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Pacific Islands: Fiji New Caledonia Solomon Islands Tonga Vanuatu Western Samoa COUNTRY REPORT Pacific Islands: Fiji New Caledonia Solomon Islands Tonga Vanuatu Western Samoa 1st quarter 1997 The Economist Intelligence Unit 15 Regent Street, 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 subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; 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 Street 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, USA Hong Kong Tel: (44.171) 830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.171) 499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: http://www.eiu.com Electronic delivery EIU Electronic New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Moya Veitch Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases CD-ROM Microfilm FT Profile (UK) Knight-Ridder Information World Microfilms Publications (UK) Tel: (44.171) 825 8000 Inc (USA) Tel: (44.171) 266 2202 DIALOG (USA) SilverPlatter (USA) Tel: (1.415) 254 7000 LEXIS-NEXIS (USA) Tel: (1.800) 227 4908 M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1997 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 ISSN 1366-4093 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. 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 3 Summary The region 5 Outlook for 1997-98 8 Review Fiji 15 Political structure 16 Economic structure 17 Outlook for 1997-98 18 Review 18 The political scene 20 The economy New Caledonia 25 Political structure 26 Economic structure 27 Outlook for 1997-98 27 Review 27 The political scene 32 The economy Solomon Islands 34 Political structure 35 Economic structure 36 Outlook for 1997-98 37 Review 37 The political scene 38 The economy Tonga 42 Political structure 43 Economic structure 44 Outlook for 1997-98 44 Review 44 The political scene 47 The economy EIU Country Report 1st quarter 1997 © The Economist Intelligence Unit Limited 1997 2 Vanuatu 50 Political structure 51 Economic structure 52 Outlook for 1997-98 53 Review 53 The political scene 56 The economy Western Samoa 59 Political structure 60 Economic structure 61 Outlook for 1997-98 62 Review 62 The political scene 63 The economy 65 Quarterly indicators and trade data List of tables 8 The region: world commodity price forecasts 21 Fiji: tourism statistics 21 Fiji: foreign trade 22 Fiji: balance of payments, national estimates 22 Fiji: inflation rates, 1996 65 Fiji: quarterly indicators of economic activity 66 Solomon Islands: quarterly indicators of economic activity 66 Tonga: quarterly indicators of economic activity 67 Vanuatu: quarterly indicators of economic activity 67 Western Samoa: quarterly indicators of economic activity 68 Fiji, Solomon Islands, Vanuatu, Western Samoa: direction of trade 68 Fiji, Solomon Islands, Vanuatu, Western Samoa: main commodities exported List of figures 18 Fiji: gross domestic product 18 Fiji: Fiji dollar real exchange rate 36 Solomon Islands: gross domestic product 36 Solomon Islands: Solomon Islands dollar real exchange rate 44 Tonga: gross domestic product 44 Tonga: Tonga dollar real exchange rate 53 Vanuatu: gross domestic product 53 Vanuatu: vatu real exchange rate 61 Western Samoa: gross domestic product 61 Western Samoa: tala real exchange rate EIU Country Report 1st quarter 1997 © The Economist Intelligence Unit Limited 1997 3 March 7, 1997 Summary 1st quarter 1997 The region Outlook for 1997-98: The changing international environment will force Pacific governments to become less aid-dependent and to reduce the public sector. The role of preferential trade agreements will decline and many regional organisations are seeking to redefine their policies. The outlook for the com- modities that dominate many regional economies is mixed. Review: The fisheries agency has bought a Vessel Monitoring System and international fisheries agreements are coming under scrutiny, with an empha- sis on conservation. Pacific governments are concerned about the transport of nuclear waste across the area. Australian immigration rules may be eased. Both France and Australia have stressed their commitment to the region. Fiji Outlook for 1997-98: The constitutional deliberations will not reach easy agreement, but the deadline is approaching amidst rumours that the prime minister’s position is weak. After a good year in 1996, marred by the effects of a major bank failure on the budget, growth will slow in 1997-98, but the outlook is positive. The budget deficit will rise to over 8% of GDP in 1996/97 because of the cost of a bank failure, but it is expected to fall thereafter. Review: The parliamentary committee considering the recommendations of a working party on constitutional change has held its sixth meeting and seems reluctant to endorse reform. Lawyers have expressed concern about the admin- istration of the courts. Foreign trade receipts were healthy in 1996 and infla- tion was moderate. Some capital-account restrictions have been eased. New Caledonia Outlook for 1997-98: There is every reason to expect the French government to take action to resolve the impasse over mineral rights that is also blocking political dialogue. Long-term growth prospects look good. Review: A complex dispute involving corporate, metropolitan and local inter- ests over an exchange of mineral rights is hindering progress on agreement over how to approach the 1998 deadline for a referendum on independence. The main parties to the political negotiations share some important points of agreement. The economy performed well in 1996; although exports were lack- lustre, tourism and mineral output were healthy and inflation was low. Solomon Islands Outlook for 1997-98: The government claims economic development has stalled. But as an election looms, reform will be pushed to the bottom of the agenda. Despite some problems, the extractive sector will continue to grow and exports will remain buoyant. Review: Legislation reforming provincial government has been overturned by the High Court. Relations with Papua New Guinea have worsened because of the Bougainville crisis. The economy is described as “precarious”, mainly be- cause of the poor budgetary position, which is getting worse. Exports and tourism have shown buoyancy. EIU Country Report 1st quarter 1997 © The Economist Intelligence Unit Limited 1997 4 Tonga Outlook for 1997-98: Although political wrangling will continue, the royal prerogative will provide ballast. Efforts to rebuild the damaged squash industry will be slow to materialise. Review: The squabbling involving parliament, the press and the courts, has continued. Tonga is trying to rebuild the squash export industry, once a main- stay of the economy. A major hotel development has started. Tonga is outraged about Indonesia’s jamming of its satellite earth station on Sumatra. Vanuatu Outlook for 1997-98: The coalition government is confident of its durability. A return to sustainable growth awaits the enactment of economic and political reforms. Review: There have been calls for MPs to cease quarrelling and many revel- ations of malfeasance by those in high office and murky plans by recalcitrant members of the paramilitary security force, whose future is under consider- ation. A reform programme, under the auspices of the Asian Development Bank, is to be enacted. New rules will protect sandalwood. Copra prices have been raised. Western Samoa Outlook for 1997-98: A recovery in agriculture is boosting growth and the outlook for budgetary revenue is healthy. Review: The political scene is stable. Australia has praised the performance of the government. Agriculture and tourism were strong in 1996. Foreign ex- change controls are to be eased. A new tuna cannery has been swamped with job applicants. Editor: Sophie Lewisohn All queries: Tel: (44.171) 308 1007 Fax: (44.171) 830 1023 EIU Country Report 1st quarter 1997 © The Economist Intelligence Unit Limited 1997 The region 5 The region Outlook for 1997-98 A changing global Most governments in the region are in the process of implementing economic environment demands reforms to equip them for a new global environment in which investment, aid new initiatives— and preferential trade arrangements will be harder to find. All governments have relied on these sources of support to varying degrees for many years. The need to find new approaches has highlighted the roles that regional organis- ations and institutions can play. The initial areas of reform for most governments have been reductions in the size and scale of their own operations; this invariably means calling on outside help, usually the Asian Development Bank (ADB) for advisory and technical assistance and funds.
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