Fiji's Economic Woes

PACIFIC ECONOMIC BULLETIN Economic survey

Fiji’s economic woes: a nation in search of development progress

Sunil Kumar and Biman C. Prasad

While recent economic stagnation is largely attributed to the Sunil Kumar May 2000 putsch, Fiji is still grappling with the political and Economics Department, economic problems triggered by the military coups of 1987. University of the South Despite efforts by various governments over the last two Pacific. decades, economic decline has not been reversed. The lack Biman C. Prasad of confidence in the economy and continuing decline in Fiji Centre and investment are major contributing factors to poor economic Department of growth. The immediate challenge for Fiji is to reverse the Economics, University economic decline through the promotion of private invest- of the South Pacific. ment and increasing export competitiveness. Continuing political instability and the lack of a solution to the problem of property rights in land present difficult challenges.

Fiji’s economy has the potential to grow at a The SDL coalition government is faced much faster rate than that achieved over the with the challenge of repairing the damage last decade. While much of the blame for done to the economy by the attempted coup poor recent economic performance can be of May 2000. So far the government’s efforts attributed to political instability, a great deal in this direction have been mixed. While on of the blame can be ascribed to economic one hand the government rightly proposes policy failures. Following the putsch of May market-based economic growth and hopes 2000, efforts have been made to address for rejuvenation of the private sector, on the economic problems, but with little success. other hand, the 2002 Budget shows increased As a result of the political upheaval, most government expenditure which the govern- economic sectors have experienced slow ment hopes to finance through domestic growth. As expected, tourism came to a near borrowings. The government’s desire for standstill, while the garment industry and private sector initiatives is commendable but manufacturing suffered serious losses due the huge unproductive expenditure arising to international sanctions and industrial from the expansionary policy measures disruptions at home. The political crisis also under the 2002 Budget is incompatible with led to an escalation in the eviction of these ambitions, since ‘domestic’ financing sugarcane farmers from their native land of the 6 per cent net budget deficit is likely to leaseholdings and illegal occupation of put strong upward pressure on interest rates. commercial properties by landowners. The projected budget deficit for 2002 is a 67

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per cent increase over the 2001 deficit (Reddy, Unfortunately, recent political instability Prasad, Naidu and Kumar 2001). If most of has seriously hampered efforts towards the F$244 million deficit is financed through building confidence in the economy. The local borrowing it may effectively lead to court battle between the SDL Coalition credit rationing and crowding out of private government and the Fiji Labour Party has investment. For its part, the government has diminished hope for a speedy settlement of argued that interest pressure may not be so the existing political conflict. As long ago as strong due to excess liquidity in the money 1998, Chand (1998) pointed out the urgent market. need for Fiji to resolve its political and land The expansionary policies of the govern- problems before confidence in the economy ment are a typical Keynesian prescription for can be restored. a depressed economy, but unfortunately, After the coups of 1987 Fiji made a expansionary policies alone will not lead to drastic economic policy shift from import higher levels of economic growth. In the short substitution to niche market exports and this run, expansionary fiscal policy may help paid significant dividends in the form of create economic activities and generate some increased garment exports and employment extra employment; but in the long run the creation. Much of the growth in the manu- crucial issue for the economy is how to create facturing sector, and in particular in the confidence to attract foreign direct investment garment sector, was realised as a result of and facilitate exports. To increase export the creation of tax-free zones (TFZ). Under capacity the Fijian economy needs to be the TFZ policy the government provided a competitive in international markets, and this 13-year tax holiday to investors. With depends on its ability to attract high levels of increased investment, garment exports foreign investment. increased significantly within a very short

Table 1 Fiji’s basic economic and financial statistics, 1997–2000

1997 1998 1999 2000 2001 GDP at market prices (F$ million) 3,060.0 3,281.5 3,664.6R 3,504.8P 3,796.9P Per capita GDP at current factor cost (F$ million) 3,316.0 3,516.3 3,889.2R 3,769.2P 3,943.5P Constant price GDP growth rate (per cent) -0.9 1.4 9.7RR -2.8P 1.5P Wage and salary earners (mid-year) (‘000) 112.9 112.5 ...... Inflation (year-on-year per cent change, all items) 2.9 8.1 0.2 3 2.3 Foreign debt outstanding (F$ million) 352.1 447.4 513.6P 529.7P .. Debt service ratio (per cent) 2.9 4.1 3.2 2.9 .. Foreign reserves (F$ million) 557.9 764.7 872.0 898.1 841.3E Domestic credit (F$ million) 1,187.6 1,232.2 1,285.1 1,358.8 .. Time deposit rate (per cent) 5.2 4.0 2.9 3.0 3.3E Lending rate (per cent) 10.2 9.1 8.5 8.4 8.4E

E estimated using existing data R revised at source P projected Source: Reserve Bank of Fiji, 2001. Quarterly Review, December, Suva; Reserve Bank of Fiji, 2000. Quarterly Review, June, Suva.

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time. The value of garment exports rose from GDP growth and economic F$8.8 million in 1987 to F$141 million in performance 1994. By 1999 garment exports had increased to a staggering F$332 million. Fiji’s GDP growth rate over the past 31 years In 1999 the economy experienced strong has been very low (Table 2). The economy growth of 9.7 per cent but contracted by grew only 124 per cent over the period 2.8 per cent in 2000 due to the political 1970–2001, equivalent to a 2.6 per cent disturbances (Table 1). In 2001 the economy average annual growth rate for this period. grew by a meagre 1.5 per cent, a slight Real per capita income, however, grew even improvement over the forecast of 1 per cent. more slowly, by a meagre 44 per cent in the In November 2001, the government projected same period—equivalent to an average 1.2 an economic growth rate of 3.5 per cent in per cent annual growth rate. 2002, based on its expansionary fiscal policy The highest level of GDP growth was (Fiji 2001a). This projection has been revised achieved between 1970 and 1975—the to 4.4 per cent (Reserve Bank of Fiji 2002c). period immediately after independence. The Reserve Bank’s revision reasserts the earlier period of lowest growth was in the 1981–85 argument by the government that increased period—the period during which Fiji’s domestic demand would augur well for the foreign debt was increasing and when a economy and induce economic growth. In decisive economic policy switch from import particular, the higher government allocation substitution to niche market exports was for capital spending is expected to generate implemented. It is, however, not implied here much-needed employment and spur activity that the decline in GDP was caused by these in the private sector (Reserve Bank of Fiji factors. It may be the case that the increase in 2001a). Economic growth for 2002 is expected foreign debt and the change in economic to be broad-based with the exception of policy were pursued as a result of declining sugar, which is projected to contract further. economic performance. The comparatively The major sectors and industries anticipated better economic growth rate during the to drive growth in 2002 are the wholesale 1986–90 period is observed to be as a result and retail trade, transport, community, social of growth in the garment and tourism sectors. and personal services, tourism, and mining The policy switch from import- and quarrying. substitution to export-oriented strategy,

Table 2 Fiji: average real GDP growth and real per capita GDP growth, 1970–2000 (at constant 1990 prices)

Average GDP growth rate Average per capita GDP growth rate 1970–75 9.7 7.5 1976–80 2.3 0.3 1981–85 -1.3 -3.1 1986–90 1.2 0.2 1991–95 2.4 0.8 1996–2000 2.1 1.5

Source: Derived from Appendix Table A1.

