exception of a spike in 2019 as a result of spending on the Tina River Hydropower Development Project. Solomon Islands was one of a small number of Pacific states that did not see a significant spike in human development spending during the pandemic.

Since 2008, Solomon Islands has received $220 million in development financing with a “principal” focus on either climate adaptation or mitigation. Over this same period, the country has seen $433 million in development financing with a “significant” focus on climate outcomes. Since 2015, Solomon Islands has seen a substantial rise in spending on climate-targeting projects. As a share of total ODF received by Solomon Islands, “principal” climate projects make up just 6% of total spending, below the regional average of 9%. Spending on “significant” climate projects in Solomon Islands makes up 10% of incoming funds, also below the regional average of 13%.

Between 2008 and 2022, Solomon Islands received $120 million in development financing with a “principal” focus on gender equality, and $1.5 billion in development financing with a “significant” focus on gender equality. “Principal” gender equality financing constituted 2% of ODF received by the country, in line with the regional average. Conversely, “significant” marked gender financing made up 29% of incoming ODF, well above the regional average of 21%. The largest project directly targeting gender equality in the country was the multi-year $23 million Addressing Gender Equality project, funded by Australia and the United Nations Development Programme.