©1995 International Monetary Fund
December 1995
IMF Staff Country Report No. 95/128
Fiji-Background Material
This report on Fiji was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with this member country. As such, the views expressed in this document are those of the staff team and do not necessarily reflect the views of the Government of Fiji, or the Executive Board of the IMF.
Copies of this report are available to the public from International Monetary Fund • Publication Services 700 19th Street, N.W. • Washington, D.C. 20431 Telephone: (202) 623-7430 • Telefax: (202) 623-7201 Telex (RCA): 248331 IMF UR Internet: [email protected] Price: $15.00 a copy
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©International Monetary Fund. Not for Redistribution INTERNATIONAL MONETARY FUND
FIJI
Background Material
Prepared by H. Khor, M. Cangiano (both SEA), H. Faruqee (RES), and A. Zimmerman (OMD)
Approved by the Southeast Asia and Pacific Department
November 1, 1995
Contents Page
Basic Data, 1989-94 4
I. Review and Analysis of Growth Performance 5 A. Introduction 5 B. Overview of Developments During 1968-94 5 1. Economic developments 5 2. General constraints to growth 7 3. Policy developments 12 C. Determinants of Growth: An Empirical Investigation 12 1. Measures of potential GDP and output gap 12 2. Factor contributions to growth 16 3. Short-run determination of output 18 D. Conclusions 19
II. Exchange Rate Developments ?? A. Introduction 99 B. Exchange Rate Policy and Developments 23 C. Determinants of the Long-Run Equilibrium Real Exchange Rate 25 D. Empirical Estimates of the Long-Run Real Exchange Rate 26 E. Concluding Remarks 30
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Contents Page
ANNEX I. Summary of Structural Reforms 70
ANNEX II. Summary of the Tax System as of October 19, 1995 76
Boxes
1. Political Background 8 2. International Trade Agreements and Arrangements 13 3. Land Tenure System 14
Text Tables
1 Regional Comparison of Social and Demographic Indicators .6 2. Selected Economic Indicators, 1968-94 9 3. Factor Contributions to Output Growth, 1971-94 17 4. Estimates of Growth Equation, 1973-94 20
Appendix Tables
5. Gross Domestic Product by Industrial Origin, 1989-94 32 6. Gross Domestic Product by Expenditure at Current Market Prices, 1989-94 . 33 7. Sugarcane Production and Growers' Income, 1989-94 34 8. Primary Production, 1989-94 34 9. Industrial Production, 1989-95 36 10. Tourism Statistics, 1989-94 37 11. Tax-Free Factories Sector, 1989-94 38 12. Consumer Prices, 1989-95 39 13. Paid Employment by Sector, 1989-94 40 14. Domestic Sales and Prices of Petroleum Products, 1989-94 41 15. Wage and Salary Earnings, 1989-94 42 16. Central Government Finances, 1989-95 43 17. Central Government Revenue and Grants, 1989-95 44 18. Central Government Debt, 1989-94 45 19. Financial Position of Major Public Enterprises, 1989-93 46 20. Operating Profits and Losses of Major Public Enterprises, 1989-94 47 21. Budgetary Appropriations to Major Public Enterprises, 1989-94 48 22. Monetary Survey, 1989-95 49 23. Assets of the Financial System, 1985-94 50 24. Balance Sheet of Monetary Authorities, 1989-95 51 25. Liquidity Position of Commercial Banks, 1989-95 52 26. Structure of Interest Rates, 1989-95 53
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Contents Page
27. Deposit Money Banks, 1988-95 54 28. Loans and Advances of Commercial Banks, 1989-95 55 29. Ownership of Deposits of Commercial Banks, 1989-95 56 30. Maturity of Time Deposits of Commercial Banks, 1989-95 57 31. Consolidated Assets and Liabilities of Nonbank Financial Institutions, 1989-94 . 58 32. Balance of Payments, 1989-94 59 33. Exports by Commodity, 1989-94 60 34. Sugar Exports by Destination, 1989-94 61 35 Total Imports and Re-exports, 1989-94 62 36. Petroleum Product Imports, Re-exports, and Retained Imports, 1989-94 63 37. Direction of Trade, 1989-94 64 38. Services and Transfers, 1989-94 65 39. Capital Account, 1989-94 66 40. External Debt and Debt Service, 1989-1994 67 41. International Reserves, 1989-95 68 42. Items Under Import Licensing, 1989-94 69
Charts
1. Economic Performance, 1970-94 10 2. Real Effective Exchange Rate, Terms of Trade, and Trade Balance, 1970-94 . . 11 3 Potential Output and Output Gaps, 1970-94 15 4. Per Capita Output, Population Growth, Openness, and Financial Development, 1970-94 21 5 Exchange Rate Developments, 1970-95 24 6. Underlying Trends in the Real Effective Exchange Rate, 1975-95 27
Referernces 31
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Flji: Basic Data, 1989-94
Prov. 1989 1990 1991 1992 1993 1994
Growth (percent change) Population 0.8 1.4 1.4 1.6 1.7 0.8 Real GDP (at factor cost) 12.6 3.8 0.5 32 1.8 4.5 Sugarcane output 28.7 -2.0 -15.8 4.5 4.7 9.8 Tourist arrivals 20.4 11.3 -7.0 7.4 3.2 10.9
Inflation (percent change) Consumer prices (period average) I/ 6.1 82 6.5 4.9 52 0.6 Real wages -8.1 -2.3 -1.4 2.0 -02 2.4 Terms of trade (percent change) 2/ -13 -32 0.3 0.5 3.0 2.4 Employment (percent change) 3.0 1.6 2.7 2.7 1.5 1.2 Unemployment rate (in percent) 6.1 6.4 5.9 5.4 5.9 5.8
Money and credit (percent change) Domestic credit (net) 25.4 21.4 22.7 13.5 12.8 4.4 Government 1.6 -42.8 219.8 77.5 -5.1 -57.7 Other official entities -3.4 10.6 29.8 21.4 21.6 03 Private sector 31.4 25.1 18.7 9.7 12.9 8.7 Broad money (M2) 9.4 25.2 14.3 14.3 6.7 2.7 Investment and savings (percent of GDP) Gross domestic investment 14.3 1S2 13.9 13.4 15.6 14.9 Gross national savings 18.9 14.8 14.0 14.0 112 11.7 Central government budget (percent of GDP) Revenue and grants 25.8 27.3 26.5 252 253 25.8 Total expenditure 28.0 27.1 27.8 28.0 28.7 27.1 Current 21.5 22.3 22.4 23.7 25.1 232 Capital 6.5 4.7 5.4 4.4 3.7 3.9 Overall balance -22 0.3 -1.3 -2.9 -3.4 -13 Balance of payments (US$ mn.) Exports, f.o.b. 377.1 415.6 360.9 348.6 367.6 484.7 Imports, f.o.b. 489.0 641.6 5493 538.8 652.8 725.7 Net services and transfers 169.1 179.7 189.6 2002 2123 182.6 Current account balance 57.2 -46.3 12 10.0 -72.8 -58.4 (In percent of GDP) (4.6) (-3.4) (0.1) (0.6) (-4.4) (-32) Capital account balance 3/ -57.1 50.6 -8.1 48.4 -43 20.4 Overall balance/deficit (-) -4.1 43.2 15.0 652 -40.0 -8.8 Gross official reserves (US$ mn.; end of period) 213.4 261.8 2723 3193 270.4 274.5 (In months of imports, c.i.f.) (4.8) (4.6) (5.5) (6.8) (4.5) (4.1) External debt (US$ mn.; end of period) 347.7 3252 286.5 284.1 278.5 261.7 (In percent of GDP) (27.9) (23.5) (19.4) (18.6) (16.6) (13.6) Debt service (US$ mn.) 89.1 1062 86.8 73.7 80.6 94.9 (In percent of exports of goods and services) (12.1) (12.6) (11.0) (9.6) (9.4) (8.8)
Exchange rate (end of period) Nominal effective rate 4/ 66.0 65.6 66.0 65.8 67.0 68.0 Real effective rate 4/ 68.0 70.1 71.0 73.8 753 75.0 FSperUSS 1.49 1.46 1.47 1.56 1.54 1.41
Quota = SDR 51. 1 million
Sources: Data provided by the Fiji authorities; and staff estimates.
