BY NED GAGAHE
During the Second Reading Debate of the 2025 budget on Tuesday, MP for Central Honiara, Gordon Darcy Lilo raised concerns over the country’s escalating national debt, particularly the substantial increase in debt servicing outlined in the 2025 budget.
Lilo warned that national debt servicing has nearly doubled compared to previous years, pointing to a growing financial strain that could jeopardize the country’s long-term economic stability.
The MP for Central Honiara highlighted that the rising debt burden will likely contribute to a widening gap in the national budget, primarily driven by debt financing.
Lilo said the country continues to struggle with the fiscal impact of debt repayments, which now consume a larger portion of government revenue.
Lilo expressed worry that without careful management, the debt-driven budget deficits could undermine the government’s ability to fund essential services such as health, education, and infrastructure.
“The increasing reliance on debt financing is a significant concern. If we continue down this path, it will not only strain our budget but could also lead to economic decline,” Lilo said.
“Our budget is being driven by borrowed funds, which limits our capacity to invest in other critical areas that would help our economy grow.”
Lilo also questioned the government’s ability to manage this mounting fiscal pressure, particularly in light of the uncertainties surrounding future financing.
He pointed out that negotiations for loans from international institutions like the World Bank and the International Monetary Fund (IMF) could be lengthy and challenging, further delaying any relief from the financial gap.
Lilo urged the government to prioritize transparency and provide clear details on the sources of financing, including where the country would obtain the funds needed to cover its growing deficit.
He also recommended that the government closely monitor its discretionary spending, emphasizing the need to focus on maintaining essential services while managing debt-related expenses.
