Documents leaked to the ABC reveal the Solomon Islands Government discussed a $US100 billion ($151 billion) loan from a Chinese businessman — an amount of money almost 77 times the Pacific nation's GDP.

Key points: An opposition MP alleges it's a scam but the Chinese broker at the centre of deal insists it is all above board

An opposition MP alleges it's a scam but the Chinese broker at the centre of deal insists it is all above board One expert has expressed doubts about the Government's ability to repay if it were to go ahead

One expert has expressed doubts about the Government's ability to repay if it were to go ahead Last year Solomon Islands switched its diplomatic allegiance to China and severed ties with Taiwan

Solomon Islands Finance Minister Harry Kuma has confirmed that the leaked letters showing him in discussions about a possible loan are authentic.

"Yes, the letters are real," he told the ABC in a message.

"I am, however, disappointed that I have not received an [advice] on the proposal from my officers when the matter was put on trial in the media."

Solomon Islands Finance Minister Harry Kuma said the letters discussing a potential $US100 billion loan are authentic.

Solomon Islands has a gross domestic product (GDP) of $US1.3 billion ($1.97 billion).

In one of the letters Mr Kuma accepts in principle a proposed 11 per cent brokerage fee — amounting to $11 billion.

"Again, note that we are very interested in this funding arrangement as it would certainly contribute to the improvement of our economy and the betterment of our people," Mr Kuma writes.

The news comes five months after Solomon Islands switched its diplomatic allegiance to China and severed ties with Taiwan.

One expert has expressed doubts about the Government's ability to repay if it were to proceed.

An opposition MP alleges it's a scam but the Chinese broker at the centre of the deal insists it is all above board.

What the letters reveal

In a letter dated November 28 last year, Mr Kuma wrote to businessman Terry Wong in Beijing, China, regarding a "potential grant/loan to Solomon Islands".

"I have been advised by your representative in the Solomon Islands in respect to the potential funding that can be made … my ministry is interested in officially opening dialogue to investigate this proposal further in detail."

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A letter dated a few days later on December 4 and signed by Terry Wong replies:

"I note receipt of your letter … accepting in principle our brokerage and consultancy charges payable upon successful completion of transfer of 100 billion US dollars."

A letter of offer from Mr Wong says there would be no restrictions on how the loan would be used but suggests infrastructure, healthcare and education among a long list.

It doesn't state the loan's interest rate — it's yet "to be determined" — but it would be equal to the average national cash deposit rate in the Solomons.

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The letter says the loan's duration is 20 years, though it is subject to negotiation.

Where the $151 billion dollars would come from is not clear.

In his letter Mr Wong indicates he heads a consortium of "consultants, agents and funds managers" and that he was the "exclusive authorised broker" for the loan.

In a second letter from Mr Kuma, written just a day after the first, he tells Mr Wong that he accepts his offer of an 11 per cent brokerage fee in principle.

In dollar terms the fee would work out to $US11 billion ($16.6 billion).

In an email to the ABC, Mr Kuma confirmed his ministry was assessing Mr Wong's proposal.

"There are several concessional loan proposals that have been offered on the table from all development partners including China," he wrote, adding that several Chinese businesses had offered loans, not just Mr Wong.

"As it would not be proper to go into details, the important matter for the Government is that such a loan has to be assessed under the purview of the Debt Management Framework, and the capacity of the Government to absorb and invest these loans into good use."

The leaked documents also include three proposals about how the money could be used — to invest in either US Treasury Bills, or a Certificate of Deposit, or thirdly, a diversified blue-chip investment portfolio.

The interest earned would be used to repay the loan and support the national budget.

In his letter, Mr Wong suggests the Solomon Islands should act "promptly", because other nations are also applying for the same finances.

He goes on to explain the money would be deposited into the Solomon Islands' Central Bank once a letter of guarantee — signed by the Finance Minister and the Prime Minister — is handed over.

Critics label loan a 'fantasy'

The documents have set off alarm bells for Denton Rarawa, who was the Governor of the Solomon Islands Central Bank until last year.

"Solomon Islands basically is a $US1 billion economy trying to borrow $US100 billion," he said.

"That is a classic case for entering into a debt trap … I am a bit concerned about the country's ability to repay a huge amount of borrowing."

He's also concerned about the 11 per cent brokerage fee, which he said was "on the high side".

Opposition MP Peter Kenilorea Jr said the proposed loan sounded like a 'fantasy'.

Peter Kenilorea Jr, a Solomon Islands Opposition MP who used to head up the country's foreign affairs department, said the idea of a $US100 billion loan is a fantasy.

"Something like this for me is not serious at all and it doesn't warrant the time of the day to spend over-assessing something as fantastical as a $US100 billion loan," he told the ABC.

"That in itself is a waste of time, a waste of resources [to] look at assessing this kind of scam."

The ABC spoke with Mr Wong who strongly denied the loan offer was a scam and emphasised his consortium was still considering whether to proceed.

The ABC has offered him an interview and has sought comment from the Solomon Islands Prime Minister's Office.