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Fiji New Caledonia Samoa Solomon Islands Tonga Vanuatu COUNTRY REPORT Pacific Islands: Fiji New Caledonia Samoa Solomon Islands Tonga Vanuatu September 2000 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 EIU delivers its information in four ways: through our digital portfolio, where our latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising conferences and roundtables. 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 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.20) 7499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 E-mail: london@eiu.com E-mail: newyork@eiu.com E-mail: hongkong@eiu.com Website: http://www.eiu.com Electronic delivery This publication can be viewed by subscribing online at http://store.eiu.com/brdes.html 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 London: Jan Frost Tel: (44.20) 7830 1183 Fax: (44.20) 7830 1023 New York: Alexander Bateman Tel: (1.212) 554 0643 Fax: (1.212) 586 1181 Hong Kong: Amy Ha Tel: (852) 2802 7288/2585 3888 Fax: (852) 2802 7720/7638 Copyright © 2000 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 EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1460-7077 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK 1 Contents The region 7 Outlook for 2000-01 7 The political scene 9 Economic policy and the economy Fiji 12 Political structure 13 Economic structure 13 Annual indicators 14 Quarterly indicators 15 Outlook for 2000-01 17 The political scene 19 Economic policy and the economy New Caledonia 20 Political structure 21 Economic structure 21 Annual indicators 22 Outlook for 2000-01 23 The political scene 25 Economic policy and the economy Samoa 29 Political structure 30 Economic structure 30 Annual indicators 31 Quarterly indicators 32 Outlook for 2000-01 33 The political scene 34 Economic policy and the economy Solomon Islands 36 Political structure 37 Economic structure 37 Annual indicators 38 Quarterly indicators EIU Country Report September 2000 © The Economist Intelligence Unit Limited 2000 2 39 Outlook for 2000-01 40 The political scene 42 Economic policy and the economy Tonga 43 Political structure 44 Economic structure 44 Annual indicators 45 Quarterly indicators 46 Outlook for 2000-01 46 The political scene 48 Economic policy and the economy Vanuatu 51 Political structure 52 Economic structure 52 Annual indicators 53 Quarterly indicators 54 Outlook for 2000-01 55 The political scene 56 Economic policy and the economy List of figures 17 Fiji: gross domestic product 17 Fiji: Fiji dollar real exchange rates 32 Samoa: gross domestic product 32 Samoa: Tala real exchange rates 40 Solomon Islands: gross domestic product 40 Solomon Islands: Solomon Islands dollar real exchange rates 46 Tonga: gross domestic product 46 Tonga: Tonga real dollar exchange rates 54 Vanuatu: gross domestic product 54 Vanuatu: vatu real exchange rates EIU Country Report September 2000 © The Economist Intelligence Unit Limited 2000 3 Summary September 2000 The region Outlook for 2000-01 The use of force to overthrow elected governments in Fiji and the Solomon Islands is likely to change regional political relationships fundamentally, although it is not yet clear how. The South Pacific Forum members will down- grade relations with the two countries, but will seek to avoid sanctions that affect economic recovery. The economic impact of the crisis will last for many years, and be manifest in various different ways. The political scene The region’s foreign ministers have condemned events in Fiji and the Solomon Islands. All 14 islands of the Pacific Islands Forum are not members of the ACP (African, Caribbean and Pacific) Group. Tuna fishing has continued to create friction with Japan. Economic policy and the Negotiations have begun on a regional trade agreement, with a second round economy of talks scheduled for March 2001. Implementation of the agreement is supposed to begin from January 2002, but the economic fall-out from the Fiji and Solomon Islands crises may delay matters. A research paper for the South Pacific Forum Secretariat projects three scenarios for economic recovery in these two countries, the most pessimistic of which predicts five years of economic recession in Fiji and seven to ten years of recession in the Solomon Islands. Fiji Outlook for 2000-01 The new interim government projects a GDP contraction of 15% this year. Fiji’s principal trade and development partners have shown a willingness to let the government establish itself before redefining relationships, but some form of sanctions will be imposed. The interim government may, however, never be credible domestically, having little standing with indigenous Fijians. Legal issues are likely to bedevil the government for months to come. The political scene After the election of a president by the Great Council of Chiefs, attempts to form an interim government resumed, with one appointed in mid-July. George Speight was arrested in late July, and the president, Ratu Josefa Iloilo, broadened slightly the complexion of the government. Economic policy and the A mini-budget released by the interim government’s finance minister has made economy some dire predictions. Government tax revenue are forecast to fall sharply, but the government has pledged not to raise taxes. Instead it will try to improve tax collection and cut expenditure. Salaries and wages of government employees, operating grants and payments and capital expenditure have all EIU Country Report September 2000 © The Economist Intelligence Unit Limited 2000 4 been reduced. The Reserve Bank of Fiji (RBF, the central bank) predicts major declines in many sectors, but the sugar harvest offers a glimmer of hope. New Caledonia Outlook for 2000-01 French domestic politics has threatened to stall progress on resolving political conflict, due to the resignation of the French overseas minister, Jean-Jack Queyranne. The economic outlook remains dependent on two factors: how much money France is prepared to plough into New Caledonia, and the prospects for nickel prices. Nickel prices are forecast to decline again in 2001, but in the medium term nickel output will increase. The political scene Jacques Lafleur has said he will resign from the French national assembly, but as yet has shown no signs of actually doing so. The threat raises many uncertainties, including that succession within the Rassemblement pour la Calédonie dans la République. Internal conflict has prompted the Union calédonienne to rethink. Elections for the Loyalty Islands Province have produced no change in the overall political balance. Economic policy and the An industrial relations plan has been unveiled. Agreement has been reached on economy the transfer to local interest of French government interests in the New Caledonia nickel industry. Exports reached a ten-year high in the first six months of 2000, driven up by the strength of world nickel prices in the first half of the year. Congress has approved new import taxes. Mobile phone services have helped boost Office of Post and Telecom revenue. Samoa Outlook for 2000-01 Economic prospects are good, if nature remains benign. Demand for tourist accommodation will refocus the attention of investors and local entrepreneurs. The latest budget projects growth rates of 3-4% in the medium term. The political scene A change in residency requirement for election candidates has caused controversy, with the government accused of discriminating against overseas Samoans. A post-election challenge for the premiership is possible. The last session of the parliament (Fono) ended with a boycott by the opposition leader. Economic policy and the Business/government relations appear good, with business pleased with the economy rationalisation and simplification of tariff and income tax schedules. The tourism industry needs more hotel rooms. The shipping corporation has reported another good year. Hopes rest on a new taro variety. EIU Country Report September 2000 © The Economist Intelligence Unit Limited 2000 5 Solomon Islands Outlook for 2000-01 The political and economic outlook is extremely poor, with the government considering postponing parliamentary elections. No timetable has yet been set for the peace process. The government’s financial situation is precarious. The political scene The new prime minister’s election was achieved by intimidation. Fighting broke out again soon afterwards, and the human rights situation has worsened sharply. Peace talks started on September 8th. Economic policy and the The decision to close the country’s two biggest enterprises, Solomon Islands economy Plantations and the Gold Ridge mining project, will have major ramifications for future investment, but only around 8% of the population is employed in the formal economy.
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