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pursued vigorously after the coups of 1987, Sectoral performances led to modest economic recovery in the periods 1991–96 and 1996–2000. However, Sugar this policy shift has not as yet delivered a Sugar has been the mainstay of the Fijian higher average growth rate (Chand 1998). economy. It employs more than 25 per cent This result may be due to uncertainties on of Fiji’s total workforce and the prospect of the political front and in property rights the sector’s collapse points to a bleak to land ownership. Chand (1998) also economic future for Fiji. Sugar production is imputes that low and declining investment expected to continue to decline in 2002 due in the economy to uncertainty over land to expiring land leases and declining levels rights. of productivity. Expiring land leases, poor Table 3 shows the change in the share of mill performance, high rates of cane burning GDP from 1996 to 2001. The most obvious and continuing transport problems plague and frequently discussed feature of the the industry. Sugar industry politics and the change in the share of GDP is the shift away unchanging position of the NLTB are likely from the agricultural sector though this to make negotiations over the proposed continues to be larger than the manu- restructure of the industry very difficult. The facturing sector. The share of agriculture has NLTB maintains that leases should not be declined from 19.5 per cent in 1996 to 16.5 renewed under ALTA and wants to replace per cent in 2001 and further decline is the current tenant farmers with landowners. predicted (Fiji 2001a). Fiji Sugar Corporation (FSC) representatives

Table 3 Fiji: composition of GDP by sector, 1996–2001 (1989 F$)

Sector 1996 1997 1998 1999 2000 2001 Share of % of Share of % of GDP GDP GDP GDP Agriculture, forests and fisheries 369.5 19.5 321.3 298.3 352.9 342.1 340.4 16.5 Mining 61.2 3.2 62.7 50.2 59.5 51.1 52.1 2.5 Manufacturing 276.9 14.6 274.7 287.9 317.8 295.9 279.6 13.6 Electricity and water 77.0 4.1 79.1 81.7 89.8 87.6 90.7 4.4 Construction 76.9 4.1 82.6 94.6 99.3 88.4 91.0 4.4 Trade hotels and cafes 308.0 16.2 315.9 335.6 332.0 382.0 398.1 19.3 Transport and communication 236.3 12.5 247.2 261.6 303.0 270.0 289.8 14.1 Finance, insurance and real estate and business services 255.3 13.5 237.2 235.9 251.5 248.3 240.6 11.7 Social and personal services 356.6 18.8 364.6 363.5 367.4 376.4 384.7 18.7 Others 15.2 0.8 15.1 15.3 16.5 16.3 16.5 0.8 Less: Imputed bank service charges 137.2 7.2 121.4 118.4 131.4 125.8 121.3 5.9 GDP at factor cost 1,895.6 n.a. 1,878.9 1,906.0 2,058.4 2,032.2 2,062.1 n.a.

Source: Fiji, Ministry of Finance and National Planning, 2002a. Economic and Fiscal Update, Supplement to the 2002 Budget Address, Government of Fiji, Suva; Fiji, Ministry of Finance and National Planning, 1999. Economic and Fiscal Update, Supplement to the 2000 Budget Address, Government of Fiji, Suva.

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in a recent submission to the Cabinet restaurant sector has seen a slight decline in Subcommittee on investment, outlined its growth rate from 3.2 per cent in 1999 to recommendations including separation of 2.5 per cent in 2000. This decline in the growth the four sugar mills into individual entities, rate was due to the decline in demand for reduction of the workforce in the mills and hotel and catering services relating to the plans to reduce production costs at the farm decline in tourist numbers as a result of the level. The FSC also requested a government May 2000 crisis. This sector’s share of GDP, guarantee of its debt until restructuring is however, is projected to increase by 3 per cent complete. The restructuring proposals have in 2002. The share of the transport and become controversial amongst the various communications sector in GDP has increased stakeholders and this may create further by 2.8 per cent in the period 1996–2001 from problems for the industry. There are plans 12.5 per cent to 15.3 per cent. The share of to salvage the operational and financial this sector is forecast to increase further by difficulties of the FSC, which incurred a 0.9 per cent in 2002 (for details of other sectors F$3 million loss in 2000 and a F$20 million see Table 3 and Appendix Table A3). loss in 2001 (see FSC 2001). According to the available data, the Tourism GDP share of the sugar industry has been According to policymakers in Fiji, the declining for some time and is likely to tourism sector holds the key to the future decline further in 2002. The industry’s share growth of the Fijian economy. After the of GDP fell from 11.3 per cent in 1996 to coups of 1987 the idea of reducing economic 7 per cent in 2001 with a probable further reliance on sugar and expanding the tourism decline to 6.2 per cent in 2002. The sugar industry was seen as a panacea for all industry’s share of all agricultural activity is economic ills (Prasad and Tisdell 1996). projected to decline from 41.2 per cent in 1996 Bureau of Statistics data show that for the to 25.6 per cent in 2002. In 2001 the industry’s year to October 2001, 287,327 visitors came contribution to GDP stood at 29.6 per cent. to our shores, a rise of 17.8 per cent over the The decline in the agricultural sector is a same period in the previous year. However, strong ‘push’ factor for rural–urban during October 2001, visitor arrivals totalled migration, which has probably accelerated 31,251, a drop of 6.6 per cent over the since 2000 with the expiry of native land previous month. The US market recorded an leases in the sugarcane belt and other farming improvement, albeit marginally, over the areas, and the accompanying civil unrest. same period. However, poor performances As a consequence of declining sugar from the New Zealand and Japanese markets output, the share of sugar industry manu- more than offset the increases in Australian, facturing in the sector has declined from Continental Europe, United Kingdom, 22.4 per cent in 1996 to only 15.5 per cent in Canadian and US visitors. Visitor arrivals 2001. The projection for 2002 is for a further have not regained pre 1999 levels (Figure 1). decline of 1.2 percentage points. Tourism earnings for the year 1999 were Due in part to the declining contribution estimated at F$558.6 million while that for of agriculture in the Fijian economy, and in 2000 was estimated at F$413.5 million, particular, the declining contribution of the which is a 26 per cent decline (Bureau of sugar industry, the contribution of the Statistics 2002). According to the 2001 data, services sector, which includes tourism, is set tourist numbers have increased by 18.3 per to increase. While the trade sector has cent over the 2000 figure. However, the total experienced an annual 3.5 per cent increase number of visitor days has increased by 40 for the period 1996–2001, the hotel and per cent (Bureau of Statistics 2001b). Tourism

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earnings for 2001 are estimated to be Bank of Fiji 2001a). Some of the gains in F$489 million. It is expected that the earnings exports may have been due to the massive will be in the vicinity of the 1999 earnings. devaluation of the Fijian dollar earlier in The current government estimate is 1998, however, these gains have been quickly F$536.7 million (Fiji 2001a:99). eroded within the last three years. The During the months of June, July and worsening exchange rate and deteriorating August after the May 2000 crisis tourist law and order situation, and the absence of arrivals declined by 70 per cent from 1999 well-defined and enforced property rights levels but have continued to improve since have been the main factors eroding overall September 2000 (Figure 1). Visitor arrivals confidence in the economy and have for January 2002 are slightly above the 1999 discouraged potential investors. The most figure and the projection is that the arrivals important factor causing the current decline will continue to increase. If this trend in exports of garments has been the reduction continues, earnings from tourism for 2002 in import duties under WTO arrangements, would easily exceed the projected F$536.7 reducing preferential access in markets in million. Tourism presently generates about Australia, New Zealand and the United 30 per cent of Fiji’s gross foreign exchange States. This loss of preferential access has earnings and 17 per cent of total output and caused many factories to close down. In a employs about 30 per cent of the total labour recent development, a large garment factory force. It could well be true that the tourism in Suva with 300 workers shut down its sector holds great potential for the economy. business overnight. More than five such factories have closed in the last twelve Garment manufactures months as a result of dampening demand The value of garment exports increased in the global market. Compared to the July– substantially in 1998, from F$200 million in September 2000 period, garment exports in 1997 to F$302.8 million in 1998 (Reserve 2001 declined by 6.4 per cent (Bureau of

Figure 1 Fiji: tourism growth rate on a monthly basis, 1999–2001 (against 1998 and 1999 figures)

-20

-40

-60 Growth rate (per cent) -80 Jan-99 Jul-99 Feb-00 Aug-00 Mar-01 Sep-01

Note: Growth 1999 is calculated against the corresponding months in 1998 and for all others 1999 monthly data is used. Source: Bureau of Statistics, 2002. Statistical News, March, Suva; Bureau of Statistics, 2001a. Key Indicators: December 2000, Government of Fiji, Suva; Reserve Bank of Fiji, 1998. Quarterly Review, September, Suva.

