Country Profile 2007

Fiji

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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.

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Comparative economic indicators, 2006

Gross domestic product Gross domestic product per head (US$ bn) (US$ '000)

Australia 755.4 Australia 37.3

New Zealand 104.4 New Zealand 25.1

Papua New Guinea Fiji(a)

Fiji(a) Samoa(a)

Samoa(a) Tonga(a)

Vanuatu(a) Vanuatu(a)

Solomon Islands(a) Papua New Guinea

Tonga(a) Solomon Islands(a)

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Contents

Fiji

3 Basic data

4 Politics 4 Political background 5 Recent political developments 7 Constitution, institutions and administration 8 Political forces 8 International relations and defence

9 Resources and infrastructure 9 Population 9 Education 10 Health 10 Natural resources and the environment 10 Transport, communications and the Internet 11 Energy provision

11 The economy 11 Economic structure 12 Economic policy 13 Economic performance

14 Economic sectors 14 Agriculture 14 Mining and semi-processing 15 Manufacturing 15 Financial services 15 Other services

16 The external sector 16 Tra d e i n go od s 16 Invisibles and the current account 16 Capital flows and foreign debt 17 Foreign reserves and the exchange rate

18 Regional overview 18 Membership of organisations 20 The regional economy

22 Appendices 22 Sources of information 22 Reference tables 22 Estimated population 23 Gross domestic product by sector 23 Government finances 23 Gross domestic product 24 Gross domestic product by expenditure

24 Inflation 24 Money and credit 24 Production of selected products 25 Visitor arrivals 25 Main domestic exports 25 Main imports 26 Main trading partners 26 Balance of payments, national series 26 External debt 27 Net official development assistance 27 Foreign reserves 27 Exchange rates

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Fiji

Basic data

Land area 18,333 sq km

Population 772,655 (1996 census); 853,445 (December 2006 estimate)

Major islands Viti Levu (10,429 sq km), Vanua Levu (5,556 sq km)

Capital Suva (population: 176,000)

Climate Tropical

Weather in Suva (altitude Hottest months, January-March, 23-30°C (average daily minimum and 6 metres) maximum); coldest months, July-August, 20-26°C; driest month, July, 124 mm average rainfall; wettest month, March, 368 mm average rainfall

Languages English, Fijian and Hindi

Measures Metric

Currency Fiji dollar (F$)=100 cents. Average exchange rate in 2006: F$1.69:US$1. Exchange rate on July 22nd: F$1.559:US$1

Fiscal year Calendar year

Time 12 hours ahead of GMT

Public holidays, 2006 January 1st (New Year!s Day); April 2nd (the prophet Mohammed!s birthday); April 6th (Good Friday); April 7th (Easter Saturday); April 9th (Easter Monday); May 4th (National Youth Day); May 28th (Ratu Sir Lala Sukuna Day); June 18th (Queen!s official birthday); October 8th (Fiji Day); November 9th (Diwali); December 25th (Christmas Day); December 26th (Boxing Day)

Politics

Fijian politics remain characterised by strong divisions between the indigenous Fijian population and Fijians of Indian decent, brought in by the British colonial administration between 1879-1916 to work in the emerging sugar industry. Since colonial rule, native Fijians by law control land tenure, which has been frozen since 1909 and managed through a collective clan-based system of ownership. However, land is leased on ten-year terms mainly by Indo-Fijians, who have come to dominate Fiji!s industries. This separation directs the political agenda and is roughly mirrored in political parties, with the United Fiji Party, led by Laisenia Qarase, representing native Fijian interests, and the Fijian Labour Party (FLP), lead by Mahendra Chaudhry, representing Indo-Fijian interests. Following the toppling of Fiji!s first Indian-led government under Mr Chaudhry!s FLP in a "civilian coup" in 2000, an interim government under Mr Qarase was appointed by the military. The courts declared the interim government illegitimate, but Mr Qarase won the ensuing general election in August 2001. The election failed to restore political stability, and the political environment continued to be characterised by bouts of ethnic friction. However, when Mr Qarase was re-elected in May 2006, he took the unprecedented step of inviting nine members of the opposition FLP to join the cabinet in an apparent effort to stabilise a political scene. In December 2006 Voreqe (Frank) Bainimarama, the commander of the military, ousted Mr Qarase, who in his view was expanding divisive nationalist policies, in a non-violent coup. Since seizing office, Mr Bainimarama has consolidated his power base by sacking the constitutional body of the Council of Chiefs, as well as several pro-Qarase officials. Fiji and the interim government have faced strong international condemnation, particularly from the country!s major donors, Australia, New Zealand and the EU. Mr Bainimarama has indicated that he would be prepared to hold democratic elections by 2010, but international donors are pressing for a shorter timeline and adding pressure through targeted travel restrictions and withholding much- needed structural aid.

Political background

Fiji gains independence in 1970 Fiji became a British colony on October 10th 1874 and remained under colonial rule until independence on October 10th 1970. From April 1972 until 1987 Fiji was governed by the Alliance Party (AP), composed of organisations that were mainly indigenous Fijian. In April 1987 the AP lost office to a coalition of the FLP and the National Federation Party (NFP), the main political vehicles for Indo-Fijians. Although the FLP leader, Timoci Bavadra, was an ethnic Fijian, the coalition!s support came mainly from Indo-Fijians.

Two co ups take place i n 1987 Mr Bavadra!s victory created tensions between the two ethnic groups, which, despite a century of co-existence, had never integrated. This culminated in a military coup on May 14th 1987, led by Lieutenant-Colonel (later Brigadier and then Major-General) Sitiveni Rabuka. Racial violence escalated, as calls for

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Mr Bavadra!s reinstatement intensified. On September 23rd 1987 the governor- general, Ratu Sir Penaia Ganilau, the defeated AP prime minister, Ratu Sir Kamisese Mara, and Dr Bavadra signed an agreement giving equal representation in parliament to the AP and the FLP-NFP coalition. However, the recently promoted Brigadier Rabuka saw this as compromising the main aim of the coup, which was to ensure continued political domination of Fiji by ethnic Fijians. Two days later he mounted a second coup, and on October 7th 1987 he revoked the 1970 constitution and declared Fiji a republic.

Sitiveni Rabuka becomes Civilian government was reinstated in December 1987. At the first election held prime minister under a new constitution in May 1992 the Soqosoqo ni Vakavulewa ni Taukei (SVT)"also known as the Fijian Political Party, formed by the Great Council of Chiefs (the Bose Levu Vakaturaga, comprising around 40 hereditary chiefs, or ratus, of Fiji!s traditional clans and other distinguished Fijians) to represent indigenous Fijians"won 30 of the 37 seats reserved for ethnic Fijians. Major- General Rabuka, who became leader of the SVT in the run-up to the election, emerged as prime minister, leading a coalition with the General Voters! Party (GVP), which mainly represents citizens from neither of the two major ethnic backgrounds, chiefly Europeans, Polynesians and Asians. During its first 18 months in office Major-General Rabuka!s government was rocked by crises; to avoid a vote of no confidence, the prime minister resigned and a new election was held in February 1994. The SVT was returned to power with Major-General Rabuka as prime minister and a cabinet composed solely of indigenous Fijians. After the election, politics was dominated by the issue of constitutional change (see Constitution, institutions and administration). Both houses of parliament adopted a new constitution in June 1997, and the prime minister formed a multiparty government.

