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Country Report Fiji June 2005 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2005 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Fiji 1 Contents Fiji 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2005-06 8 The political scene 10 Economic policy 11 The domestic economy 12 Foreign trade and payments The region 13 Summary 14 Outlook for 2005-06 15 The political scene 17 Economic policy and the domestic economy List of figures 7 Fiji: gross domestic product 7 Fiji: consumer price inflation Country Report June 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 Fiji 3 Fiji June 2005 Summary Outlook for 2005-06 The next general election in Fiji is not formally due until September 2006, but it is likely to be brought forward to the first half of 2006. This is because of rising political tensions between the Fijian-nationalist-dominated government led by the prime minister, Laisenia Qarase, and the leader of the ethnic-Indian- dominated Fiji Labour Party, Mahendra Chaudhry, who was ousted as prime minister after a coup in 2000. Growth is forecast to slow in 2005-06, mainly reflecting a decline in the garment industry following the loss of the US market quota for Fijian garment exports. The impact of this will be partly offset by the continued expansion of the tourism industry, although growth in the sector could be held back by a shortage of suitable accommodation. The political scene The early release of coup-related offenders has continued to dominate the political scene, and has casued relations between the government and the army commander, Frank Bainimarama, to deteriorate even further. Mr Bainimarama has been warned against providing briefings to Mr Chaudhry. The government has announced plans to set up a “reconciliation and unity” commission. Economic policy At 3.3% of GDP, the government’s budget deficit for 2004 was smaller than expected, thanks to strong value-added tax revenue. The three telecom- munications monopolies have been instructed to cut their charges over the next three years. High world oil prices have led to revived interest in the production of ethanol from Fijian sugar. The new owners of the Vatukoula gold mine have called for tax concessions from the government. The domestic economy The Reserve Bank of Fiji (the central bank) expects real GDP growth to slow in 2005 owing to a further contraction of the local garment industry. The ratio of gross investment to GDP rose to 17% in 2004, a 17-year high, but it was still well below the government’s target of 25%. Foreign trade and payments Official foreign-exchange reserves fell to F$715m (US$415m) at end-March 2005, providing 4.7 months of import cover, but recovered slightly during April, to stand at F$725m, or 4.8 months of import cover, at the end of the month. Editors: Kate Allard (editor); Gerard Walsh (consulting editor) Editorial closing date: June 6th 2005 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule Country Report June 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 4 Fiji Political structure Official name Republic of Fiji Islands Form of state Parliamentary The executive The president, appointed by the Great Council of Chiefs (Bose Levu Vakaturaga), appoints the prime minister, who selects the cabinet Head of state The president, Ratu Josefa Iloilo National legislature Bicameral parliament comprising an appointed upper house, the Senate (32 members), and an elected lower house, the House of Representatives (71 members). The 1997 constitution prevented the dominance of parliament by indigenous Fijians and abolished the requirement that the prime minister be an indigenous Fijian. There is universal suffrage for all citizens aged over 21. Voting is compulsory and preferential Regional government Local administration is on a divisional basis, with separate councils for urban areas. There is a separate local government system for the indigenous Fijian population Legal system Magistrates’ courts, High Court and Court of Appeal, presided over by the Supreme Court National elections August 25th-September 1st 2001; the next election is due by September 2006 Main political parties Soqosoqo Duavata ni Lewenivanua (SDL, People’s Unity Party); Fiji Labour Party (FLP); Matanitu Vanua (MV, Conservative Alliance); National Labour Unity Party (NLUP); National Federation Party (NFP); United General Party (UGP); National Alliance (NA) National government On September 10th 2002 Laisenia Qarase, the leader of the SDL, was appointed prime minister. The cabinet comprises 15 SDL members, two from the MV, two from the NLUP and one independent. In defiance of the constitution, Mr Qarase named a cabinet that did not include any members of the FLP. The Supreme Court has upheld the contention of the FLP leader, Mahendra Chaudhry, that his party is constitutionally entitled to cabinet seats, but Mr Chaudhry finally decided in November 2004 not to pursue the issue further Prime minister & minister for Fijian & ethnic affairs Laisenia Qarase Key ministers Agriculture, sugar & land resettlement Ilitia Tuisese Commerce, business development & investment Tomasi Vuetil ovoni Education Ro Teimumu Kepa Finance & national planning Ratu Jone Kubuabola Foreign affairs & external trade Kaliopate Tavola Home affairs, immigration & national disasters Josefa Vosanibola Information, communications & media relations Ahmed Ali Labour, industrial relations & productivity Kenneth Zinck Lands & mineral resources Samisoni Tikinasau Local government, housing, & environment Pio Wong National reconciliation, information & media Simione Kaitani Public enterprises & public-sector reform Jonetani Galuinadi Regional development Ted Young Tourism, culture & heritage Konisi Yabaki Transport & civil aviation Simione Kaitani Women, social welfare & poverty alleviation Adi Asenaca Caucau Central bank governor Savenaca Narube Country Report June 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 Fiji 5 Economic structure Annual indicators 2000a 2001a 2002a 2003a 2004b GDP at current prices (F$ m; at factor cost)d 3,505 3,764 3,969 4,396b n/a Real GDP growth (av; %)c -3.2 2.7 4.3 3.0b 3.8a Consumer price inflation (av; %)c 3.0 2.3 1.6 4.2 3.3a Population (m)c 0.81 0.82 0.83 0.83 n/a Exports fob (US$ m)d 584 538 546 671 n/a Imports cif (US$ m)d 825 794 893 1,168 n/a Current-account balance (US$ m)d -90 -56 -67 -275b n/a Reserves excl gold (US$ m)e 411.8 366.4 358.8 423.6 478.1a Total external debt (US$ m)f 209.1 188.5 209.6 n/a n/a Debt-service ratio, paid (%)d 6.3 5.5 5.9 n/a n/a Exchange rate (av; F$:US$)e 2.129 2.277 2.187 1.896 1.733a a Actual. b Economist Intelligence Unit estimates. c Reserve Bank of Fiji, Quarterly Review. d Asian Development Bank. e IMF, International Financial Statistics. f World Bank, Global Development Finance. Origins of gross domestic product 2002a % of total Components of gross domestic product 2001b % of total Agriculture, forestry & fishing 16.1 Private consumption 57.0 Mining & quarrying 2.5 Government consumption 17.1 Manufacturing 15.6 Fixed investment 14.5 Construction 4.3 Stockbuilding 1.0 Electricity & water 4.4 Exports of goods & services 55.7 Transport & communications 13.6 Imports of goods & services -60.7 Wholesale & retail trade, restaurants & hotels 19.5 Statistical discrepancy 15.4 Other services 24.0 Principal exports 2004a F$ m Principal imports 2004a F$ m Garments 256.4 Machinery & transport equipment 548.4 Sugar 178.4 Manufactured goods 481.0 Gold 88.5 Food 349.2 Fish 85.1 Mineral fuels 320.5 Timber 42.9 Miscellaneous manufactured articles 245.3 Main destinations of exports 2004a % of total Main origins of imports 2004a % of total Australia 29.6 Australia 34.0 US 27.2 New Zealand 20.2 UK 15.6 Singapore 12.5 Pacific Islands 8.7 Japan 4.5 New Zealand 5.6 US 3.7 a Reserve Bank of Fiji, Quarterly Review.
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