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Statistics 2001d). However, it is hoped for the third quarter in 2001 and towards the that the sector may see some increase in end of the year. A total of 365 permits was production as a result of the introduction of issued in the third quarter in 2001. In the the Duty Suspension Scheme (DSS) from this private dwelling category, 127 permits worth year (Fiji 2000a). Under the DSS proposed F$5 million were issued while for the same in the 2002 Budget, exporters will be able to period in 1999, 186 permits worth F$8.8 import inputs duty free. They will also million were issued. The number of permits benefit from another measure that allows 100 issued in 2001 was slightly higher than those per cent waiver of tax until the end of 2002. issued in 2000 largely due to an increase in The growth in this economic sector hinges permits issued for private dwellings and on long-term confidence in the economy to other buildings. A total of F$4 million worth attract high value investments ahead of of private dwellings were issued completion countries like Indonesia, China, Malaysia, certificates in the third quarter of 2001. This Bangladesh and Brazil. was 20.1 per cent below the third quarter of 1999 but represents a 47.8 per cent increase Mining over the second quarter of 2001. The ongoing The production of gold in November 2001 construction of major projects and the amounted to 10,572 ounces, a decline of increase in government capital expenditure 18 per cent over October 2000, largely due to in 2002 is likely to improve growth prospects a decline in the yield of high-grade ore from for this sector. However, long-term prospects Emperor Gold Mining. However, October for the sector are hard to predict since production was 13 per cent higher than for confidence in the economy remains so low. September. From January to November 2001, The removal of economic sanctions by the the total output of gold was 114,248 ounces, European Union is one positive sign for the 2 per cent higher than for the same period in construction sector. For example, the EU- 2000. Mining is among the few sectors in Fiji funded Rewa bridge is likely to spur activity that has not been affected by events such as in the construction sector. the coups. The government has provided incentives for this sector in the 2002 Budget, Fisheries and forestry including the removal of a 3 per cent export Timber and fisheries sectors did not suffer tax as well as allowing the company to import directly from the political instability. From plant and equipment duty free. Empire Gold January to September 2001, 351,000 cubic Mining has been a long-time beneficiary of metres of timber were produced. This was government concessions (Fiji 2001a). an increase of 8.8 per cent over the same period in 2000 (Reserve Bank of Fiji 2001a). Construction This increase was realised as a result of a Usually the most visible sign of economic 15 per cent rise in the production of pine recovery and increasing investment is activity pulp. The total output for 2002 is estimated in the construction sector, and so far not much to increase by around 10 per cent. The activity has been observed. The building and government did not make any substantial construction sector declined steeply after May statement on this sector in the 2002 Budget, 2000, and the construction of residential particularly regarding the mahogany issue, properties declined by about 33 per cent in which could be a major investment venture 2000, while overall building and construction in Fiji. The total raw value of mahogany is declined by 13 per cent (Bureau of Statistics estimated at more than F$500 million. 2001c). There was, however, some increase The fishing industry is another industry in building and construction permits issued with huge potential in Fiji. In 2001 cumulative

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to September, total fresh fish production 2001, while it declined marginally over the amounted to 26,000 tons: an increase of December 2001 quarter. The increase in the 10 per cent over the same period in 2000. REER reflects a slight deterioration in Fiji’s While in 2000, fisheries sector exports international competitiveness. This decline declined by about 17 per cent, there was a was mainly due to domestic inflation earlier 10 per cent increase in the January–September in 2001. The overall inflation rate in 2001 period in 2001 due to new markets in the was reported to be 3.5 per cent (while United States, Japan and other parts of Asia. inflation in the first three-quarters of 2001 A further 7 per cent increase is projected for was recorded at 4.9 per cent it declined to 2002. 2.3 per cent in the last quarter). Inflation has not been a serious issue in Fiji recently, however it has occasionally Exchange rate, inflation and the raised concerns. In 1988 and 1998, for money market example, inflation recorded 11.7 per cent and 8.1 per cent respectively, due to massive The exchange rate in Fiji has been reasonably devaluation of the Fijian dollar aimed at stable for the last three years. However, soon encouraging exports and creating employ- after May 2000, restrictions were imposed ment. Inflation in 1999 was low, at 0.2 per on international transactions and credit cent, partially due to the effect of the removal facilities by commercial banks for a brief of the value-added tax from essential food period. The current Reserve Bank credit items and to low inflation rates in Fiji’s policies for commercial bank operations and major trading partners such as Australia and foreign exchange regulations resemble the New Zealand. The Reserve Bank’s control pre-coup situation (see Reserve Bank of Fiji over the money market and exchange rates 2000b, 2000c, 2000d for the sequence of is commendable and the Reserve Bank Act policy actions taken by the Reserve Bank of of 1985 is applied with absolute clarity. Fiji). Overall monetary discipline has been well maintained by the Reserve Bank of Fiji, thereby avoiding deeper economic crisis of Trade and balance of payments the kind that often takes place in politically unstable economies. For example, lack of Fiji’s small economy is heavily dependent monetary discipline in Papua New Guinea on external trade and tourism. There are between 1997 and 1999 led to the decline of more than 300 business establishments in the value of the kina from US$0.79 to Fiji that manufacture or blend products that US$0.20 (Duncan 2001). are exported (Fiji Trade and Investment Over the early months of 2002, the Board 2002). These products include timber nominal effective exchange rate (NEER) has items such as furniture, industrial coatings, risen marginally, reflecting no major move- foodstuffs, beverages, soaps, bottled water, ments in the Fiji dollar against other handicrafts and footwear, garments and currencies. Bilateral movements over the construction materials. A wide variety of latter part of 2001 and early 2002 show that agricultural products are included in the list the Fiji dollar appreciated against the euro, of exported items. The government’s current yen and the US dollar, but weakened against economic growth strategy is based on the Australian and New Zealand dollars. expanding exports and tourism. The govern- As a measure of international competitive- ment plans to create various incentives for ness, the real effective exchange rate index export ventures and help in the formation of (REER), rose by 2.1 per cent over the year new companies through the Fiji Investment