Recent political developments

A "civil coup" takes place in In March 2000 agitation against the government began again, with the aim of

May 2000 bringing about its downfall. A coup, ostensibly led by George Speight, a failed businessman fighting for the indigenous cause, succeeded in having the government dismissed and the president removed from office by the military. After a period of martial law the Great Council of Chiefs elected a new president, and a civilian government chosen by the military was installed. Led by Mr Qarase, the interim government struggled to establish credibility domestically and internationally. In November 2000 the High Court ruled that the 1997 constitution had not been overturned by the coup, that the appointment of the interim government was unlawful and unconstitutional, and that both houses of the elected parliament remained intact. Fiji!s Court of Appeal upheld that judgment on March 1st 2001. The decision forced the government to call a general election in August 2001. Mr Qarase turned his cabinet and supporters into a new party, Soqosoqo Duavata ni Lewenivanua (SDL, or United Fiji Party), which won 31 seats. The FLP won 27 seats, which entitled it to a place in the government under a constitutional provision that applies when an opposition party wins more than 10% of the seats in the House of Representatives. Mr Qarase was sworn in as

prime minister on September 10th 2001, but later announced a government of 20 ministers and seven assistant ministers"all but one of them indigenous Fijians. Mr Qarase said that if the FLP joined the government, it would create an unworkable situation. In response, the FLP took legal action challenging the validity of the government. The FLP won the case in the Supreme Court.

In response to the court!s decision, Mr Qarase asked Mr Chaudhry to accept one of two options: to become the official opposition, a role he had rejected after the election in protest at his party!s exclusion from the cabinet; or to take up his offer of 14 new positions in an expanded cabinet. However, the new cabinet ministers would be in charge of marginal portfolios such as the overseeing of pension payments to war veterans and the management of state properties, and would have no say in the policy direction of the government. Mr Chaudhry, unsurprisingly, rejected both options, not only because they went against the spirit of the 1997 constitution, which envisages a multi-racial government inclusive of the larger opposition parties, but also on the grounds of the additional costs involved in running 14 extra ministries. Mr Qarase again offered the FLP ministerial posts following his re-election in the general election of 2006, with the same result.

Another coup takes place in Following Mr Qarase’s re-election his relationship with Mr Bainimarama

December 2006 deteriorated, as the latter voiced concerns that the prime minister!s policies were discriminatory. Mr Chaudhry’s FLP also expressed concerns relating to contentious proposed legislation. The first was a bill that would have granted amnesty to the perpetrators of the 2000 coup. The second was a proposal to extend the current constitutional land rights guaranteed to indigenous Fijians to include foreshore and seabed rights. Third, the government proposed reforms to use the military exclusively as a peacekeeping force. These proposals led Mr Qarase onto a collision course with Mr Bainimarama, which culminated in a well-orchestrated and anticipated coup on December 5th 2006. After seizing office, Mr Bainimarama was successful in consolidating power and appointed himself interim prime minister. Isolated reports have indicated that individual Fijian nationalists have been dealt with harshly, with the army allegedly detaining and assaulting some opposition members. Media freedom has been curtailed and members of the government who are critical of the interim government have been prevented from attending public functions abroad. The official state of emergency was lifted in May 2007.

The Great Council of Chiefs In April, in a controversial move, Mr Bainimarama suspended the Great

is suspended Council of Chiefs, when it rejected his call to endorse the vice-presidential candidate of his choice, Ratu Epeli Nailatikau. In June 2007 the New Zealand high commissioner to Fiji, Michael Green, was expelled for “interfering in internal affairs”, eliciting a strong response from the government of New Zealand. Both Australia and New Zealand have cut military ties with Fiji and issued travel restrictions for members of the interim administration. New Zealand expanded these restrictions in July 2007 to include sports teams and seasonal workers.

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The land lease issue

The decision taken during the colonial period to bring in indentured labour from India to work in the sugar industry has had enduring repercussions. Between 1879 and 1916 around 2,000 Indian immigrants a year arrived in Fiji. The colonial government adopted a system of parallel governments, creating provincial governments for the Fijian population in addition to the colonial government. Perhaps more importantly, the land ownership pattern was frozen in 1909, with sales of land prohibited after this time. This created the current situation, where around 90% of the land is owned by indigenous Fijian communities, but over 70% of the sugar crop is produced by Indians, usually on land leased from Fijians. About 18,000 of Fiji!s sugar leases are on land owned by native Fijians. In 1999 the Native Land Trust Board launched a campaign urging Native Fijians to take up expired leases. By 2004 a total of 4,177 leases had expired, with only 65% of these renewed. This has led to many"mostly Indian"farmers being displaced. However, the government-owned Fiji Sugar Corporation has identified new areas of land it hopes will be cultivated by Indian and Fijian tenants. The former prime minister, Laisenia Qarase, and the former leader of the opposition, Mahendra Chaudhry, have been at loggerheads over the government!s wish to replace the expiring Agricultural Landlord and Tenant Act (ALTA) with the Native Land Tenancy Act, and it remains to be seen how the new government deals with the matter. The latter provides for leases of up to 50 years, compared with the 30-year ALTA limit, as well as shorter leases of 20, 30 and 40 years. Mr Chaudhry claims that only 20-year leases would actually be issued, thereby offering insufficient security for tenant farmers. Constitution, institutions and administration

The 1997 constitution On May 14th 1997, on the tenth anniversary of his first coup, Major-General Rabuka tabled the Constitution (Amendment) Bill. It was passed unanimously by both houses of parliament and signed into law by the president on July 4th 1999. The new constitution reduced the number of seats in parliament reserved for indigenous Fijians from 37 to 23 and the number reserved for Fijian Indians from 27 to 19. The number for other ethnic groups was cut from five to three, with the Rotuma (Polynesian) ethnic group retaining its one seat. The remainder of the 71 seats in the lower house became "open". All parties receiving over 10% of the vote in a general election were entitled to cabinet appointments in proportion to their seats in parliament. The president had to be an indigenous Fijian, but there were no restrictions on other positions, including that of the prime minister. The president is appointed by the Great Council of Chiefs and holds a ceremonial role with reserve powers, including the role of Commander-in- Chief of the Fijian armed forces. Fiji maintains an independent judiciary with three braches, the High Court, the Court of Appeals and the Supreme Court.

Fiji's current constitutional The institutional situation in Fiji is more fragile at present than it has been since

status is unclear the 1987 coups, and there is little indication of how this might be changed. In theory, the constitution of 1997 remains in force, but in practice the country remains under military rule with an unelected interim government.

Fiji has a bicameral parliament comprising an appointed upper house, or Senate (32 members), and an elected lower house, the House of Representatives (71 members). There is universal suffrage for all citizens aged over 21; voting is compulsory and preferential. The president, currently Ratu Josefa Iloilo, is appointed by the Great Council of Chiefs (Bose Levu Vakaturaga), comprising about 40 hereditary chiefs and other distinguished Fijians. The president appoints the prime minister, who selects the cabinet. 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. The overall political system is highly unstable.