II Starting from 1994, data reflect the new consumer price index (1993 base year). 21 Average of main categories of export and import unit values weighted by the 1987-89 composition of Fiji's trade. 3/ Excludes errors and omissions. 41 IMF, Information Notice System index, 1980= 100, adjusted to exclude Brazil from Fiji's trading partners covered by the index.
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L Review and Analysis of Growth Performance
A. Introduction
Fiji is one of the most developed of the Pacific island economies (PIEs), with a per capita GDP of about US$2,300 and a population of 780,000 (Table I).1 Although garments have emerged as a major export sector, Fiji's economy remains highly dependent on the sugar and tourism sectors, which account for about 40 percent of foreign exchange earnings. Despite favorable natural resource endowment and a relatively well-developed infrastructure, Fiji's growth has averaged only 214 percent over the last 20 years, and the growth pattern has been characterized by a high degree of volatility.
This paper reviews Fiji's growth performance since the late 1960s and empirically examines the factors underlying its weak performance. It concludes that Fiji's growth performance, like most of the other PIEs, has been constrained by its remoteness and vulnerability to external shocks. Growth has also been adversely affected by political and institutional uncertainties, particularly over the last ten years, which undermined private sector confidence, resulting in a marked decline in investment and larger emigration of skilled labor. Fiji's experience suggests that cautious macroeconomic policies alone do not guarantee strong growth and investment, especially if microeconomic policies are inward-looking or political stability is lacking.
The paper is organized as follows: Section B provides an overview of Fiji's economic developments since its independence. In this section, the main constraints to growth associated with small island economies are reviewed along with developments in the policy framework. Section C empirically analyses Fiji's growth performance and output behavior from different angles using three approaches: the Hodrick-Prescott filter, a growth accounting framework, and a reduced form equation. Section D summarizes the conclusions and draws some policy implications.
B. Overview of Developments During 1968-94
1. Economic developments
Fiji's growth performance since the late 1960s can be broadly divided into three subperiods. During the first period, from 1968 to 1973, Fiji experienced high growth (averaging 8 percent per annum), reflecting favorable sugar prices, strong tourism expansion,
According to the latest estimates of the Bureau of Statistics published in May 1995, 50 percent of the population is now composed of indigenous Fijians, while Fijians of Indian origin constitute about 45 percent.
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Table 1. Fiji: Regional Comparison of Social and Demographic Indicators
Papua New Solomon Western Fiji Kiribati Guinea Islands Tonga Vanuatu Samoa
Area Total land area ('000 sq. kilometers) 18.3 0.73 463 29 0.75 12 2.84 Agricultural land (percent of total) 23.8 50.7 1.1 3.4 72.2 13.9 43.5 Forests and woodland (percent of total) 64.86 2.74 82.5 88.5 10.7 75.0 47.18
Population (1992) Total population ('000) 78417 75 4,055 335 92 156 167 Age dependency ratio 21 0.67 0.76 0.78 0.92 0.72 0.88 0.76 Urban population (percent of total) (1990) 45.0 37.0 16.0 11.0 21.0 21.0 23.0 Growth rate (percent) Total 1.4 2.7 2.3 3.0 1.1 2.6 0.6 Urban 2.1 4.1 3.5 6.5 3.4 6.1 1.1 Life expectancy at birth (years) 72 58 56 62 68 63 71 Total fertility rate (births per woman) 3.0 3.8 4.9 5.8 3.6 5.3 4.6 Mortality rate (per thousand) Infant 23 60 54 44 21 45 25 Under five years of age 28 81 71 56 25 58 30
Income (1993) GDP per capita (current US$) 2,171 488 1,130 715 1,549 1,230 950
Health Population per physician ('000) 2.8 5.1 12.9 6.5 1.9 7.9 4.0 Population per nurse ('000) 0.5 0.2 1.2 0.6 0.5 0.4 0.6
Access to safe water (percent of population) (1990) Total 80.0 73.0 34.0 69.0 96.0 71.0 82.0 Urban 95.0 91.0 93.0 82.0 98.0 100 100 Rural 68.0 63.0 23.0 68.0 92.0 64.0 77.0
Education Pupil-teacher ratio Primary 31 29 31 21 23 29 21 Secondary 20 15 25 17 18 18 39
Energy (1992) Energy consumption per capita (kg. of oil equivalent) 525 107 235 170 196 288 425
Source: World Bank, Social Indicators of Development, 1994; and IMF, Recent Economic Developments reports, various issues.
I/ Provisional population estimates, 1994. 21 Ratio of population defined as dependent (under 15 and over 64 years) to the working-age population (15-64).
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and high investment (Table 2 and Chart I).2 The second period (1974-86), which followed the first oil price shock, saw a deceleration of growth and increased volatility, reflecting mainly exogenous shocks. Growth slowed from an annual average of 3 percent during 1974-81 to an average of 1 percent during 1982-86, in part, reflecting severe weather conditions3 and a prolonged depression in world sugar prices.4 The weak growth in the first half of the 1980s may also have reflected the adverse effects of an overvalued exchange rate (see Section II below) and a marked decline in fixed investment following the completion of major infrastructure projects in the late 1970s/early 1980s (Charts 1 and 2).