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Corporation. The government sees substantial company’s products have to be exported or opportunities for forestry diversification, sold to another tax-free factory in Fiji. In commercial fisheries and shipbuilding exchange, the company gains the benefit of (which has not been commercially successful a 13-year tax holiday. In August 2001 the in the past). Agricultural diversification Reserve Bank of Fiji introduced an export involving fruit, vegetables, ginger, copra and credit ratio policy, which requires the banks taro could also be areas of interest for the to lend a minimum of 5 per cent of their government. average deposits to eligible exporters of Sugar exports show a decline of 6.2 per goods and services (Reserve Bank of Fiji cent for the 2000 season (Table 4). In 2001, 2001b). This policy was introduced to the total cane harvested amounted to only encourage exporters through tangible around 2.8 million tons, generating just over financial support. The Governor of the 293,000 tons of sugar, a decline of 14 per Reserve Bank defended the policy as a cent in sugar output and a massive decline pragmatic response to the special circum- of 25.9 per cent in sugarcane output. Mining stances that the Fijian economy currently exports increased by 11.7 per cent for 2000, faces. He stated that it should not be while timber and textiles exports declined interpreted as a move away from the market- slightly. The increase of 2.8 per cent in total based implementation of monetary policy exports for 2000 was realised as a result of since the banks were free to set interest rates increases in exports of other commodities. on such lending. The establishment of this Fiji’s balance of trade with its trading export-financing ratio, together with the partners has not been favourable (Table 5). existing export finance facility, reflects the Between 1992 and 2000 Fiji had a trade importance of exports to the whole economy. deficit with its major trading partners. It is From January to September 2001, data imperative that Fiji’s exports be boosted on overseas exchange transactions (OET) through appropriate policy changes. The showed that merchandise exports fell by government’s decision to lift the moratorium around 9 per cent, following a decline of on tax-free factory/tax-free zone approvals around 7 per cent in the corresponding has contributed positively to the garment period in 2000. Generally, the decline in industry, but more needs to be done to exports was broadly based but with sugar attract new investments. Under the tax-free and garments showing the greatest decline. factory/tax-free zone policy, 70 per cent of a Consistent with the depressed domestic

Table 4 Fiji: exports of major products, 1995–2000 (F$ million, overseas exchange transaction basis)

Sugar Gold Timber Fish Textiles Total 1995 299.2 (10.9) 53.6 (5.3) 51.9 (40.7) 67.6 (15.0) 25.8 (-49.1) 650.3 10.7 1996 322.4 (7.8) 72.5 (35.3) 45.3 (-12.7) 65.8 (-2.7) 50 (93.8) 706.7 (8.7) 1997 194.2 (-39.8) 46.6(-35.7) 39.2 (-13.5) 44.4 (-32.5) 88.3 (76.6) 547.5 (-22.5) 1998 197.5 (1.7) 46.2 (-0.9) 41.7 (6.4) 55.5 (25.0) 93.1 (5.4) 637.4 (16.4) 1999 302.3 (53.1) 36.8(-20.3) 21.1 (-49.4) 78.8 (42.0) 87.6 (-5.9) 657.2 (3.1) 2000 283.5 (-6.2) 41.1 (11.7) 20.8 (-1.4) 65 (-17.5) 87 (-0.7) 675.6 (2.8)

Note: Year-on-year growth rates are in parentheses. Source: Reserve Bank of Fiji, 2001a. Quarterly Review, December, Suva.

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demand, merchandise imports declined by than the 1999 deficit of F$477.4 million. This around 6 per cent compared to an increase of decline in the trade deficit was due to the 1.6 per cent in the same period in 2000. The decline in imports (see Table A5 for data on fall in imports was largely due to a decline in the trade deficit with major trading partners). the demand for consumption goods of 2 per The trade balance for 2001 is anticipated to cent and a decline in the demand for have worsened as exports continued to intermediate goods of 26 per cent. At the end decline during the year. However, there are of December 2001, foreign reserves remained signs of improvement in 2002 economic healthy at around F$837 million, equivalent growth and exports. The latest projection to 4.4 months of imports. By the end of March of growth in economic output for 2002 is 2002, the foreign reserves had declined to 4.4 per cent. The earlier projection for 2002 F$787 million as was to be expected due to was 3.5 per cent (see Reserve Bank of Fiji the government’s current expansionary fiscal 2002b for the reasons pertaining to the policy and the relaxation of capital controls revised projection). Economic growth for in the 2002 Budget. Foreign reserves are 2001 has been revised upwards to 2.6 per cent anticipated to decline further during the last from an earlier estimate of 1.5 per cent. These two quarters of 2002. The Reserve Bank states data do not, however, show how the trade that the decline in foreign reserves would be figure may be affected in light of the new a sign of higher economic activity and is information available. confident that the level of foreign reserves will remain within a comfortable range even with the current relaxation of control policy Unemployment, wages and the (Reserve Bank of Fiji 2002b). labour market Merchandise exports do not show any striking fluctuation in the period after the May The cumulative number of emigrants of all 2000 event. The year 2000 trade deficit was ethnic backgrounds from 1987 to 2001 is recorded at F$407.8 million, which was lower estimated at 70,660. Of the total number who

Table 5 Fiji: exports, imports, balance of trade and current account balance (F$ million on an accrual basis)

Exports Imports Balance of Services Investment Income and Current trade (net) income transfers (net) account (net) balance 1992 525.7 809.8 -284.1 258.8 -75.2 42.2 16.8 1993 571.9 1,006.5 -434.6 286.7 -83.6 22.9 -125.0 1994 717.7 1,053.7 -336.0 290.3 -126.1 -55.9 -101.6 1995 730.8 1,070.8 -340.0 278.7 -101.2 25.1 -36.2 1996 911.3 1,178.7 -267.4 326.9 -86.0 26.7 86.2 1997 803.8 1,182.8 -379.0 427.6 -104.1 0.9 50.1 1998 839.5 1,221.1 -381.6 351.5 -162.8 18.2 -11.4 1999 1,047.1 1,524.5 -477.4 400.5 -196.9 -72.4 -149.3 2000 1,096.3 1,504.1 -407.8 140.9 47.0 167.5 -99.4

Source: Reserve Bank of Fiji, 2001a. Quarterly Review, December, Suva:A44.

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migrated during the 1987–2000 period, established employees in the agricultural 89 per cent were Indo-Fijians. It is estimated sector have increased by 14.4 per cent, that in the years 2000 and 2001, these were mining 15.5 per cent, construction 17.9 per 5,275 and 6,316 emigrants, respectively cent, electricity 27.9 per cent, transport 13.9 (Reserve Bank of Fiji 2001a, 2002c). Most of per cent and in services by 28.1 per cent. those who migrated were professional and Manufacturing and commerce have shown skilled people (Reserve Bank of Fiji 2001a; a decrease of 2.1 per cent and 1.7 per cent Mohanty 2001). Because of this loss of skilled respectively. labour, Fiji is likely to face a major challenge in its efforts to increase investment and exports. Poverty alleviation The labour market generally remained weak over 2001. From January to November The Fiji Poverty Report indicated that 25 per 2001, more than 2,600 jobs were lost in the cent of households in Fiji lived in poverty garment sector alone. The situation is likely and another 15 per cent of households were to worsen in this sector but there are some about to drift into poverty if their real offsets from new investments expected in incomes were not sustained or increased 2002 (Reserve Bank of Fiji 2001a). Aside from over time (UNDP 1997). With the current garments, the employment situation in the state of the economy, it is believed more than non-agricultural sectors is improving slightly. 25 per cent of households are now in poverty. With the exception of sugar, employment in The government has allocated a total of agriculture is likely to improve as well, albeit F$157 million for poverty alleviation in the marginally. The number of newly registered 2002 Budget compared to F$101 million in taxpayers with the Inland Revenue Depart- 2001. This increase in the poverty alleviation ment, a partial indicator of employment, budget is commendable but the government recorded 1,789 new entrants in February needs to define its target clearly. The Family 2002. While this alludes to growth in Assistance Scheme, which is the only direct employment levels, some of these jobs may assistance to affected households, has only have become vacant due to emigration. been increased from F$8.6 million to On the wages front, private sector wage F$11 million. This is far too little in terms of growth ranged between 3 and 7 per cent. In the large number of people in need of direct the public sector, civil servants received a assistance as a result of lost income and lost 3 per cent cost of living increase in December prospects of work. An estimated 40,000 2001, backdated to 1 January 2001. Other people are in need of direct assistance, statutory bodies received similar or even particularly as a result of displacement of higher increases. In the twelve months to sugarcane farmers and loss of jobs as a result November 2001, inflation averaged 4.9 per of the May 2000 upheaval. During the last cent. Effectively, this could mean that real decade Fiji has been drifting towards the wages fell by more than 1 per cent in 2001. orbit of low-wage developing economies and Overall, real wage rates have declined by for this reason the issue of poverty associated 21.5 per cent over the period 1986–99. The with low wages must be addressed (Reddy et biggest reduction of 34 per cent was recorded al. 2001). in the manufacturing sector. The only sector experiencing an increase in real wage rates Public sector reforms was the mining sector, with an increase of 28.3 per cent (see Appendix Table A8 for Privatisation and corporatisation in Fiji have details). An increase of 23.5 per cent was been undertaken as part of the country’s recorded for all sectors. The salaries of overall public enterprise reforms. The first

