Stabex, Conditionality and the Macroeconomy: The Case of the Solomon Islands

In its original form under the Lomé Convention between the European Communities (EC) and the African, Caribbean and Pacific (ACP) states, the Stabex scheme provided compensation for loss of export earnings with no restrictions on how the transfers were to be used. However, over successive Lomé Conventions, conditions on the uses of Stabex transfers have been progressively tightened. Under Lomé IV,2 priority must be given to the economic operators in the sector which suffered the loss of earnings. Diversification is permitted but restricted.