The third period (1987-94) was characterized by a pickup in average growth to 23A percent, along with reduced volatility. The period began with the mid-1987 military coups which plunged the economy into a crisis. Output declined sharply, while investment shrank by almost a quarter in real terms and emigration increased markedly. Although output recovered somewhat in 1988, inflation accelerated sharply and investment fell further to an historically low level. In the wake of the shift in economic strategy (see below), output rebounded sharply in 1989; since then, however, output has grown at an average of 2V4-3 percent. While inflation eased to below 1 percent by 1994, investment did not recover, reflecting continued lack of confidence (Box 1).
2. General constraints to growth
Like other PIEs, Fiji's growth performance has been constrained by a number of factors common to many of the Pacific island economies, such as the small size of the domestic market, remoteness, proneness to natural disasters, and demographic factors.5 Small size is economically disadvantageous for a number of reasons, including a limited resource endowment, implying a high import content of output and dependency on a narrow range of exports; a limited ability to exploit economies of scale and to influence prices; a
2At the time of independence (1970), Fiji's per capita GDP (US$440) was relatively high by developing country standards. Also, Fiji presented impressive social indicators, including near universal primary school education, high levels of adult literacy and life expectancy, and good standards of public health.
3Since 1970, Fiji has been hit by 38 tropical cyclones. In addition, there were severe droughts in 1977, 1982/83, and 1994.
4Fiji's failure to achieve any significant diversification is reflected by a virtually unchanged share (about 44 percent) of the work force in agriculture over the intercensal period 1976-86.
5Since 1980, average growth among the PIEs has been just above 2 percent per annum.
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Box 1. Political Background
After being a British colony for almost a century, Fiji became independent on October 10, 1970. Fiji's system of government was patterned after the British Westminster model, although a number of modifications were introduced to reflect national circumstances. The bicameral Parliament consisted of an elected 52-member House of Representatives, where indigenous Fijians and Fijians of Indian origin were equally represented, and an appointed 22-member Senate, of which 7 were appointed by the Prime Minister, 6 by the Leader of the Opposition, 8 by the Great Council of Chiefs, and 1 by the Council of the Island of Rotuma. From independence until the mid- 1980s, Fiji's politics were relatively stable. There were four contested general elections with the Alliance Party, strongly supported by the Great Council of Chiefs, forming the Government for the whole of this period. However, a large opposition party, the National Federation Party, which was largely dominated by Fijians of Indian origin, was also represented in Parliament.
After a coalition formed by the National Federation Party, which also included the Labor Party, won the April 1987 election, ethnic tensions surfaced. Military coups ensued in May and September 1987, leading to the installation of an interim civilian government comprising indigenous Fijians.
In 1990, the interim government promulgated a new Constitution which guarantees a majority for indigenous Fijians in both houses of Parliament. Under the Constitution, the President of the Republic, who is chosen by the Great Council of Chiefs, appoints as Prime Minister the indigenous Fijian he judges to have the support of the majority of Parliament. Voters were registered in four separate rolls (Fijians, Indians, Rotumans, and others) electing 37,27, 1, and 5 of the 70 members of the House of Representatives, respectively. Of the 34 members comprising the Senate, the President appoints 24 indigenous Fijians, 1 Rotuman, and 9 from other communities. Over the last two years, political developments have been characterized by continued debate over constitutional matters. In June 1995, a Constitutional Committee was established to review the Constitution by 1997. tendency toward oligopolistic or monopolistic market structures; and a shortage of skilled labor.6
Remoteness leads to higher per-unit transportation costs and large inventories because of uncertainty of supplies and unreliability of transport services. The impact of natural disasters on the island economies is relatively larger, in terms of damage per unit of area and cost per capita, than for larger countries.7 Finally, demographic changes are sometimes very pronounced, owing to net emigration.
6It should, however, be mentioned that there is considerable literature arguing that smallness could actually be an advantage to development, as reflected by the capacity to flexibly adapt to sudden changes (see, e.g., Streeten, 1993, and Elek, Hill, and Tabor, 1993).
7Small island countries also tend to have unique and very fragile ecosystems and, more than other countries, would be affected by coastal erosion, global warming, and rising sea level.
©International Monetary Fund. Not for Redistribution Table 2. Fiji: Selected Economic Indicators, 1968-94
(In percent; unless otherwise indicated)
1968-94 1968-73 1974-86 1987-94 1974-81 1982-86 1987-88 1989-94
GDP growth (at factor cost) 3.7 7.9 2.2 2.8 2.8 1.3 -2.1 4.4
Per capita GDP growth 1.9 5.8 0.2 1.6 0.8 -0.7 -6.2 2.9
Sugar production ('000 tons) 383.1 330.0 381.3 425.9 358.9 417.2 382.0 440.5
Tourist arrivals ('000) 199.6 127.1 196.4 259.0 179.6 223.3 199.0 279.0
Inflation (Average) 7.3 5.9 8.6 6.1 10.8 5.0 8.7 5.3
Gross fixed capital formation (In percent of GDP) 20.9 22.7 23.7 14.9 25.7 20.6 14.4 15.0 Of which private 10.0 12.9 11.1 6.0 11.5 10.5 8.3 5.3 Of which public 8.3 6.8 9.4 7.7 10.0 8.4 5.5 8.4
Current account (In percent of GDP) -5.5 -12.3 -5.4 -0.4 -6.9 -3.1 1.4 -1.0
Trade account (In percent of GDP) -13.3 -17.3 -14.9 -7.7 -15.0 -14.7 -1.9 -9.7
International reserves (In months of imports, c.i.f.) 4.6 4.0 4.5 5.2 5.0 3.7 5.6 5.1
Budget balance (In percent of GDP) -3.3 -2.2 -3.8 -2.9 -3.6 -4.1 -2.9 -2.9
Money growth (Percent change) 14.1 16.7 14.2 12.2 16.5 10.4 12.3 12.1
Sources: Staff estimates based on data derived from: Fiji Bureau of Statistics, "Current Economic Statistics," various issues; Cole and Hughes (1988); Taylor (1987); IMF, "International Finance Statistics;" and various IMF and World Bank documents.
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FIJI ECONOMIC PERFORMANCE, 1970-94
Source: Data provided by the Fiji authorities.
I/ GDP at 1977 factor costs.
©International Monetary Fund. Not for Redistribution CHART 2 FIJI REAL EFFECTIVE EXCHANGE RATE, TERMS OF TRADE AND TRADE BALANCE, 1970-94
Sources: Data provided by the Fiji authorities; and IMF, World Economic Outlook database for terms of trade.
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3. Policy developments
Macroeconomic policies have generally been prudent during 1968-94. Fiscal deficits were moderate, while money expansion was kept broadly in line with nominal GDP growth. As a result, inflation averaged about 7 percent and the external position remained comfortable, with international reserves averaging at 4l/2 months of imports. External indebtedness reached 40 percent of GDP in 1986, but has fallen markedly since. During this period, the largest single source of external support to Fiji was the preferential access to the European Union market for sugar (Box 2).