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major step towards this was taken in the privatised or corporatised were making 1993 Budget in which the government clearly above-average returns. These include Telecom indicated that public enterprise reform Fiji, Post Fiji Limited and Fiji International would allow many loss-making enterprises Telecommunications Limited (FINTEL). to be reorganised so that better returns could Public sector reform is vital for Fiji’s be achieved. These reforms were later economic progress. Particularly important encapsulated in the Public Enterprise Act of is the reform of the civil service. In Fiji’s case, 1996. According to the government, public it is common knowledge that the perform- enterprise reform is aimed at ance of the civil service since 1987 has • ensuring that government will obtain deteriorated to an extent where it is affecting higher returns from its investments the performance of the private sector. Reform • improved productivity of the civil service therefore should be • better quality services provided by the targeted towards making it more efficient entities and productive. According to Duncan, Cuthbertson and Bosworth (1999) a well • increased efficiencies developed market economy can absorb • stricter accountability for the manage- resources and people released from civil ment of government’s investment. service reform and this may lead to better The government’s share of public enter- utilisation of resources. prise assets has increased from F$3,816.38 million in 1998 to F$4,981.21 million in 2000, an increase of about 30 per cent Investment and savings (Appendix Table A10). The net worth of these public enterprises has also increased Investment in Fiji has continued to decline from F$2,936.67 million in 1998 to F$3,407.79 since 1980 and this has been pointed out as million in 1999, an increase of about a key factor in the sluggish economic growth 16 per cent. over the past 20 years. In the late 1970s and One of the reasons for privatisation and early 1980s, total investment was as high as corporatisation has been the poor perform- 29.4 per cent of GDP (Appendix Table A11). ance of public enterprises. Compared to the In 2000 it reached a record low of 10 per cent usual private sector returns of a minimum of GDP. Political instability, labour market of 10 per cent, the returns on public enter- rigidities, institutional constraints and lack prises has been very poor (Table 6). The of property rights have been pointed out as government, however, fails to point out that fundamental factors accounting for the lack some of the public enterprises that are being of confidence in the economy (Prasad and

Table 6 Fiji: returns on assets and on shareholders’ funds from public enterprises, 1998–2000 (per cent)

1998 1999 2000 Return on assets 1.35 -0.31 1.42 Return on shareholders’ funds 1.76 -0.43 2.08

Source: Fiji, Ministry of Finance and National Planning, 2001a. Economic and Fiscal Update, Supplement to the 2002 Budget Address, Government of Fiji, Suva.

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Table 7 Fiji: average levels of investment by sector, 1977–99 (per cent of GDP)

Government Public Private Total 1977–80 5.6 5.9 13.5 24.7 1981–85 4.8 6.6 12.1 23.5 1986–90 3.0 3.6 8.3 14.8 1991–95 2.9 5.5 4.3 12.8 1996–99 2.9 4.2 4.3 11.4

Source: Reserve Bank of Fiji, 2001a. Quarterly Review, December, Suva:A29.

Kumar 2000; Sepehri and Akram-Lodhi encouraged savings through its policy 2000; and Chand 1998). The largest decline instruments. On the whole, time deposit took place between 1981–85 and 1986–90, interest rates paid by commercial banks and that is, in the period following the 1987 rate differentials have not been attractive for coups (Table 7). individual savings. Investment depends on the availability Economies that grow at rates higher of domestic or foreign savings. The savings than 5 per cent normally have a domestic data for Fiji show that savings have fallen savings rate greater than 20 per cent. This drastically, from a high of 21.7 per cent of has not been the case in Fiji for the past 20 GDP between 1978 and 1982 to a low of 13.3 years and particularly so during the post per cent between 1988 and 1993 (Table 8). 1987 period. There are various reasons for this decline in The other factors that affect savings the savings rate. From the fluctuations in the and investment in Fiji besides political data, the political instability appears to have uncertainty are natural disasters, lack of contributed to the decline. Households and defined property rights and unfavourable businesses tend to place their savings in safe labour market conditions. The outward flow havens at such times and spend their income of skilled labour is obviously a discouraging on investments such as education. On the factor for potential investors. Focus on other hand, the government has not economic fundamentals such as enhancing

Table 8 Fiji: domestic savings, 5 year averages, 1973–96

Average domestic savings Domestic savings as ($F) average of GDP (per cent) 1973–77 81.50 16.0 1978–82 186.00 21.7 1983–87 193.90 16.0 1988–93 235.20 13.3 1992–96 335.00 14.5

Source: Reserve Bank of Fiji, 2000. Quarterly Review, June, Suva; World Bank, 1995. World Tables, World Bank, Washington, DC.

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savings and maintaining market-based as the collapse of the National Bank of Fiji foreign exchange rates is imperative for and the recent scam in the agriculture policymakers. The level of interest rates does ministry do not provide confidence with not seem to have a significant effect on respect to long-term investment. In the investments, as argued by Kumar and Prasad current global economic climate, the role of (2001), but encouraging savings may help the government in providing institutional improve the fundamentals of the economy. support to the development of the private sector will determine a country’s ability to attract private investment and to become Conclusions and policy competitive. Good governance therefore recommendations requires strict adherence to the rule of law and a well-functioning judiciary and police Fiji’s economy since the coups of 1987 has force. Recents events demonstrate that Fiji is not been stable. Economic growth has far from this position. fluctuated greatly despite the policy shift from The fourth issue that needs urgent import substitution to an export-led strategy. attention is the development of human Why has the policy shift not produced resources. One of Fiji’s comparative advant- tangible results? First, there have been many ages has been in the supply of skilled labour contradictions in the reform agenda pursued to private investors. The continuing emigrat- by various governments since 1987. For ion of large numbers of skilled persons has example, the government has concentrated meant the erosion of this comparative its reform agenda on the deregulation of the advantage. This issue will have to be product market, and the labour market and addressed through changes in curriculum to some extent public sector reform. While and through the development of a broad- some success has been achieved in these areas based human-resource development strategy. other institutional constraints remain. For The fifth issue is the development of an example, the biggest constraint to investment affirmative action program and targeting of has been the problem of property rights in economic incentives and policies. Affirm- land. This issue remains one of the key ative action programs are state-managed problems. Until there is a clear definition of programs aimed at helping minorities and property rights in land, investors will disadvantaged groups. In the case of Fiji, continue to shy away from Fiji. these programs have been politically The second constraint is the lack of motivated, inefficient and not targeted at the political stability in Fiji. There is always a disadvantaged in the community. Such link between political stability, policy policies have created distortions in the instability, investment and economic growth. economy and hindered the development of Fiji faces competition from many other small efficient private enterprises. This is an developing nations that offer a better political obvious contradiction in the economic environment for investors. Fiji has continued strategy pursued by the government. to develop its economic policies against a While international economic trends backdrop of political instability and this has and economic conditions in its trading affected economic performance. For example, partners can have some impact on Fiji’s despite the economic incentives offered to economic performance, Fiji’s economic investors, the level of investment has declined problems are homegrown. The choice for Fiji over the last one and half decades. is not difficult; it has to resolve its decade- The third constraint relates to govern- long political instability and the problems ance. Corruption and mismanagement of relating to property rights in land. It also public funds is not new to Fiji. Scandals such needs to continue with its economic reform