Political forces

The Soqosoqo Duavata ni Lewenivanua (SDL, or United Fiji Party) has become the main advocate of indigenous supremacy since the Soqosoqo ni Vakavulewa ni Taukei (SVT, formed by the Great Council of Chiefs to represent indigenous Fijians) was almost wiped out in the 2001 election. The Conservative Alliance Matanivitu Vanua (CAMV) is a more extreme supporter of indigenous rights. The Fiji Labour Party (FLP) is a predominantly Indo-Fijian party, still led by Mr Chaudhry, the prime minister ousted in the 2000 coup. The United Peoples’ Party, mainly supported by Europeans, Chinese and ethnic groups, is the third political party to have seats in the House of Representatives. The current military government is lead by Mr Bainimarama, who has been sworn in as interim prime minister by Mr Iloilo. Mr Bainimarama had reappointed Mr Iloilo after consolidating power following the December 2006 coup.

International relations and defence

Fiji has played a major role in successive trade negotiations between countries of the African, Caribbean and Pacific (ACP) group under the Lomé Convention. Various coups have strained Fiji!s relations with many countries"its membership of the Commonwealth was suspended for several years"although the 2001 election led to a general normalisation of international relations. The 2006 coup has resulted in strong international condemnation, in particular from the country!s major donors, Australia, New Zealand and EU. The international community has put pressure on the interim government to hold democratic elections by early 2009 by threatening to withhold vital development aid. In response to public pressure from major donors, the interim government has announced that it will seek greater ties with China. In July 2007 Mr Bainimarama stated that the government would apply for part of the US$600m in soft loans earmarked by the Chinese government for Pacific Island nations. The government has also stated its desire for greater military ties with China. In the past the majority of training for Fiji!s peacekeeping troops has been undertaken in Australia an New Zealand. Fiji is participating in the Australian-led intervention in the Solomon Islands.

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Defence Fiji!s military is structured principally to maintain about 1,000 soldiers serving in UN peacekeeping missions overseas, mostly in the Middle East. This is an important source of revenue. According to the London-based International Institute for Strategic Studies, there were 3,200 personnel in the army and 300 in the navy in 2006, supported by 6,000 reservists. The defence budget for 2006 was F$74m (US$44m). Australian and New Zealand warships visit Fiji regularly, and ships from the UK and the US navies visit occasionally. These ties were cut between May 2000 and the 2001 election, and again in 2006 following the coup.

Resources and infrastructure

Population

According to the last official census in 1996, the population stood at 772,655, up from 715,375 a decade earlier. More recent figures from the Fiji Islands Bureau of Statistics (FIBS) estimated the population at 853,445 in December 2006. According to FIBS, indigenous Fijians made up an estimated 55.2% of the population in 2006, with Indo-Fijians accounting for 36.7% of the total. The 1996 census showed that 53.6% of the population lived in rural areas and 46.4% were urban dwellers. Population growth has been severely curtailed by emigration, mainly of Indo-Fijians, following its several coups. The government estimates that 1,000 people left the country each month in the 18-month period following the overthrow of the government of Mahendra Chaudhry in 2000, most of them professionals and owners of small businesses and their families. The rate of emigration fell by more than 13% in 2002 to reach 5,877, but according to the FIBS annual emigration was 6,182 in 2003 and 4,353 in the first nine months of 2004, with Indo-Fijians accounting for more than 80% of the departures.

Education

Education is not mandatory School attendance is not compulsory in Fiji, but the government provides free education for the first eight years of schooling. Most schools are operated by local committees. Although there is no formalised racial segregation, schools have traditionally been attended by pupils of a single race. Adult illiteracy is low, at 4% for males and 7% for females, according to the UN Population Fund. The University of the South Pacific, funded by regional governments and aid donors, is based in the capital, Suva. Australia!s University of Central Queensland also has a Suva campus for fee-paying students. The University of Fiji was opened at Lautoka in 2005, sponsored by the Arya Pratinidhi Sabha, a long-established Indian education movement. However, the government is reluctant to recognise it, possibly because of its political links with the Fijian Labour Party. The University of Fiji has been launched with modest resources, but has signed a co- operation agreement with the University of Canberra in Australia.

Health

Longevity is relatively high Healthcare standards in Fiji are high compared with those in most developing countries. According to the World Health Organisation, in 2005 life expectancy at birth was 66 years for men and 72 for women, and the infant mortality rate in 2003 was about 16 per 1,000 population (compared with 50 per 1,000 in 1970). The government provides most medical facilities, and specialist medical services are available in Suva and Lautoka. In 2004 public health expenditure was equivalent to 4.6% of GDP. Because of their relative isolation, the Pacific island nations have experienced a much lower incidence of HIV/AIDS infection than most other areas of the world. However, there is widespread ignorance about the way in which the virus is transmitted, and concern is growing about accelerating infection rates and the impact of a spreading epidemic on population numbers. The government now appears to have woken up to the problem: in a speech in June 2006 the country’s representative to the UN, Ishga Saver, talked about the likelihood of infection rates increasing rapidly, and the need for compulsory testing. There is also concern about the impact of the shift from traditional diets of fish and fruit to imported, processed foods high in fat and sugar. Obesity levels have risen dramatically in the Pacific island nations in recent decades. Diabetes and other obesity-related diseases are becoming increasingly prevalent (diabetes is the main cause of death in 11 island states).

Natural resources and the environment

Only one-third of Fiji's islands Fiji is an archipelago of 332 islands, about one-third of which are inhabited on a

are inhabited permanent basis. The total land area is 18,333 sq km, with the island of Viti Levu accounting for 10,429 sq km (57%) and Vanua Levu 5,556 sq km (30%). According to the Native Land Trust Board, in 2000 most of the land"1,487,581 ha"was held under "native title" (collectively owned by the traditional clans). Of this area, 387,075 ha was leased, largely for agricultural purposes. Legislation enacted in 2004, which reserved certain types of land (mainly that once occupied by extinct tribes) for allocation to landless indigenous Fijians, raised the total area of land owned or reserved for Fijians from 83% to just over 90%. According to the UN Food and Agriculture Organisation (FAO), forests covered 815,000 ha of Fiji (44.6% of the total) in 2000. FAO figures for 1995 show that a further 8.4% was accounted for by woodland. Forest cover fell by an average of 2.1% a year in 1990-2000.

Transport, communications and the Internet

Ports and airline services About a dozen international shipping lines serve Fiji. The main ports of entry are Suva, Lautoka, Levuka and Savusavu. Fiji!s international airports are Nadi and Nausori, which are about 200 km and 20 km from Suva respectively. Nadi airport was upgraded in time for the South Pacific Games, which were held in Fiji in June-July 2003, and there are also plans to upgrade Nausori airport. In

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contrast with most other airlines in the region, profits at Fiji!s national carrier, Air Pacific, have jumped sharply in recent years, as the international airline has expanded its services. However, competition has increased since mid-2004, following the launch of budget airline services by competitors from New Zealand and Australia.

Telecommunications There are telephone or radio telephone links to almost all inhabited islands. A network to deliver satellite and television services to all inhabited islands opened in September 2004. Most towns and large villages have automatic telephone exchanges and direct dialling. In 1994 a mobile-phone network was established in the country. It was estimated in 2004 that 90,000 land telephone lines were in use, along with more than 100,000 mobile phones. Internet use has risen sharply in recent years, especially in Suva, Lautoka and the main tourist resorts. Dial-up Internet rates are expensive in Fiji. In August 2005 the Fiji Commerce Commission instructed Fiji International Telecommunications Ltd (Fintel) and Amalgamated Telecom Holdings (which owns Telecom Fiji, the main telecoms operator) to cut overseas call rates by an average of 50%, but the firm has objected to the order. Commercial users have long complained that high call charges are throttling business and hampering attempts to develop call centres and other telecoms-related businesses.