Microeconomic policies were inward-looking and protectionist during the period from 1974 to 1986. High protective tariffs and nontariff barriers, mainly in the form of licenses, were introduced, leading to very high rates of effective protection for scarcely productive industries. In addition, an extensive system of price controls was put in place. Such policies led to a deterioration in external competitiveness, with adverse consequences for investment and the opportunity to develop a strong manufacturing sector.
The 1987 crisis induced a shift toward a more market-oriented approach. A number of measures were introduced in 1987-88, immediately following the military coups, including two major devaluations of the Fiji dollar, a tightening of exchange controls, the removal of ceilings on interest rates, and the imposition of a wage freeze for civil servants. These measures were followed by the adoption of a new market-oriented, outward-looking strategy at the 1989 National Economic Summit. Trade liberalization and economic deregulation; fiscal consolidation; tax, public enterprises, and labor market reforms; and investment promotion constituted the key elements of the new strategy.8 However, implementation of the reforms has been uneven, and private confidence has remained weak, reflecting continuing uncertainty over constitutional and land-related matters (Box 3).
C. Determinants of Growth: An Empirical Investigation
This section empirically investigates Fiji's growth during the last 25 years and the factors behind its lackluster performance. Statistical measures of Fiji's potential growth and output gaps are first derived. Second, a growth accounting framework is used to derive production factors' relative contribution to growth. Finally, a reduced form equation is estimated to capture the relative impact of the main determinants of output behavior.
1. Measures of potential GDP and output gap
As described earlier, GDP growth in Fiji has been characterized by an unusually high degree of volatility. In order to assess what growth performance in Fiji would have been
8 A summary of the reforms announced in 1989, their stated objectives, and implementation status is summarized in Annex I.
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Box 2. International Trade Agreements and Arrangements
Since 1975, the Sugar Protocol of the Lome Convention has guaranteed Fiji access to the European Union (EU) market at a price linked to the EU's internal sugar price, which, on average, has been more than twice the world free market price. Fiji's current quota to the EU market is 170,000 metric tons, with the shortfall or excess from one year offset in the following year. In July 1994, the EU agreed to extend the preferential access to its market for the African, Caribbean, and Pacific (ACP) countries for a six-year period starting July 1995. The new agreement provides for an additional 300,000 metric tons of sugar to be supplied to Finland, Portugal, and the United Kingdom at a guaranteed price of US$0.26 cents/lb (about two-and-a-half times the current world market price). Fiji's share of the additional quota is estimated at 40,000 metric tons. With regard to the U.S. market, Fiji is currently allowed to supply about 10,000 metric tons at domestic price, about twice the world market price.
The implications of the Uruguay Round Agreement for Fiji's sugar exports to the EU are expected to be limited, as long as Fiji continues to benefit from guaranteed market access. Although the Uruguay Round allows the EU to continue with its policy of guaranteed access to its market, it also requires the EU to convert its system of variable import levies for nonpreferential sugar into fixed tariffs, which are to be reduced by 20 percent by the year 2000. Recent studies have shown that the EU's internal price is likely to decline, with estimates in the rarjge of 6-15 percent.
Fiji became a full contracting party of the General Agreement on Tariffs and Trade (GATT) in December 1993, and in April 1994 signed the Uruguay Round Agreement. The Government has committed to bind tariffs at 40 percent for a wide range of agricultural and industrial products, with the exception of powdered milk and rice which have a 46 percent binding tariff. In all of these cases, however, Fiji's tariffs are already well below the binding tariff. A working committee is looking into the ratification of the World Trade Organization (WTO) by the end of next year.
At the regional level, since January 1981, Fiji has benefitted from its participation in the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA). Under SPARTECA, Australia and New Zealand provide, on a nonreciprocal basis, duty-free and unrestricted access to their markets for all products exported by the South Pacific Forum Island Countries (SPFIC), provided that the goods have a minimum of 25 percent SPFIC content and a minimum of 50 percent SPFIC/Australia/New Zealand content. In 1994, New Zealand granted a derogation for Fiji's garment exports which reduces the qualifying area content to 45 percent. Negotiations are still ongoing with Australia to modify the definition of local area content. However, with the trend reduction in Most Favored Nation (MFN) tariffs in Australia and New Zealand, the level of preference afforded by SPARTECA has been eroded.
Since 1986, Fiji has been a member of the Multifiber Arrangement (MFA) joining its repeated extensions. Fiji's quota to the U.S. market, which has recently been renegotiated and increased, is rapidly becoming binding. However, the utilization rate of the EU's quota is still fairly low. Fiji's quota to the EU is based on a two-year derogation under the Lome Convention, as Fiji garments do not qualify according to the rules of origin.
Within the South Pacific region, a bilateral agreement had been reached recently with Tonga, and bilateral agreements are being finalized with Papua New Guinea, Tuvalu, and Vanuatu.
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Box3. Land Tenure System
The land tenure system in Fiji dates to the Deed of Cession of 1874, which classified land into three categories: some 83 percent of the land is to be retained by ethnic Fijians (as communal native land) in perpetuity; the remainder consists of freehold (8 percent) and crown land (9 percent). Most sugar cultivation takes place on leased land, about half of which are on native land. Under the Native Land Trust Act, enacted in 1940, the management of all native land and the negotiation of the leases were placed under the control of the Native Lands Trust Board (NLTB), acting on behalf of the Fijian land-owning units, which are typically at the village level. Leases can be sold, but the transfer must be recorded and recognized by the NLTB. Once granted a lease, the holder is free to shift the land among similar uses without the approval of the NLTB. However, land can only be shifted to a different use category by negotiating a new lease.
The current legal framework for the leases is the Agricultural Landlord and Tenants Act (ALTA) of 1976 which replaced a similarly named "Ordinance" (ALTO). The former removed from the latter the so-called hardship clause, entitling owners to reclaim their land every ten years when the leases expire, provided they could prove to the Agricultural Tribunal that they needed it for their economic survival. In principle, tenants who do not receive lease renewals are entitled to compensation for authorized improvements to the land, such as buildings. This aspect of the law, however, is especially difficult to implement for two main reasons. First, the improvements must be authorized in writing by the NLTB, and indications are that few fanners comply with this requirement. Second, neither the landowners nor the new tenants are likely to have the resources to compensate former tenants for improvements. ALTA also allowed for new leases to be concluded for up to 30 years, and had grandfathered existing leases with less than five years remaining by extending them collectively by 20 years. As a result, the majority of the leases on native lands will expire by 2004.