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program to further streamline its institutions structure development. Finally, ethnically- so that it supports private sector investment based economic policies and programs will and export competitiveness. Furthermore, not release the energies of investors and the Fiji needs to adopt the principles of good people of Fiji to make it an efficient economy. governance and achieve a high degree of These policies are only likely to create more fiscal discipline. Fiscal discipline will help distortions and affect the efficiency of the the government to increase its effectiveness economy. It is hoped that Fiji will learn from and provide more funds for public infra- the mistakes of the past two decades.

Appendix

Table A1 Fiji: GDP, per capita GDP and the CPI, 1970–2001 (current and 1990 prices)

GDP GDP per capita CPI GDP Per capita GDP (F$ million) (1990=100) (1990 prices) (1990 prices) 1970 168.9 324.2 17.3 976 1,874 1971 184.7 346.5 18.9 977 1,833 1972 238.5 423.7 23.1 1,032 1,834 1973 300.6 540.6 25.7 1,170 2,104 1974 410.5 726.5 29.4 1,396 2,471 1975 515.4 894.8 33.2 1,552 2,695 1976 570.6 975.4 37.0 1,542 2,636 1977 605.7 1,016.3 39.6 1,530 2,566 1978 642.9 1,059.2 42.0 1,531 2,522 1979 779.4 1,255.1 45.3 1,721 2,771 1980 901.0 1,421.2 51.9 1,736 2,738 1981 953.7 1,476.2 57.7 1,653 2,558 1982 1,020.5 1,550.9 61.7 1,654 2,514 1983 1,031.8 1,535.3 65.9 1,566 2,330 1984 1,151.7 1,678.9 69.3 1,662 2,423 1985 1,177.7 1,689.7 72.4 1,627 2,334 1986 1,326.1 1,857.3 73.7 1,799 2,520 1987 1,329.2 1,843.6 77.9 1,706 2,367 1988 1,433.3 1,993.5 87.0 1,647 2,291 1989 1,558.0 2,151.9 92.4 1,686 2,329 1990 1,728.0 2,360.7 100.0 1,728 2,361 1991 1,834.8 2,472.8 106.5 1,723 2,322 1992 2,019.0 2,681.3 111.7 1,808 2,400 1993 2,170.7 2,837.5 117.5 1,847 2,415 1994 2,268.9 2,912.6 118.2 1,920 2,464 1995 2,351.3 2,961.3 120.8 1,946 2,451 1996 2,523.6 3,264.7 124.5 2,027 2,622 1997 2,616.2 3,316.0 128.1 2,042 2,588 1998 2,804.9 3,516.3 138.5 2,025 2,539 1999 3,139.1 3,889.2 138.8 2,262 2,803 2000 3,084.8 3,769.2 142.9 2,158 2,637 2001 3,203.1E 3,943.5E 146.2 2,191 2,697

E estimated using stated growth rate and overall inflation in the economy. Source: Reserve Bank of Fiji, Quarterly Review, Suva (various issues); International Monetary Fund (various issues). International Financial Statistics, Washington, DC; Bureau of Statistics, 2001a. Key Indicators: December 2000, Bureau of Statistics, Suva.

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Table A2 Fiji: basic social indicators

GDP per capita (PPP $US) as of 1999 US$4,799 Public expenditure on education (percentage of GDP, 2002 Budget) 5.4 For 1985-87 it was at 6 per cent and 5.2 and 4.7 in 2000 and 2001 respectively. Public expenditure on health (per cent of GDP) 2.6 It has been 2.0, 2.9, 2.8 and 2.4 for 1990, 1998, 2000 and 2001 respectively Life expectancy for males in years (female) 67.0 (71) Overall life expectancy is 68.8 years Male literacy rate as a percentage of population 15 years and over (female) 94.7 (91) Overall literacy rate is 92.6 per cent Infant mortality rate (per ’000 live births) in 1999 18.0 Infant mortality rate in 1970 was 50 Under 5 mortality rate (per ’000 live births) in 1999 22.0 Under 5 mortality rate was 61 in 1970 Children underweight for age (per cent under age 5, average 1995–2000) 8.0 Children under height for age (per cent under age 5, average 1995–2000) 3.0 Children with low birth weight (per cent of all births, average 1995–99) 12.0 HIV cases (per cent age 15-49) in 1999 0.07 TB cases (per 100,000 people) in 1998 21.0 Population with access to essential drugs (per cent) for 1999 100.0 Population using improved water sources (per cent) in 1999 47.0 Population using adequate sanitation in 1999 43.0 1970 1999 2015 Population (million) 0.6 0.8 0.9 Urban population as per cent of total 36.8 48.6 60.0 1975–99 1999–2015 Annual population growth rate 1.4 0.9

Source: Fiji, Ministry of Finance and National Planning 2001a. Economic and Fiscal Update, Supplement to the 2002 Budget Address, Government of Fiji, Suva; Fiji, Ministry of Finance and National Planning 2001b. Budget Estimates 2002, Government of Fiji, Suva; United Nations Development Programme, 2001. Human Development Report 2001, Oxford University Press, New York.

Table A3 Fiji: gross domestic product by sector, 1996–2001 (F$ million)