Energy provision

Hydroelectricity is an Fiji!s governments have invested heavily in hydroelectricity, which is now a key

important power source source of power. The Monasavu project near Suva was completed in 1983 at a cost of F$233m (US$167m). In the early 1990s hydroelectricity accounted for around 80% of Fiji!s total electricity generation. The Fiji Electricity Authority (FEA), the state-owned authority responsible for the generation, transmission and distribution of electricity in Fiji, is planning to set up several smaller hydroelectric schemes and a wind farm. The FEA is also planning to make increasing use of ethanol, produced from sugarcane, to fuel power stations. Total electricity consumption and production amounted to 812m kwh in 2003, according to the Asian Development Bank.

The economy

Economic structure

Main economic indicators, 2006 Real GDP growth (%) 3.4 Consumer price inflation (av; %) 2.5 Current-account balance (F$ m)a -621.1a Exchange rate (av; F$:US$) 1.66 a 2005. Source: Reserve Bank of Fiji; Fiji Islands Bureau of Statistics.

Fiji’s economy is vulnerable to Fiji has the largest and most developed economy of the Pacific island nations, external shocks but in global terms it is small and vulnerable, both to domestic political

uncertainty and to external shocks. Relative political stability between 2001 and 2006 encouraged growth in tourism, private consumption and construction activity. These factors underpinned growth of 1.1% in 2003, 5.4% in 2004 (according to national estimates) and 0.7% in 2005, in part because of lower clothing production, but picked up in 2006 to reach an estimated 3.4%. The economy began to contract after the coup in December 2006. According to the Reserve Bank of Fiji (the central bank), the economy will contract in 2007, because of declines in the construction, mining and service sectors. Tourism is also likely to underperform. The interim government!s decision to cut civil servants! wages by 5% is expected to dampen private consumption.

Economy in need of long term Agriculture (sugarcane, livestock, forestry and subsistence farming), forestry and structural reform fishing remain important, accounting for around 20% of GDP for much of the 1990s, although this figure had declined to 14.3% by 2005. Sugar remains the most important crop, although the proportion of agricultural GDP attributable to sugar fell from 46% in 1994 to 27.4% in 2002, reflecting land lease problems (see Politics: Recent political developments), outdated technology and a lack of much-needed capital investment. Sugar processing accounted for 14.2% of manufacturing output in 2002, compared with 26.4% in 1994. The EU is now committed through the World Trade Organisation (WTO) to restructuring its sugar subsidies granted to the African, Caribbean and Pacific States (ACP) by 2008-09. To ease the transition, the EU has dedicated large sums to restructure the ACP economies to diversify the national industries and increase competitiveness. However, this structural assistance has been withheld since the December 2006 coup in order to pressure the Fijian government for a clear timeline for democratic elections. The main driver of economic growth, tourism, declined slightly in 2006, with 545,168 tourist arrivals compared with 549,906 in 2005. Although a rebound is expected by late 2007, the political repercussions of the coup and associated warnings issued by foreign governments concerning travel to Fiji reduced arrivals to 108,000 in first quarter of 2007, a decline of 5.5% from the same period in 2006. A sizeable garment industry suffered from the social and political unrest of 2000 and the declining value of concessional arrangements, as overall tariff levels were reduced. As a result, many foreign-owned garment factories have closed in recent years, and employment in the industry had dropped to around 12,000 by mid-2005. Australia has extended by seven years (from 2005) its preferential trade agreement with Fiji relating to Fijian exports of garments and shoes, although jobs continue to be lost as a result of the non-renewal of a three-year trade agreement with the US, which expired at the end of 2004.

Economic policy

Successive governments have failed to make good on promises to reduce the budget deficit, which hit a peak of 9.3% of GDP in 2001, reflecting in part the impact (both direct and indirect) of the political crisis at the time. The budget deficit was reduced slightly to an estimated 8.7% of GDP in 2002, and the

Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007 Fiji 13

government had hoped to reduce the budget deficit to 4% in 2003 by means of an increase in the rate of value-added tax (VAT) from 10% to 12.5%. However, a cyclone in January 2003 necessitated unplanned spending and resulted in a budget deficit of 9% of GDP in 2003. By 2006 the deficit had been reduced to 3.8% of GDP. Another key policy issue that has plagued governments in recent years has been the need to reverse the slump in investment, caused by the political instability as a result of the coups of 1987, 2000 and 2006, as well as by ongoing constitutional uncertainty, and the non-resolution of the land lease issue (see Politics: Recent political developments). These factors caused gross fixed capital formation to sink from around 20% of GDP in the 1970s to 13.5% in 2001. Investment has since picked up. According to the Reserve Bank of Fiji the ratio of gross investment to GDP rose to 19% in 2006, although it was still well below the government!s target of 25%.

The government is keen to The government has been keen to diversify the economy, to decrease reliance diversify the economy on the sugar crop within the agricultural sector and, more generally, to reduce the economy!s dependence on agriculture. Within the agricultural sector, the government has encouraged the development of the timber industry. Earnings from exports of timber and timber products have increased substantially since 1986, as plantations run by Fiji Pine, the country!s main operator in the sector, have come on stream. Maturing mahogany plantations are also making an increasingly significant contribution to export earnings. In early 2006 the prime minister, Laisenia Qarase, predicted that Fiji stood to earn about US$58m from Vitu Levu’s mahogany sales in five years! time, and that once mahogany plantations on Vanua Levu reached maturity in approximately eight years! time, earnings would increase even further.

Economic performance

Economic growth has fluctuated widely since the mid-1990s, reflecting climatic factors and the impact of domestic and foreign political events. The economy contracted by 2.8% in 2000, but experienced a recovery in 2001-02, when annual growth averaged 3.5%. The economy expanded by 5.4% in 2004 before growth dipped to 0.7% in 2005, to return to 3.4% in 2006, according to estimates. High dependence on imports means that the rate of consumer price inflation is largely determined by trends in import prices and by the movement of the Fiji dollar against the currencies of the country!s major trading partners, particularly the US dollar. However, the rise in inflation to an average rate of 4.2% in 2003 was driven mainly by the increase in VAT to 12.5%. Inflation subsequently eased to an average rate of 2.8% in 2004 and only 2.4% in 2006.

Economic sectors

Agriculture

The sugar industry The economy has traditionally relied heavily on agriculture, where sugar is by

is struggling far the most important crop. However, the industry!s long-term prospects are poor. According to the Sugar Grain Growing Council, cane production has declined by more than 36% since 1999. Productivity lags far behind international standards and extensive reforms and investment are needed to revitalise the industry. The two main problems are the inefficient land-lease system and the changing trade arrangements with the EU. Under the Lome Convention!s Sugar Protocol, Fiji exports around one-half of its normal sugar output to the EU at two to three times market prices. The value of this subsidy was estimated at US$69m in 2006. The protocol was successfully challenged at the World Trade Organisation (WTO) in 2004, and in response the EU is now committed to phasing out its sugar subsidies by 2009. The Fiji Cane Growers Association estimates that a collapse in the industry would affect almost 200,000 people, roughly one-quarter of the population. To avoid this looming crisis, the EU has dedicated substantial funds to increasing industry competitiveness and diversifying the economy. However, following the December 2006 coup, the EU has threatened to cut or withhold part of this structural aid. It is likely that the aid will eventually be released once a clearer timeline for elections is announced by the interim government. Timber and fish"mainly tuna"have become increasingly important in recent years. Fish export earnings increased by 18.9% year on year in 2006. Copra, ginger and coconut oil are also produced for export.