Agriculture leases, which expire over the next few years, are being watched closely as an indication of how the NLTB will deal with the renewal issue. The ALTA was designed to allow the indigenous Fijian landowners (and the NLTB) time to reassess their needs and decide whether to renew the leases. At the moment, there is much anxiety among the farming community about the conditions for renewal and, in the event of nonrenewal, the amount of compensation for capital improvements on the land. While most indigenous Fijian landowners are likely to renew current leases, a significant number is reportedly interested in reclaiming the land for their own use, in part, because they consider current land rents, which are subject to a five-year revision, to be below market rates.
under normal conditions, this section presents a statistical measure of Fiji's potential output and output gaps by using the Hodrick-Prescott (HP) filter. These are reproduced in Chart 3.
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FIJI POTENTIAL OUTPUT AND OUTPUT GAPS, 1970-94 I/
ACTUAL AND POTENTIAL OUTPUTS (In billions of 1977 Fiji dollars)
Source: Staff calculations. I/ GDP at 1977 factor costs. 2/ Output gaps are defined as the difference between actual and potential output, in percent of potential output.
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The rationale for using the HP filter is to estimate the underlying potential rate of growth by smoothing the volatility of output under the assumption that supply shocks have long lasting effects on output, while demand shocks tend to be temporary.9 Natural disasters are typically associated with temporary supply shocks. However, in the case of Fiji, the frequency of such events suggests that weather-related supply shocks tend to be a recurring feature of the economy.10
The results show that there was a marked slowdown in potential growth from 7 percent during 1968-73 to 21A percent during 1974-86, followed by a slight pickup during the post-1987 period to about 23A percent. Output and growth show a high degree of volatility around potential during the 1980s, but appear much less volatile in the 1990s.
2. Factor contributions to growth
To better understand the relative contribution of capital, labor, and factor productivity to Fiji's growth performance, a growth accounting framework was used to decompose their relative contributions. A production function of the simplest form is assumed, in which output is a function of labor and capital under the restriction of constant returns to scale. This simple technology was augmented to include human capital accumulation as an additional factor of production. Total factor productivity (TFP) in either case is obtained as the residual by subtracting the relative contributions of other factors of production from the real GDP growth. The simplest of TFP calculations is the so-called "Solow" residual, while a second estimate, obtained by augmenting the Solow model with a measure of human capital accumulation, is the "Mankiw-Romer-Weil"(MRW) residual.
Using the above approach, two estimates of the TFP were calculated for 1971-94 (Table 3). The Solow residuals indicate that there was little growth in the TFP during that period. However, productivity gains appear to have picked up in the post-1987 period, possibly reflecting the effects of the implementation of the structural reforms. Capital contributed, on average, about one third to growth over the period as a whole, with its contribution declining by more than half from 1971-86 to the post-1987 period, reflecting the marked decline in investment. Labor contributed about two thirds to growth. However, its contribution declined from the 1970s to the first half of the 1980s. This could have reflected the inward-looking policy and lack of diversification in the economy. Notwithstanding the high emigration in the third period, labor's contribution appears to have increased. This could
9The HP algorithm minimizes the squared residuals of a variable from its trend, subject to a smoothness constraint, A, that penalizes squared variations in the growth of the trend series. Higher values of X imply that variations in output are almost entirely demand driven. Conversely, small values of X imply that variations of output are induced by supply shocks. i0For these reasons, X has been set at a low value.
©International Monetary Fund. Not for Redistribution Table 3. Fiji: Factor Contributions to Output Growth, 1971-94
(Period averages; percent changes in real terms)
Rate of growth: Growth contibution of: Solow M-R-W GDP Capital Labor Education Capital Labor Education Residual Residual
Weights 0.25 0.75 --
Whole period 1971-94 3.2 4.0 2.7 1.0 2.0 _« 0.2
Subperiod: 1971-73 8.9 5.4 6.1 1.4 4.6 3.0 — __ Subperiod: 1974-81 2.8 5.6 3.6 1.4 2.7 -1.3
Subperiod: 1982-86 1.3 3.5 (0.3) 0.9 -0.3 -- 0.6
Subperiod: 1987-94 2.8 2.3 2.4 0.6 1.8 -_ 0.4
Weights 0.33 0.33 0.33
Whole period 1971-94 3.2 4.0 2.7 5.0 1.3 0.9 1.6 -0.6
Subperiod: 1971-73 8.9 5.4 6.1 11.0 1.8 2.0 3.6 1.4
Subperiod: 1974-81 2.8 5.6 3.6 8.1 1.8 1.2 2.7 -2.9
Subperiod: 1982-86 1.3 3.5 (0.3) 4.0 1.2 -0.1 1.3 -1.1
Subperiod: 1987-94 2.8 2.3 2.4 0.2 0.8 0.8 0.1 1.2
Source: Staff estimates.
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be related to the change in development strategy and to the employment of labor in the garment industry. Under the MRW approach, human capital contribution to growth was high, reflecting a rapid growth in the stock of human capital. However, during the post-1987 period, human capital contribution declined sharply, reflecting the effects of emigration and a marked reduction in expenditures on education, as funds were diverted to military expenditures.11
The above results should be interpreted cautiously owing to data limitations. Since Fiji does not compile data on capital stock, a series has been derived through the permanent inventory approach.12 As for labor, a consistent series was available only for formal employ- ment with the consequence that total employment is understated. The accumulation of human capital has been proxied by expenditures on education in real terms, owing to the unavailabi- lity of data on the number of years of education received by the population over 25 years of age and other similar indicators.
3. Short-run determination of output
This section estimates a reduced form equation of the relative impact of exogenous shocks and policy-related factors determining Fiji's short-run output fluctuations. A number of problems make this exercise difficult and the results tentative, including the difficulty of identifying appropriate proxies to measure changes in structural policies and the limited size of the sample.
Given the specific purpose of the analysis, the model selection was determined mainly by forecasting performance. The modeling of output fluctuations was derived through a specification search that started from a large set of explanatory variables and then proceeded to a more parsimonious representation by iterative elimination of statistically insignificant variables.13 The initial set of explanatory variables was based on the findings of the recent empirical growth literature on developing countries and on the availability of reliable data. This initial set included: gross capital formation (in levels and in percent of GDP); the share
HWhile factor weights in the Solow approach reflect, on average, their relative share in national income, those in the MRW approach were based on shares estimated in similar studies of other developing countries.
12A depreciation rate of 20 percent is assumed, in view of Fiji's vulnerability to natural disasters, and a capital/output ratio of 3 was used as a starting point. These two assumptions imply that, given the declining investment ratio over the last ten years, the capital stock in Fiji has grown only modestly.
13 Although this strategy has the advantage of avoiding potentially biased results from omission of relevant explanatory variables, it may lose in terms of coefficient accuracy, owing to the high degree of collinearity among some of the regressors.