Sector 1996 1997 1998 1999 2000 2001 2002 Agriculture, forestry and fisheries 369.5 321.3 298.3 352.9 342.1 340.4 353.8 Crops 193.5 154.8 125.0 171.7 157.9 149.6 142.6 Sugarcane 152.1 116.3 85.7 126.4 112.2 100.7 90.5 Other crops 41.3 38.5 39.3 45.3 45.6 48.9 52.0 Livestock products 19.4 15.9 17.6 17.2 17.7 18.1 19.0 Fishing 28.8 24.9 26.2 36.5 36.8 40.5 43.3 Forestry 20.6 16.9 19.7 16.4 17.7 18.3 20.2 Subsistence 107.3 108.8 109.7 111.0 112.2 113.8 115.0 Mining and quarrying 61.2 62.7 50.2 59.5 51.1 52.1 58.5 Manufacturing 276.9 274.7 287.9 317.8 295.9 279.6 287.4 Sugar 62.0 47.4 35.0 51.5 45.9 43.4 41.2 Other food industries 66.9 61.1 64.9 71.1 65.1 67.7 71.7 Clothing and footwear 58.1 74.5 97.3 106.0 100.1 85.1 89.4 Other industries 83.4 85.2 84.1 82.6 78.1 76.5 78.1 Self employment 6.5 6.5 6.6 6.7 6.7 6.9 7.1 Electricity and water 77.0 79.1 81.7 89.8 87.6 90.7 95.0 Construction 76.9 82.6 94.6 99.3 88.4 91.0 98.3 Trade, hotels, cafes, etc 308.0 315.9 335.6 332.0 382.0 398.1 422.0 Wholesale and retail trade 254.3 259.9 275.5 266.2 331.8 341.7 358.8 Hotel, cafes, etc 53.7 56.0 60.1 65.9 50.2 56.3 63.1 Transport and communications 236.3 247.2 261.6 303.0 270.0 289.8 306.1 Transport 163.9 174.2 186.7 221.9 176.6 192.5 203.6 Communication 72.3 73.0 74.9 81.0 93.5 97.3 102.5 Finance, insurance, real estate, business services 255.3 237.2 235.9 251.5 248.3 240.6 245.7 Finance 126.2 117.1 108.9 120.9 115.8 111.6 114.9 Insurance 13.2 12.1 12.7 12.9 14.7 14.8 14.5 Real estate and business services 43.0 39.9 39.7 42.3 41.8 36.8 37.9 Ownership dwellings 72.9 73.5 74.6 75.4 76.0 77.4 78.4 Community, social and personal services 356.6 364.6 363.5 367.4 376.4 384.7 388.5 Others 15.2 15.1 15.3 16.5 16.3 16.5 17.1 Less: Imputed Bank Service Charges 137.2 121.4 118.4 131.4 125.8 121.3 124.9 GDP at factor cost 1,895.6 1,878.9 1,906.0 2,058.4 2,032.2 2,062.1 2,133.7 Per cent change on previous year 3.1 -0.9 1.4 8.0 -2.8 1.5 3.5

Source: Fiji, Ministry of Finance and National Planning, 2001a. Economic and Fiscal Update, Supplement to the 2002 Budget Address, Government of Fiji, Suv; Fiji, Ministry of Finance and National Planning, 1999. Economic and Fiscal Update, Supplement to the 1999 Budget Address, Government of Fiji, Suva.

Table A4 Fiji: annual tourist arrivals, 1981–2001

Arrivals Growth Arrivals Growth Arrivals Growth (‘000) rate (per cent) (‘000) rate (per cent) (‘000) rate (per cent) 1981 190.0 - 1988 208.2 9.6 1995 318.5 -0.1 1882 203.6 7.2 1989 250.6 20.4 1996 339.6 6.6 1983 191.6 -5.9 1990 279.0 11.3 1997 359.4 5.9 1984 235.2 22.8 1991 259.4 -7.0 1998 371.3 3.3 1985 228.2 -3.0 1992 278.5 7.4 1999 410.0 10.4 1986 257.8 13.0 1993 287.5 3.2 2000 294.1 -28.3 1987 189.9 -26.3 1994 318.8 10.9 2001 348.0 18.3

Source: Reserve Bank of Fiji, Quarterly Review, Suva, various issues; Bureau of Statistics, 2002. ‘Visitor statistics—January 2002’, Statistical News, No. 08, Bureau of Statistics, Suva; Bureau of Statistics, 1985. Current Economic Statistics, Bureau of Statistics, Suva.

Table A5 Fiji: direction of trade for trading partner countries (F$ million)

Imports Domestic Re-exports Total exports Trade (c.i.f) exports (f.o.b.) (f.o.b.) (f.o.b.) deficit/surplus Australia 1998 576.4 339.0 12.7 351.7 -224.7 1999 730.9 385.1 135.6 520.8 -210.2 2000p 689.9 336.9 79.7 416.6 -273.3 New Zealand 1998 202.2 39.1 4.4 43.5 -159.6 1999 236.9 45.2 3.2 48.4 -188.6 2000p 290.3 57.3 1.7 58.9 -231.3 United Kingdom 1998 13.3 210.5 0.4 210.8 197.5 1999 12.9 135.6 0.2 135.7 122.8 2000 16.7 174.2 - 174.2 157.5 United States 1998 213.2 128.1 3.3 131.4 -81.8 1999 220.9 125.7 2.8 128.5 -92.4 2000 80.4 239.1 - 239.1 158.7 Japan 1998 76.3 41.6 0.1 41.7 -34.7 1999 114.0 36.6 0.5 37.1 -76.9 2000p 80.3 45.5 0.4 45.9 -34.3 Singapore 1998 72.8 0.4 0.4 0.8 -72 1999 78.0 1.3 0.2 1.6 -76.5 2000 100.7 1.6 - 1.7 -99.1 China 1998 28.2 2.0 - 2.0 -26.2 1999 82.0 0.4 0.1 0.5 -81.5 2000 34.2 1.2 - 1.3 -32.9 Hong Kong 1998 27.4 5.5 0.1 5.6 -21.8 1999 47.8 10.0 - 10.0 -37.8 2000 68.2 16.8 - 16.8 -51.3 Taiwan 1998 43.8 0.5 0.2 0.7 -43.1 1999 32.9 5.4 0.1 5.5 -27.4 2000 36.2 18.4 - 18.4 -17.8 Pacific islands 1998 3.8 52.5 39.5 92.0 88.2 1999 4.2 61.9 34.1 96.0 91.8 2000 7.2 120.0 18.7 138.7 131.6 Others 1998 176.8 86.6 49.4 136.0 -40.9 1999 218.3 140.4 76.2 216.6 -1.6 2000 352.4 14.4 117.6 132.0 -220.4 Total 1998 1,434.20 905.6 110.7 1,016.3 -417.9 1999 1,778.70 947.6 252.9 1,200.5 -578.2 2000 1,756.40 1,025.5 218.1 1,243.7 -512.7

Source: Reserve Bank of Fiji, 2001. Quarterly Review, December, Suva.

Table A6 Fiji: current account flows, 1998–2000 (F$ million)

Total exports Total Trade Net Investment Net income Current (including imports balance services income net and account re-exports) transfers balance 1998 March 178.7 286.6 -107.9 81.7 -33.8 -24.8 -50.9 June 182.0 198.5 -16.5 103.3 -50.1 -25.2 61.6 September 263.6 330.8 -67.2 107.2 -19.1 52.2 92.1 December 215.2 405.1 -189.9 59.7 -59.9 15.9 -114.3 1999 March 202.7 279.0 -76.3 90.6 -41.0 -21.5 -7.3 June 240.3 337.5 -97.2 97.3 -29.1 -33.9 -33.9 September 273.4 415.8 -142.4 108.0 -67.8 31.4 -3.0 December 330.7 492.1 -161.4 104.6 -59.0 -48.4 -106.6 2000 March 248.1 396.3 -148.2 36.0 119.2 129.6 17.4 June 222.2 375.2 -153.0 73.7 -17.7 -17.3 -96.6 September 306.9 334.2 -27.3 -24.4 -47.1 -5.8 -57.5 December 319.1 398.3 -79.2 55.5 -7.4 61.0 37.3

Source: Reserve Bank of Fiji, 2001. Quarterly Review, December, Suva.

Table A7 Fiji: capital account, 1992–2000 (F$ million)

Government and Direct Banks and Capital Overall balance statutory bodies investments others account balance 1992 -38.1 105.3 21.0 88.2 89.2 1993 -48.8 116.9 -47.4 20.7 -70.4 1994 -48.6 99.9 -10.7 40.6 -16.6 1995 -23.0 76.2 48.0 101.2 109.0 1996 -9.8 -33.0 38.0 -4.8 97.4 1997 -6.7 -10.6 -11.2 -28.5 -41.2 1998 44.5 139.9 24.1 208.5 67.0 1999 107.2 -78.5 142.6 171.3 99.3 2000 14.4 -69.3 203.2 148.3 99.4

Source: Reserve Bank of Fiji, 2001. Quarterly Review, December, Suva.