Mining and semi-processing

Mining and quarrying Mining and quarrying contributed less than 1% of total GDP in 2006. The only

remains marginal significant mining activity is the production of gold, which in 2006 accounted for F$43.1m (US$25.9m) of exports, or 3.6% of domestic export earnings. Despite high prices, total gold production and export volumes have been falling in recent years, because of higher fuel costs, staff absenteeism and lower-quality ore. In December 2006 the Vatukoula gold mine was closed, which resulted in an estimated 2,510 jobs being lost. More than 6.4m ounces of gold have been mined at Vatukoula since 1933, and current reserves are estimated at 1m ounces. Investors are looking at reopening and enlarging the Mount Kasi gold mine at Vanua Levu and developing the Tuvatu prospect near Nadi. In July 2007 Newcrest Mining, an Australian mining company, signed a memorandum of understanding with Mitsubishi Materials Corporation and Nittetsu Mining Company, both Japanese mining firms, jointly to develop the Namosi gold mine.

Country Profile 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007 Fiji 15

Manufacturing

The garment industry The proportion of GDP accounted for by manufacturing was 14.9% in 2006. For

is in decline many years the sector was dominated by the processing of sugarcane and other agricultural products, notably copra, coconut oil and timber. However, from 1985 manufacturing became more diversified with the development of a garment export industry based on tax breaks and concessional access to the Australian market. However, the gradual erosion of Australian concessions and loss of a market quota agreement with the US at the end of 2004 have adversely affected the garment industry. During 2005 the construction industry was busy with contracts, mainly for resort hotels, and several more major projects are in prospect, but local construction companies have warned of shortages of local skilled labour.

Financial services

Fiji!s monetary policy is controlled by the Reserve Bank of Fiji (RBF, the central bank), which also has wide regulatory powers over financial services providers. The government in effect withdrew from the commercial banking sector after bailing out the state-owned National Bank of Fiji in 1998. An Australian financial services group, Colonial Ltd, acquired 51% of the bank in 1999. It is now known as Colonial National Bank and is the largest network in the country, with a majority holding in one of the two merchant banks in Fiji. Five foreign-owned commercial banks already operated in Fiji, and there is a small but developing South Pacific Stock Exchange located in Suva.

Other services

Tourism is the primary source Tourism is a mainstay of the economy and has reduced the country!s previous

economic growth heavy dependence on sugar for foreign-exchange earnings. Visitor numbers collapsed after the political upheaval in May 2000, when some of the biggest resort hotels closed for a time. After relative calm had been restored the industry embarked on a heavy promotional campaign in its main markets, Australia, New Zealand and the US (which together account for two-thirds of tourists), with some success. Visitor arrivals reached a record of around 500,000 in 2004, owing partly to the launch of "no frills" flights from New Zealand and Australia, and rose further to around 550,000 in 2005 and 2006. Increasing tourist numbers have encouraged substantial investment in a number of new resorts, notably by the international hotel chain, the Accor Group. Other international brand names involved in tourism development include Four Seasons, Intercontinental, Meridian and Hilton. The coup in December 2006 led to a decline in tourist arrivals with 108,000 arrivals in the first quarter of 2007, a fall of 5.5% compared with the same period in 2006. However, the effects of the coup have had much lower impact on tourist arrivals than those of the coup in 2000, and arrivals are forecast to rebound in the second half of 2007.

The external sector

Trade in goods

Sugar is the most Garments, which briefly overtook sugar as the biggest export earner in the late important export 1990s, accounted for 18.8% of domestic exports in 2004, but this share fell back to 7.9% in 2005. Sugar exports had a 17.9% share of domestic exports in 2005, but this may decline again in the future, because of the changing EU trade regime. Machinery and transport equipment accounted for 21.9% of imports in 2005, followed by manufactured goods (14.9%) and food (12.4%). However, the largest share in 2005 was held by mineral fuels (32.7%, up from 23.5% in 2004), partly reflecting high global oil prices. Fiji runs a persistent trade deficit, the value of which has climbed gradually over the past five years to reach F$1.9bn (US$1.1bn) in 2006 on a customs basis. Australia is Fiji!s most important trading partner, taking in over 22% of Fiji!s total exports in 2006 and supplying 22% of its imports. The US is also an important export market, taking in 18.5% of Fiji!s total exports in 2006. Fiji also has important trading relations with Singapore (now the largest source of imports thanks to fuel imports), the UK (largely as an export market), New Zealand (largely as a source of imports) and Japan.

Invisibles and the current account

Fiji!s surplus on the services account is mainly the result of tourism revenue. According to the Asian Development Bank (ADB), the services surplus was US$129m in 2005 and the transfers surplus reached US$160m. This was not enough to offset a steady rise in the trade deficit, which pulled the current account into a deficit of US$467m in 2005.

Capital flows and foreign debt

According to OECD figures, Australia is Fiji!s most important donor, contributing 39% of total aid disbursements between 2001 and 2005. In 2005 total disbursements from Australia amounted to US$65.7m, out of total aid disbursements of US$108.8m. Japan is the second-largest donor, accounting for 25.2% of total aid given between 2001 and 2005. New Zealand contributed 4.5% of total aid during the same period, making it the third-largest bilateral donor. The EU is the most important multilateral donor, accounting for 14.7% of aid disbursements between 2001 and 2005. Multilateral aid is also channelled through several UN agencies. According to the ADB, Fiji!s total external debt stood at US$202m in 2004 or 9.4% of gross national income (GNI). External debt as percentage of GNI has remained between 8-13% since 1995.

Foreign reserves and the exchange rate

Foreign-exchange reserves rose between 1993 and 1999, and by acting swiftly to protect the reserves after the coup in May 2000, the Reserve Bank of Fiji (the central bank) succeeded in preventing any dramatic run-down. In recent years rising tourism revenue has helped foreign reserves to recover to US$478.1m at end-2004, but this fell to US$314.7m in 2005. Because of capital inflows, the worsening current-account situation has yet to have much impact on foreign reserves: by the end of March 2006, foreign reserves stood at US$448.1m, equivalent to around 3.4 months of import cover. The Fiji dollar initially weathered the political crisis of mid-2000 reasonably well, standing at F$2.08:US$1 at end-June that year. However, by the end of June 2001 the currency had fallen to F$2.31:US$1. It recovered ground slowly, ending 2002 at F$2.07:US$1, before appreciating strongly during 2003, to end the year at F$1.72:US$1, reflecting the weakness of the US dollar. Further appreciation was evident in 2004, with the currency ending the year at F$1.65:US$1, but it then slid back to end 2005 at F$1.86:US$1. It later appreciated to average F$1.69:US$1 in 2006.