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of total trade to GDP as a proxy for trade liberalization measures; shares of M2 and private sector credit to GDP as proxies for the development of the financial system (M2 and credit to the private sector in percent of GDP); the variability of inflation and of the real effective exchange rate as proxies of macroeconomic stability; terms of trade movements; and sugar production as a proxy for weather-related shocks (some of these variables along with the per capita real output are shown in Chart 4).14
The final equation is reported in Table 4.15 The dependent variable is the real per capita output (in logs). The equation performs remarkably well in terms of goodness of fit, capturing the volatility of output during the 1980s. This is reflected primarily in the significance of the coefficient for SUGAR. All the coefficients are of the expected sign and statistically significant. In particular, the coefficients of OPEN (-1) and FIN (-1) are both positive and significant, indicating that trade liberalization and financial development, respectively, have had a positive effect on growth. As expected, the coefficient of REER indicates the negative effect of an appreciating exchange rate on growth. This effect could have been important in the first half of the 1980s, when the Fiji dollar appeared to have been overvalued, relative to its long-run equilibrium level (see Section II). Conversely, the coefficient of terms-of-trade index, TT (-1), reflects the positive effects on output of an improvement in terms of trade. The coefficient of gross fixed investment as a share of GDP (TINV) is positive but small. The small size of the coefficient is not surprising, in light of the volatility of output, as investment is a more important determinant of potential output. Finally, the dummy POL for the 1987 coups is negative as expected, reflecting its adverse effects on confidence, investment, and hence, growth.
D. Conclusions
After experiencing a high rate of growth in the late 1960s-early 1970s, Fiji's growth performance weakened markedly following the first oil shock price through the mid-1980s. The empirical evidence shows that potential output declined from 7 percent in the 1968-73
14A11 the variables were expressed in logarithm, either in per-capita forms or rate of change to minimize the possibility of spurious correlation among trended variables, and in most cases, lagged by one period to avoid simultaneity bias. The variables were checked for nonstationarity by examining the sample autocorrelation functions, rather than formally testing for the presence of unit roots, given the scarce number of observations. In the presence of unit root, the sample autocorrelation function assumes slowly decaying values from an initial level close to unity. Nonetheless, the presence of some nonstationary variables cannot be ruled out. However, their presence does not affect the quality of the estimated coefficients of the stationary variables in the regression as shown by Sims, Stock, and Watson (1990).
15 All the diagnostic tests perform satisfactorily, given the small size of the sample. The estimated equation seems fairly robust. Cusum and cusum square tests, together with the standard Chow test applied in 1987, reject the possibility of structural breaks.
©International Monetary Fund. Not for Redistribution Table 4. Fiji: Estimates of Growth Equation, 1973-94
(Dependent variable: GDPP at 1977 constant prices)
Variables constant TINV OPEN(-l) FIN(-l) REER(-l) TT(-l) SUGAR POL
Coefficients 4.99 0.06 0.19 0.15 -0.17 0.13 0.10 -0.04 White's standard errors 0.54 0.02 0.05 0.01 0.05 0.06 0.02 0.01 t- statistics (9.26) (2.36) (3.80) (29.41) (-3.55) (2.42) (4.18) (-4.25)
Number of observations: 22 Adjusted R- squared: 0.91 Durbin- Watson: 2.35 Legend: Standard error: 0.02 TINVGDP a Real gross fixed capital formation/GDP (in logs). Chow test (1987): 0.87 FIN(-l) = Broad money over GDP (in logs). Jarque-Bera normality test: 1.63 REER = Real effective exchange rate index, 1970= 100 (in logs). TT( - 1) = Terms of trade index, 1970= 100 (in logs). Root mean squared error: I/ 14.85 SUGAR = Sugar production (in '000 of metric tons and in logs). Mean absolute error: I/ 12.37 POL = Dummy variable for 1987.
I/ Calculated on untransformed variables.
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FIJI PER CAPITA OUTPUT, POPULATION GROWTH, OPENNESS, AND FINANCIAL DEVELOPMENT, 1970-94
Source: Data provided by the Fiji authorities, and staff estimates.
I/ Sum of imports and exports of goods and nonfactor services over GDP at 1977 prices.
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period to 2 percent in the 1974-86 period. The decline was attributable, in part, to lower contributions from capital and labor, the former reflecting a secular decline in investment since the early 1980s, while the latter may have reflected Fiji's failure to diversify its productive base and develop a strong nonsugar manufacturing sector. This, in turn, may be attributed to the inward-looking policies of the period. By protecting relatively inefficient industries and allowing the exchange rate to be significantly above its long-run equilibrium rate, such polices induced a sharp deterioration in Fiji's external competitiveness and accentuated the decline in investment. Output became highly volatile during this period, mainly on account of adverse weather conditions.
Reflecting the adoption of a more market-oriented, outward-looking reform strategy, Fiji's growth performance appears to have improved somewhat since the late 1980s. Potential growth has increased somewhat and volatility has declined, reflecting more favorable weather conditions. The increase in potential growth could be related to the effects of structural measures and a real exchange rate that was more in line with its long-run determinants. However, factor contributions declined further reflecting stagnant investment and net emigration.
Fiji's growth experience suggests that cautious macroeconomic policies, per se, may not be sufficient to stimulate growth and investment if microeconomic policies are inward- looking, or private confidence is lacking. Addressing political and institutional uncertainties should, therefore, constitute an essential part of any efforts to restore private sector confidence and achieve a sustained recovery in private investment.
II. Exchange Rate Developments
A. Introduction
The gradual appreciation of the real effective exchange rate of the Fiji dollar since its two major devaluations in 1987 has raised questions about the external competitiveness of the economy and the appropriateness of exchange rate policy. This paper provides an empirical assessment of Fiji's exchange rate developments from a long-run perspective. The analysis examines developments in the real effective exchange rate and its long-run determinants in order to assess the appropriateness of exchange rate policy in Fiji. It concludes that the real exchange rate may have been significantly above its long-run equilibrium level in the first half of the 1980s. However, since the 1987 devaluations, the real exchange rate has moved broadly in line with its long-run determinants.
The structure of the paper is as follows: Section B reviews exchange rate policy and developments in Fiji since the 1970s; Section C provides a brief discussion on the determinants of the long-run equilibrium exchange rate as applied to the case of Fiji; Section D provides empirical estimates of the long-run equilibrium value of the real exchange rate; and Section E offers some concluding remarks. It concludes that there may have been a
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significant misalignment between the real exchange rate and its long-run equilibrium value during the first half of the 1980s. Since the 1987 devaluations, however, Fiji's real exchange rate has moved broadly in line with a path consistent with the movements in its long-run determinants, particularly the improvement in the terms of trade.