19 Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia Pacific Press PACIFIC ECONOMIC BULLETIN Economic survey 9,811.3 Services Mean wage Services Salary 12,375.4 11,540.3 16.0 ransport ransport Commerce T Commerce T Electricity Electricity (constant 1990 prices) Construction Construction , December, Reserve Bank of Fiji, Suva. , December, Reserve Bank of Fiji, Suva. , December, (constant 1990 prices) Manufacturing Quarterly Review Quarterly Review Mining Manufacturing Mining Fiji: sector and wage rates, 1986–99 Fiji: sector and salary rates in real dollars, 1990–99 Agriculture Agriculture Reserve Bank of Fiji, 2001a. Reserve Bank of Fiji, 2001a. 199019911992 8,627.01993 8,505.21994 8,676.8 16,724.0 8,726.8 16,488.3 8,935.7 16,820.9 10,668.0 15,723.4 10,517.4 16,099.0 10,729.6 10,618.0 11,445.1 10,468.5 11,718.3 10,679.5 11,740.4 9,406.0 12,021.2 9,273.2 9,460.2 8,920.0 9,957.4 10,195.4 8,794.4 8,972.2 9,761.0 9,303.0 9,525.4 9,623.5 9,817.4 11,018.7 9,662.0 11,281.7 9,525.8 9,718.0 9,926.0 10,163.3 9,342.0 9,210.3 9,395.7 9,582.1 Table A8 Table Source: A9 Table Source: 199519961997 8,856.8 11,864.319981999 9,736.9 15,957.0 18,438.6 9,694.6 9,867.4 18,592.5 11,615.1 18,975.5 10,173.5 19,313.4 10,619.8 11,915.6 12,143.8 10,259.9 10,442.4 12,798.6 10,106.0 12,302.5 11,339.0 12,521.6 11,278.7 9,441.2 11,816.6 8,997.6 12,026.7 9,255.3 11,182.1 8,612.3 11,433.7 8,765.9 11,409.1 10,073.7 10,921.3 10,506.0 11,1 12,886.8 12,158.8 9,726.0 9,750.2 10,064.0 11,338.6 1986198719881989 11.21990 10.61991 9.81992 12.91993 14.5 11.0 14.61994 10.81995 11.0 14.3 14.11996 11.31997 14.8 16.1 11.61998 14.6 15.8 11.7 14.91999 12.6 14.4 17.4 12.3 10.1 17.8 16.8 11.4 9.6 17.6 17.0 11.3 9.8 19.5 11.5 15.9 19.1 15.1 11.8 12.1 15.4 20.6 18.3 12.0 15.1 20.7 18.6 13.1 15.5 18.3 15.5 11.8 16.9 15.4 18.2 15.3 10.5 15.8 17.9 15.0 10.6 15.2 18.3 13.8 15.6 19.1 13.1 19.5 12.8 17.9 14.8 19.3 12.6 18.1 15.1 19.8 12.9 16.6 20.3 13.4 15.8 13.7 15.8 16.4 19.5 13.6 15.5 16.3 19.8 16.1 15.9 15.2 13.2 16.3 14.1 16.7 14.0 16.3 12.7 16.5 13.8 16.2 12.9 15.9 14.0 14.9 15.6 13.8 13.7 14.2 13.4 14.9 14.0 13.2 15.2 15.4 13.4 13.1 13.7 14.0 11.5 13.9 11.7 15.0 13.7 12.5 12.8

Table A10 Government shareholdings in state enterprises in Fiji

State enterprises Government shareholding (per cent) Government commercial companies Airports Fiji Limited 100 Fiji Broadcasting Corporation Limited 100 Fiji Hardwood Corporation Limited 100 Ports Terminal Limited 100 Rewa Rice Limited 100 Unit Trust of Fiji Limited 100 Viti Corporation Limited 100 Yaqara Pastoral Company Limited 100 Post Fiji Limited 100 National Trading Corporation Limited 100 Commercial statutory authorities Civil Aviation Authority of the Fiji Islands 100 Fiji Electricity Authority 100 Housing Authority 100 Maritime and Ports Authority of the Fiji Islands 100 Public Rental Board 100 Majority-owned government companies Air Pacific Limited 51 Fiji Pine Limited 99.9 Fiji Sugar Corporation Limited 68 Fiji International Telecommunications Limited 51 Pacific Fishing Company 98 Minority-owned companies Air Fiji Limited 11.5 Colonial National Bank 49 Amalgamated Telecom Holdings Limited 49 Fiji Reinsurance Company Limited 20 Pacific Forum Line Limited 23 Shipbuilding Fiji Limited 49 Reorganised enterprises Fiji Broadcasting Commission 100 Government Supplies Department 100 Ports Authority of Fiji 100 Civil Aviation Authority of Fiji 100 Department of Forestry- Hardwood Plantations 100 Public Trustee Office 100 Fiji Electricity Authority 100 Marine Department 100 Water and Sewerage, Public Works Department 100 Government Handicraft Centre 100

Source: Fiji, Ministry of Finance and National Planning, 2001a. Economic and Fiscal Update, Supplement to the 2002 Budget Address, Government of Fiji, Suva.

Table A11 Investments in Fiji, 1977–99 (F$ million)

Investments Investments (F$ million) (per cent of GDP) Government Public Private Total Government Public Private Total 1977 38.5 20.5 69.9 128.9 6.4 3.4 11.5 21.3 1978 33.0 31.3 85.4 149.7 5.1 4.9 13.3 23.3 1979 35.2 58.9 110.9 205.0 4.5 7.6 14.2 26.3 1980 45.4 70.1 134.3 249.8 5.0 7.8 14.9 27.7 1981 72.8 77.2 130.4 280.4 7.6 8.1 13.7 29.4 1982 61.0 88.5 113.2 262.7 6.0 8.7 11.1 25.7 1983 36.3 90.7 112.2 239.2 3.5 8.8 10.9 23.2 1984 37.9 49.2 130.9 218.0 3.3 4.3 11.4 18.9 1985 40.8 37.8 160.4 239.0 3.5 3.2 13.6 20.3 1986 43.2 26.7 145.4 215.3 3.3 2.0 11.0 16.2 1987 33.6 51.7 144.6 229.9 2.5 3.9 10.9 17.3 1988 40.4 42.9 108.2 191.5 2.8 3.0 7.5 13.4 1989 56.8 39.5 114.8 211.1 3.2 2.3 6.4 12.0 1990 62.1 130.8 110.6 303.5 3.1 6.6 5.5 15.3 1991 81.8 103.0 109.5 294.3 4.0 5.0 5.2 14.4 1992 68.7 94.7 83.9 247.3 3.0 4.1 3.6 10.7 1993 63.2 178.8 119.3 361.3 2.5 7.1 4.7 14.3 1994 68.9 141.4 110.1 320.4 2.6 5.3 4.1 12.0 1995 66.6 168.4 115.0 350.0 2.4 6.0 4.1 12.5 1996 88.3 83.5 125.0 296.8 3.0 2.8 4.2 10.0 1997 95.6 98.9 112.0 306.5 3.1 3.2 3.7 10.0 1998 98.6 233.0 154.0 485.6 3.0 7.1 4.7 14.8 1999 94.8 128.0 167.4 390.2 2.6 3.5 4.6 10.6

Source: Bureau of Statistics, Government of Fiji, Suva.

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