Regional overview

Membership of organisations

The Pacific Islands Forum The Pacific Islands Forum (PIF) is the most important regional organisation. It was formerly known as the South Pacific Forum, which in turn developed from the South Pacific Bureau for Economic Co-operation, established more than 40 years ago. The forum adopted its new name at its annual meeting in 2000, recognising that not all of its members were in the South Pacific since the admission of former US trust territories north of the equator. The forum was created in 1971 in response to the spread of self-government in the region and the need of the new states for a political forum. The 16 members are Australia, the Cook Islands, the Federated States of Micronesia, Fiji, Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, the Marshall Islands, Samoa, the Solomon Islands, Tonga, Tuvalu and Vanuatu. The PIF meets each year at head- of-state/government level, and immediately after the meeting ministers spend two days in consultation with the forum!s dialogue partners"Canada, China, the EU, France, India, Indonesia, Japan, Malaysia, the Philippines, South Korea, the UK and the US. A separate dialogue session is held with Taiwan by the six PIF members with which it has diplomatic relations. The PIF Secretariat, which is based in Suva, the capital of Fiji, and has a staff of about 70, administers a series of programmes aimed at promoting regional co-operation among member states through trade, investment, economic development, and political and international co-operation. The secretariat has also developed a growing portfolio of technical training programmes as part of broader initiatives for strengthening institutions and improving governance and accountability. Operations are funded by contributions from member governments and donors. Current donors consist of the PIF!s dialogue partners together with Australia, New Zealand, the Commonwealth Secretariat and Germany. Since October 1994 the PIF has had observer status at the UN General Assembly. Island governments have used the PIF and other regional forums to make their views known on other issues, such as climate change and the impact of rising sea levels. Other perennial issues are pooled regional governance, greater co-operation on regional air transport, security and crossborder crime (including money-laundering). The PIF is now focusing on implementing the Pacific Plan, a wide-ranging package of measures agreed at its summit meeting in October 2005 in Papua New Guinea (PNG). One major objective is to integrate trade in services (including temporary labour movement) into the Pacific Island Countries Trade Agreement (PICTA) and the proposed EU Economic Partnership Agreement (EPA) by 2008. There are also plans for the bulk purchase of commodities such as oil. Greg Urwin, an Australian and a former high commissioner to Fiji, Samoa and Vanuatu, was re-elected secretary-general of the PIF at the organisation’s annual summit in October 2006. Mr Urwin was first elected to the role following an acrimonious annual meeting in 2003. The post of secretary-general, the senior

regional position, had always previously been filled by a Pacific islander, and the leaders of some of the smaller PIF member states were unhappy at the aggressiveness of Australian lobbying for their candidate and suspicious of Australia’s motives in seeking the top position in the organisation. Australia’s expanding military role in the region, along with its aid activities, means that it is likely to play a crucial role in PIF activities. The rising power in the region is China, and the Chinese government held discussions with several PIF member states in Fiji in 2006.

The Pacific Community A second regional organisation is the Pacific Community (formerly the South Pacific Commission), formed in 1947 by Australia, France, the Netherlands, New Zealand, the UK and the US. These countries were the colonial powers in the region at the time, and they insisted that the organisation be non-political, dealing only with technical issues and matters of practical co-operation. The community now has 26 members and continues to be an apolitical body, offering technical advice, assistance, training and research. Its headquarters are in Nouméa, the capital of New Caledonia, and it also has a substantial presence in Suva. It is a bilingual organisation (using English and French), with a staff of around 175 and a limited budget that is augmented by special funding for particular projects. The community has an integrated work programme based around the development of the region’s land-based, marine-based and human resources, and is currently drafting a new corporate plan that is expected to focus on better use of land and marine resources.

Other regional organisations The secretary-general of the PIF Secretariat chairs the Council of Regional Organisations of the Pacific (CROP), which brings together the PIF and the Pacific Community as well as six other regional organisations: the Forum Fisheries Agency (based in Honiara, the Solomon Islands capital); the Pacific Islands Development Programme (based in Hawaii); the South Pacific Regional Environment Programme (based in Apia, Samoa); the South Pacific Applied Geoscience Commission (based in Suva); the South Pacific Tourism Organisation (also based in Suva); and the University of the South Pacific (based in Suva, but with campuses and centres throughout the region). A further regional organisation, although narrower in membership than either the PIF or the Pacific Community, is the Melanesian Spearhead Group (MSG), which brings together the Solomon Islands, PNG, Vanuatu, Fiji and the New Caledonia independence coalition, the Front de Libération Nationale Kanak Socialiste (FLNKS). The MSG aims to promote co-operation between members in economic, political and cultural matters, and is implementing a free-trade agreement (FTA) between its members.

The EU-ACP convention All PIF members excluding Australia and New Zealand are also members of the (Cotonou Agreement) 78-state Africa, Caribbean and Pacific (ACP) group defined by the Cotonou Agreement. The agreement, which was ratified in February 2003, gives the ACP nations preferential trading access to the EU market and a share in EU aid programmes and other assistance. The PIF Secretariat is charged with the task of drafting a joint position for negotiations between the PIF members and the EU as provided for in the agreement.

The Cotonou Agreement, which covers the period from 2000 to 2020, has a strong political dimension. As well as respect for human rights, democratic principles and the rule of law, the ACP countries have also agreed to promote good governance and to combat corruption and illegal immigration into the EU. Under previous conventions, ACP products, whether agricultural or industrial, entered the EU duty-free, but four agricultural products"beef, sugar, bananas and rum"were subject to a more restrictive system of tariff quotas. The Cotonou Agreement offers a negotiating framework for tailor-made regional FTAs, under which ACP countries, preferably within existing economic groupings, will gradually open their domestic markets to European products. Given the adjustment costs involved, a preparatory period of eight years has been agreed, during which the old system of preferences will continue to apply. The EU maintains a regional delegation in Suva, Fiji.

The regional economy

The region is diverse The 22 island countries of the Pacific region are spread across more than 30m sq km, but occupy less than 2% of that area. Almost all of the countries are politically independent, and have their own governments and heads of state, but aid from the former colonial powers, and from other bilateral and multilateral donors, remains important.

Economies dependent on aid The importance of aid reflects the weakness of most of the economies in the and external conditions region, as well as problems of poverty, law and order and poor governance. Agriculture, in particular the export of agricultural commodities, is central to the economies of many of the Pacific islands. Other important industries are fishing and tourism. Fiji and New Caledonia have important mining industries, but none of the other small island communities has significant natural resources. The high degree of dependence on such sectors renders the islands vulnerable to external shocks, the weather (most island countries are subject to cyclones, for example) and the vagaries of commodity markets. The economic performance of trading partners also has a direct and usually almost immediate impact on the island economies. Tourist arrivals fell in the wake of the terrorist attacks on the US on September 11th 2001, although not to the extent initially feared. Inbound tourism rose once again in 2002, partly as a result of the October bombings in Bali, Indonesia, which had the effect of diverting some tourists to the Pacific. Over the same period, the recovery in world gold and nickel prices has benefited Fiji’s small gold industry and also New Caledonia’s important nickel industry, which is attracting a high level of new investment. But political instability within the region remains a major obstacle to investment and growth.