B. Exchange Rate Policy and Developments
Since achieving independence in 1970, Fiji has maintained a pegged exchange rate regime. Until February 1974, the Fiji dollar was pegged to the pound sterling. Then for about a year, the currency was pegged to the U.S. dollar. Since April 1975, the Fiji dollar has been pegged to a currency basket, comprising the currencies of Fiji's five major trading partners- Australia, Japan, New Zealand, the United Kingdom, and the United States. The methodology for calculating the (undisclosed) weights in the basket has evolved over the years. The appropriateness of weights are reviewed each year by the Reserve Bank, based on the share of each partner country in the total value of trade, tourist transactions, and external debt service, as well as the share of each currency in the invoicing of trade.
The early to mid-1970s was a period of relatively high variability in Fiji's nominal effective exchange rate (Chart 5). This volatility stemmed from the Fiji dollar's peg to a single currency (either the pound sterling or the U.S. dollar) and the general increase in exchange rate variability following the collapse of the Bretton Woods system and the advent of floating exchange rates. The volatility in the nominal exchange rate led to higher real exchange rate variability, although commodity price shocks (particularly of oil) also played a role. Exchange rate volatility in nominal and real effective terms declined after Fiji moved to a basket peg.
During the first half of the 1980s, the Fiji dollar appreciated significantly in both nominal and real effective terms. As the bilateral exchange rate declined only slightly against a strengthening U.S. dollar during this period, the Fiji dollar appreciated significantly against the currencies of Australia, New Zealand, and the United Kingdom. The extent of the nominal effective appreciation suggests that the weight of the U.S. dollar in the basket generally exceeded the weight of the U.S. dollar on a trade basis.
In 1987, against the backdrop of political uncertainty and substantial capital flight following the coups, the Fiji dollar was devalued on two separate occasions (June 29 and October 6) by a cumulative amount of 33 percent against the U.S. dollar (intervention currency), which led to large depreciations in nominal and real effective terms. Since the devaluations, the nominal effective exchange rate remained relatively flat, while the real effective exchange rate appreciated by about 15 percent through 1993, as a result of higher inflation in Fiji than that of its trading partner countries. Since mid-1994, relatively low domestic inflation has reversed the trend appreciation in Fiji's real exchange rate, which has depreciated by about 3 percent through mid-1995.
©International Monetary Fund. Not for Redistribution - 24 - CHART 5 FIJI EXCHANGE RATE DEVELOPMENTS, 1970-95 (1980=100) Effective Exchange Rates I/, 2/
Source: IMF, Information Notice System. I/ An increase indicates an appreciation of the Fiji dollar. 2/ Brazil has been excluded from Fiji's trading partners and competitors covered by these indices, because despite its small weight, sharp movements in Brazil's prices and exchange rate distort the indices. 3/ Foreign currency per Fiji dollar based on period average rates.
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C. Determinants of the Long-Run Equilibrium Real Exchange Rate
Traditional theories of exchange rate determination have emphasized the notion of an equilibrium real exchange rate16 toward which the real exchange rate tends to converge over the long run. Over shorter periods, the real exchange rate, as with other relative prices, is likely to be affected by real disturbances. To the extent that these shocks are permanent, the long-run equilibrium value of the real exchange rate may also be affected. In other words, permanent real shocks may require fundamental shifts in relative prices in order to be compatible with macroeconomic equilibrium.
Over the medium to long run, determinants of the equilibrium real exchange rate would include those factors that affect the home country's net trading position in world markets and its underlying propensity to be a net lender or borrower of capital. In other words, permanent structural components of both the current and capital accounts jointly determine the sustainable path for real exchange rate.
One important measure of long-run developments in the current and capital accounts is summarized by trend movements in a country's net foreign asset position, which reflects changes in its underlying saving-investment balance. Insofar as domestic and foreign spending patterns differ, fundamental developments in net foreign asset positions would require corresponding changes in international relative prices.17 In general, a declining net foreign asset position (or rising net external debt position) for the home country would require a trend real depreciation of the home country's currency to eventually stabilize the outstanding stock of net foreign assets.18
Other specific factors often used to explain long-run movements in the real exchange rate in developing countries have included: differential rates of productivity growth across traded and nontraded goods sectors, the stance of fiscal policy, changes in the trade regime,
16The most prominent example of this would be the Purchasing Power Parity (PPP) concept which has been widely used to derive alternative measures of national income.
17The analogy is with the well-known transfer problem. Consider a long-run decline in a country's net foreign asset position. This international redistribution of wealth from the home country to the foreign country has an expenditure-reducing impact in the home country which predominantly affects spending on home goods. Hence, the transfer must be accompanied by a real depreciation at home and expenditure-switching toward home goods to restore full- employment and improve the trade position to offset the change in interest income (payments) on net foreign assets (liabilities).
18See Mussa (1984) for further discussion on the relation between net foreign assets and international relative prices.
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and developments in the terms of trade.19 For example, in the case of a permanent improvement in the terms of trade, domestic real incomes would rise, raising domestic demand and the relative price of nontraded goods, thereby resulting in a sustained real appreciation of the home country's currency.20
All the factors identified above apply to Fiji. However, given the importance of commodity exports in the economy, the terms of trade would be expected to play a major role in determining the long-run equilibrium value of the real exchange rate.21 Given the relatively small size of the economy, Fiji's terms of trade are driven by external developments in world commodity prices. The economy has remained heavily reliant on exports of sugar, which have accounted for around 40 percent of export receipts in the last ten years.22 On the import side, movements in the world price of oil have tended to dominate major developments in Fiji's import prices; the share of oil in total imports has been in the range of 10-20 percent. Reflecting mainly price movements of sugar and oil, Fiji's terms of trade showed a significant decline from the mid-1970s to the mid-1980s, but have generally improved since then (Chart 6).
D. Empirical Estimates of the Long-Run Real Exchange Rate
Using cointegration analysis, estimates of the underlying trend in the real exchange rate can be obtained. Conceptually, cointegration identifies a long-run relationship between economic variables which are individually nonstationary but a linear combination of which is stationary.23 In other words, using cointegration, the underlying trend developments of a variable (in this case, Fiji's real exchange rate) can be explained in terms of the movements in a set of explanatory variables.
19See, e.g., Edwards (1989).
20In addition to this income effect, the rise in the relative price of exportables also has substitution effects depending on whether the exportable good is consumed domestically or not. See Edwards (1989) for further discussion of the conditions needed for terms-of-trade developments to be positively correlated with real exchange rate movements over time.
21Other real disturbances, such as cyclones and other natural disasters, may also have a lasting impact on Fiji's prices relative to its trading partners. To the extent that such supply disturbances have a permanent impact on the level of productivity and costs, these shocks may impact on the long-run value of the real exchange rate.
22About 40 percent of sugar exports are destined for the EU market (sold at preferential prices) and the remainder sold at the world or international agreement price for sugar.
23 A variable is stationary if the mean and variance do not change over time. For more on cointegration analysis, see Enger and Granger (1991).