Islands struggle with issues The Australian-led multilateral intervention in the Solomon Islands, which such as crossborder trade began in late July 2003, should be seen in the context of the wider difficulties faced by island-state governments. Regional governments, including those of Australia and New Zealand, have for some time been intensifying their efforts to deal co-operatively with a range of new problems arising out of organised crime and the impact of globalisation, but the smaller Pacific island states lack

the ability and resources to deal effectively with issues such as the smuggling of drugs, arms and people, overpopulation, environmental degradation, money- laundering and corruption. The governments of Australia and New Zealand are reluctant to be seen to be intervening in their neighbours’ affairs in a “neo- colonialist” fashion. However, faced with the virtual collapse of the state in the Solomon Islands and the security implications of having a failed state on their doorstep, they have received support from the Solomon Islands government, and more widely among the Pacific island countries, for intervention. The other island states depend on patrol and surveillance operations carried out by Australia and New Zealand, and also by France (from New Caledonia). Regular meetings are held between law-enforcement, customs, immigration and legal officials to review developments and exchange information. However, the joint implementation of a modernised legislative framework and co-ordinated border control systems has been slow. Six island jurisdictions have offshore financial centres (tax havens) to augment their meagre revenue. Most of these have implemented new laws following the threat of sanctions, made in 2000 by the French-based Financial Action Task Force (FATF, which operates under the auspices of the OECD), unless regulatory regimes were strengthened to minimise opportunities for money-laundering and other criminal activities.

A Pacific free-trade area has The Pacific Island Countries Trade Agreement (PICTA), first envisaged at the been established inaugural meeting of the Pacific Islands Forum (PIF) in 1971, came into force in 2003. The FTA, which will be phased in over the next ten years, aims to remove trade barriers such as import duties, quotas and tariffs between the 14 PIF island nations to help boost trade, promote regional integration and improve the economic efficiency of their economies. There are, however, concerns about the benefits of a free-trade area relative to the costs, especially given the low level of intra-island trade (which accounts for just 3% of total trade within the region) and the impact on government revenue of lower export taxes and import duties, which represent the main source of income for most island governments. The main beneficiary of the FTA is likely to be Fiji, which has the most developed economy and is the biggest trader with the other islands. Closely connected with PICTA is the Pacific Agreement on Closer Economic Relations (PACER), which provides a framework for the development of trade relations between the 16 PIF countries. Under PACER, the two developed PIF members, Australia and New Zealand, have agreed to provide technical assistance to developing PIF members and preferential market access for their products. These countries in return have given assurances to Australia and New Zealand that they will not be disadvantaged by any trade arrangements that the developing PIF states may enter into with other developed countries.

Appendices

Sources of information

Bureau of Statistics, Current Economic Statistics (quarterly), Suva Ministry of Finance, Budget Speech (annual), Suva Reserve Bank of Fiji, Annual Report, Suva Reserve Bank of Fiji, Quarterly Review, Suva

International statistical sources Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries (annual) The Economy of Fiji, Performance Management and Prospects, Australian Government Publishing Service, Dwyer Leslie Pty Ltd Foreign and Commonwealth Office, Fiji Annual Report, HMSO, London IMF, International Financial Statistics (monthly) OECD, Geographical Distribution of Financial Flows to Aid Recipients (annual) World Bank, Global Development Finance (annual)

Websites Fiji government online: www.fiji.gov.fj Fiji Islands Bureau of Statistics: www.statsfiji.gov.fj Fijilive.com, news magazine: www.fijilive.com Pacific Beat, Radio Australia!s Pacific Islands website: www.abc.net.au/ra/pacbeat/ Reserve Bank of Fiji: www.reservebank.gov.fj

Reference tables

Estimated population (mid-year; ‘000) 2002 2003 2004 2005 2006 Total 825.8 832.7 838.5 846.1 853.4

Source: Fiji Islands Bureau of Statistics.

Gross domestic product by sector (F$ m; current prices) 2001 2002 2003 2004 2005 Agriculture, forestry & fishing 489.5 533.7 546.4 579.8 614.9 Mining & quarrying 29.3 32.3 35.8 46.3 35.1 Manufacturing 515.1 519.2 511.3 598.7 565.1 Electricity & water 98.0 102.1 106.2 111.6 113.1 Construction 133.5 144.3 162.0 170.9 227.9 Wholesale & retail trade, restaurants & hotels 539.3 581.3 624.5 789.4 857.8 Transport & communications 552.7 574.7 635.1 630.3 742.3 Finance & insurance 442.7 443.2 429.6 449.4 518.5 Community, social & personal services 620.0 661.0 738.3 754.1 807.2 Imputed bank service charge -118.3 -116.3 -109.4 -129.3 -185.3 Total 3,301.7 3,475.4 3,679.9 4,001.1 4,296.7

Source: Fiji Islands Bureau of Statistics.

Government finances (F$ m unless otherwise indicated) 2000 2001 2002 2003 2004a Total revenue & grants 911.0 900.5 1,038.8 1,066.3 1,172.1 Indirect taxes 420.0 456.1 514.7 660.6 699.3 Direct taxes 293.5 284.4 275.1 269.3 334.6 Non-tax revenue 183.0 155.5 168.0 133.7 133.8 Capital revenue 13.5 4.1 80.5 0.7 0.6 Grants 1.1 0.5 0.5 2.0 3.8 Total expenditure 1,141.6 1,253.7 1,382.5 1,447.9 1,479.1 Wages & salaries 429.1 440.7 467.7 497.9 519.3 Charges on public debt 214.0 208.8 229.4 237.5 277.9 Capital expenditure 146.2 186.7 238.7 243.7 205.6 Budget balance -230.6 -353.2 -343.7 -381.6 -307.0 % of GDP -6.6 -9.3 -8.7 -9.0 -6.8 a Provisional. Source: Reserve Bank of Fiji, Quarterly Review.

Gross domestic product (factor cost) 2001 2002 2003 2004 2005 Total (F$ m) At current prices 3,300.2 3,485.1 3,684.2 3,990.7 4,296.7 At constant (1995) prices 2,690.4 2,777.3 2,806.7 2,959.4 2,979.9 % change, year on year 2.0 3.2 1.1 5.4 0.7 Per head (F$) At current prices 4,046.0 4,231.8 4,421.3 4,779.0 5,100.0

Source: Reserve Bank of Fiji, Quarterly Review.

Gross domestic product by expenditure (F$ m; current market prices) 2000 2001 2002 2003a 2004a Private consumption 2,069.0 2,188.0 n/a n/a n/a Government consumption 633.7 655.4 n/a n/a n/a Gross fixed investment 403.1 516.8 n/a n/a n/a Stockbuilding 40.0 40.0 n/a n/a n/a Exports of goods & non-factor services 2,092.2 2,136.0 n/a n/a n/a Imports of goods & non-factor services 2,355.0 2,327.0 n/a n/a n/a Statistical discrepancy 621.8 626.6 n/a n/a n/a GDP 3,504.8 3,835.8 3,969.3 4,396.3 4,647.0 a Provisional. Source: Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries.

Inflation (annual av) 2002 2003 2004 2005 2006 Consumer price index (1993=100) 125.6 130.9 134.6 137.7 141.2 % change, year on year 0.8 4.2 2.8 2.4 2.5

Source: Fiji Islands Bureau of Statistics.

Money and credit (F$ m unless otherwise indicated; end-period) 2002 2003 2004 2005 2006 Money (M1) incl others 712.0 900.0 1,018.0 1,173.7 1,124.7 % change, year on year 14.7 26.1 13.4 18.0 -4.2 Quasi-money 870.6 1,080.5 1,167.7 1,316.7 1,869.9 Money (M2) 1,453.1 1,958.0 2,162.8 2,490.4 2,994.6 % change, year on year 7.8 25.0 10.5 15.2 20.3 Domestic credit 1,391.7 1,662.9 1,871.2 2,368.7 2,927.7 Claims on central government 158.0 236.4 178.1 277.5 356.2 Claims on public sector 97.7 100.1 127.3 141.9 n/a Claims on private sector 1,136.1 1,326.4 1,565.8 1,949.3 2,411.5 Net foreign assets 628.0 671.0 753.6 756.2 848.9

Source: IMF, International Financial Statistics.

Production of selected products ('000 tonnes unless otherwise indicated; calendar years) 2001 2002 2003 2004 2005 Sugarcane 3,077 3,216 2,817 2,971 2,952 Paddy rice 15 13 16 14 15 Fish 19 21 16 23 n/a Copra 17 14 10 10 11 Gold (kg) 3,865 3,726 3,517 4,033 2,793 Cement 98 102 100 111 143 Flour 60 59 64 88 88

Source: Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries.

Visitor arrivals 2002 2003 2004 2005 2006 Total 397,859 430,800 502,765 549,906 545,168 Australia 123,606 141,873 176,310 184,995 197,742 US 58,815 58,323 65,188 71,972 66,317 New Zealand 68,293 75,016 103,918 117,989 108,347 UK 43,393 49,794 48,819 54,755 80,586 Japan 26,382 23,464 24,173 27,378 24,369

Source: Reserve Bank of Fiji, Quarterly Review.

Main domestic exports (F$ m; fob) 2002 2003 2004 2005 2006 Sugar 234.4 225.7 209.2 223.7 215.1 Garments 229.9 234.2 226.4 120.4 94.9 Fish 78.4 79.4 81.4 82.9 97.9 Gold 67.8 76.5 88.5 59.3 43.1 Lumber 38.9 30.8 42.0 45.1 37.6 Molasses 12.4 6.9 9.7 9.9 19.2 Coconut oil 5.9 4.9 3.6 3.5 2.1 Others 213.4 290.9 290.0 302.8 324.4 Total 874.1 958.3 950.7 847.6 834.3

Source: Reserve Bank of Fiji, Quarterly Review.

Main imports (F$ m; cif) 2002 2003 2004 2005 2006 Mineral fuels 435.4 463.0 587.0 784.0 1,021.5 Machinery & transport equipment 429.1 579.4 559.1 591.1 683.6 Manufactured goods 384.9 445.5 486.2 452.2 464.1 Food 314.8 335.2 351.7 355.5 386.0 Chemicals 147.5 162.8 196.5 206.2 224.1 Beverages & tobacco 16.3 17.5 20.4 21.7 22.7 Crude materials 13.8 16.3 20.2 21.7 32.1 Oils & fats 15.4 20.9 15.8 18.1 17.5 Miscellaneous manufactured articles 206.2 236.7 253.5 264.0 258.3 Miscellaneous transactions 6.6 7.4 11.3 8.3 10.0 Total 1,970.0 2,284.7 2,501.6 2,722.8 3,119.9

Source: Reserve Bank of Fiji, Quarterly Review.

Main trading partners (% of total) 2002 2003 2004 2005 2006 Exports to (re-exports & domestic exports): Australia 23.3 26.5 30.0 20.4 22.3 Singapore 1.1 1.2 9.0 20.4 10.7 US 19.5 18.1 22.5 15.5 18.5 UK 15.3 14.6 13.0 15.1 14.3 Japan 5.7 3.4 3.9 5.5 10.4 Imports from: Singapore 5.4 10.7 12.5 29.9 34.4 Australia 42.3 34.6 34.0 24.5 22.4 New Zealand 19.2 17.3 20.2 18.0 15.9 Japan 4.7 4.9 4.5 4.2 3.6 US 6.6 3.6 3.7 3.8 2.9

Source: Reserve Bank of Fiji, Quarterly Review.

Balance of payments, national series (F$ m unless otherwise indicated; accruals basis) 2001 2002 2003 2004 2005 Goods: exports fob 1,170.5 1,177.6 1,250.9 1,158.1 1,231.5 Goods: imports fob 1,769.1 1,749.4 2,016.9 2,230.0 2,473.6 Trade balance -598.6 -571.8 -766 -1,071.9 -1,242.1 Services balance 228.8 432.2 406.3 329.4 451.5 Income balance -33.3 31.7 0.9 0.5 -49.4 Transfers balance 153.4 171.9 160.3 123.6 218.9 Current-account balance -24.9 65.0 -198.5 -618.4 -621.1 Current-account balance (% of GDP) -6.7 1.7 -4.7 -13.5 -13.1

Source: Reserve Bank of Fiji, Quarterly Review.

External debt (US$ m unless otherwise indicated; debt stocks as at year-end) 2001 2002 2003 2004 2005 Total external debt 114.3 140.1 203.1 201.8 n/a Long-term debta 98.4 103.5 117.0 126.6 n/a Public & publicly guaranteed long-term debt 85.4 96.0 110.5 119.6 n/a Private non-guaranteed long-term debt 13.0 7.5 6.4 7.0 n/a Short-term debt 15.9 36.7 86.1 75.3 n/a Use of IMF credit 0.0 0.0 0.0 0.0 n/a Total debt service 22.9 21.8 18.3 14.6 n/a Principal repayments on long-term debt 17.1 16.3 11.7 8.9 11.3 Interest on long-term debt 5.2 5.0 4.5 3.9 5.6 Interest on short-term debt 0.6 0.5 2.1 1.8 n/a Ratios (%) Total external debt/GNP 11.5 12.5 13.5 8.1 n/a Short-term debt/total external debt 8.5 17.6 32.7 37.3 n/a a Debt with original maturity of over one year. Source: Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries.

Net official development assistance (US$ m) 2001 2002 2003 2004 2005 Bilateral 5.7 41.5 37.5 27.0 75.5 Japan 11.5 18.4 24.4 16.5 4.0 Australia 8.9 9.5 12.9 17.7 65.7 New Zealand 1.8 2.8 2.7 2.8 3.5 France 0.6 0.6 1.0 1.7 1.0 Germany 0.1 0.0 0.1 0.1 0.0 Multilateral -1.7 -1.1 9.3 31.1 32.9 EU -1.3 -0.8 4.0 21.9 19.8 UN Technical Assistance 0.9 1.2 1.7 1.8 n/a Total incl others 4.3 40.9 47.4 58.8 108.8

Source: OECD, Geographical Distribution of Financial Flows to Aid Recipients.

Foreign reserves (US$ m; end-period) 2002 2003 2004 2005 2006 Foreign exchange 331.50 393.35 446.10 284.8 n/a SDRs 6.83 7.70 8.31 7.99 8.9 Reserve position in the IMF 20.49 22.57 23.70 21.89 23.3 Total reserves excl gold 358.82 423.62 478.10 314.72 n/a Gold (national valuation) 0.29 0.35 0.38 0.43 0.53 Total reserves incl gold 359.11 423.97 478.48 315.15 n/a

Source: IMF, International Financial Statistics.

Exchange rates (currency unit per F$; end-period) 2002 2003 2004 2005 2006 US$ 0.484 0.581 0.608 0.573 0.600 A$ 0.858 0.775 0.780 0.783 0.761 NZ$ 0.922 0.888 0.847 0.841 0.852 ¥ 57.42 62.18 62.61 67.53 71.45

Source: Reserve Bank of Fiji, Quarterly Review.

Editors: Hilary Ewing (editor); Gerard Walsh (consulting editor) Editorial closing date: August 7th 2007 All queries: Tel: (44.20) 7576 8000 E-mail: [email protected]