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CHART 6
FIJI UNDERLYING TRENDS IN THE REAL EFFECTIVE EXCHANGE RATE, 1975-95 Real Effective Exchange Rate and Estimated Trends
Sources: Staff calculations.
I/ Ratio to broad money (M2). 2/ Ratio of sugar to oil prices (log index).
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Using monthly data from January 1975 to April 1995, a long-run relationship between the real effective exchange rate (REER) and its determinants24 is estimated below.25 In addition to the explanatory variables, dummy variables (DEVAL1, DEVAL2) for the devaluations were used to estimate the long-run impact of the 1987 devaluations on Fiji's real exchange rate. In principle, a nominal devaluation, per se, should not affect the real exchange rate permanently, unless it is in response to a real shock or structural change which may have permanently affected the equilibrium relative prices.26
Using filtered values of the explanatory variables,27 the estimated long-run equation for the REER is given by:
REER = -0.26*DEVAL1 + -0.09*DEVAL2 + 0.14*NFA + 0.08*COMMOD - 0.23*COMMOD*DUM + e; (-13.75) (-4.74) (4.27) (6.39) (-14.23)
adj. R2 = 0.97, DF = -3.04; where /-statistics are given in parentheses.28 A constant (not reported) was also included in the regression. Using actual (rather than filtered) values of the explanatory variables does not affect the estimated sign of the coefficients, but uniformly lowers the point estimates and /-statistics.
24For the explanatory variables, monthly data on commodity prices were obtained to proxy for Fiji's terms of trade. The relative commodity price index (COMMOD) was constructed as the ratio of world and EU sugar prices to the world price of oil, expressed in logs. Also, monthly data on net foreign assets (NFA) of the banking system, as a share of broad money, are used as a proxy for the NFA position of the economy.
25Augmented Dickey-Fuller (DF) tests (not reported) suggest that the real exchange rate and the explanatory variables are stationary in first differences over the sample. This finding suggests that PPP is a poor approximation of the long-run real exchange rate for this period as it requires the real exchange rate level to be stationary.
26In fact, using dummy variables for the two coups in 1987, each preceding the corresponding devaluation, does not affect the results.
27Using the HP filter (with A, = 1000), filtered values of the long-run determinants are used. Since the cointegrating relationship to be estimated depends on the long-run (nonstationary) comovements (or common stochastic trend) between the variables, filtering out short-run (stationary) noise should increase the efficiency of the estimation.
28The /-statistics are only indicative as the ordinary least square estimates have nonstandard distributions, complicating the usual statistical inference. The DF statistic is the Dickey-Fuller test for nonstationarity applied to the residuals from the regression. Although the DF statistic is not significant at the 5 percent level, the test is of low power.
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The empirical results indicate that the 1987 events may have resulted in a long-run real depreciation of 35 percent. Net foreign assets also had a significant coefficient with the correct sign, as did relative commodity prices, except for the subsample between 1980 and 1986 (indicated by period dummy (DUM)). During that period, the real exchange rate appreciated significantly while the terms of trade declined sharply.
Using the fitted value for REER in the equation (i.e., the cointegrating relationship between the variables) and residual e, the real exchange rate can be decomposed into trend (permanent) and cyclical (transitory) components, respectively. Graphs of the actual REER and its estimated long-run trend(s), as well as plots of the explanatory variables, are given in Chart 6. Trend 1 imposes the positive coefficient on the terms of trade variable—consistent with theoretical priors—over the full sample, while Trend 2 reflects the unconstrained estimate of the long-run real exchange rate summarized in the equation.
Based on the first trend, it is clear from Chart 6, that there was a significant departure of the real exchange rate from its long-run equilibrium value during the first half of the 1980s. During this period, the real and nominal effective exchange rates appreciated in unison (Chart 5) at a time when the terms of trade declined sharply. As Fiji maintained its pegging system throughout this period—which limits the flexibility of the nominal exchange rate- adjustment of the real exchange rate had to come through the slower process of relative price adjustment, which may explain the persistent divergence of the actual from the long-run equilibrium rate.
With the two devaluations in 1987, the deviation of real exchange rate from its underlying trend was closed quickly, although it seems that the real exchange rate may have overshot its long-run equilibrium value initially. Since that time, the real exchange rate has moved broadly in line with the long-run equilibrium rate as suggested by its fundamental determinants. In particular, the real appreciation since 1987 appears consistent with Fiji's rising terms of trade in recent years (Chart 6).
As an alternative indicator of external competitiveness, a crude estimate of the relative unit labor cost of Fiji against its major trading partners was derived. According to this indicator, the external competitiveness of Fiji in the post-1987 period was preserved because of the wage controls during 1987-91.29
^ata on unit labor costs are not available for Fiji. However, based on data on real GDP and average wage rate and employment in the formal sector, crude estimates of unit labor costs in Fiji were constructed for the period 1970-92.
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E. Concluding Remarks
The analysis of Fiji's exchange rate concludes that there may have been a significant misalignment between the real exchange rate and its long-term equilibrium value during the first half of the 1980s. Since the 1987 devaluation, however, Fiji's real exchange rate has moved broadly in line with a path consistent with the movements in its long-run determinants. The higher inflation in Fiji in the period following the 1987 devaluations seems to have reflected, in part, the pass-through effect of the devaluations on prices. To the extent that there was some overshooting in the real rate, prices have since adjusted to move the real exchange rate to a more appropriate level. Moreover, some appreciation of the real exchange rate would appear to be consistent with the improvement in the terms of trade in recent years.
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References Briguglio, Lino, "Small Island Developing States and Their Economic Vulnerabilities," World Development, Vol. 23 (No. 9, 1995), pp. 1615-32.
Cole, Rodney, and H. Hughes, The Fiji Economy, May 1987. Problems and Prospects (Australia: National Centre for Development Studies, The Australian National University, 1988).
Edwards, Sebastian, Real Exchange Rates, Devaluation and Adjustment: Exchange Rate Policy in Developing Countries (Cambridge, Massachusetts: M.I.T. Press, 1989).
Elek, Andrew, H. Hill, and S. Tabor, "Liberalization and Diversification in a Small Island Economy: Fiji Since the 1987 Coups," World Development, Vol. 21 (No. 5, 1993), pp. 749-69. Engle, Robert, and Clive Granger, eds., Long-Run Economic Relationships: Readings in Cointegration (Oxford: Oxford University Press, 1991).
Fiji, Bureau of Statistics, Current Economic Statistics (Suva, various issues). Fiji, Ministry of Finance and Economic Development, Supplement to the Budget Address (Suva, various issues).
Gani, Azmat, and B. D. Ward, "Migration of Professionals from Fiji to New Zealand: A Reduced Form Supply-Demand Model," World Development, Vol. 23 (No. 9, 1995), pp. 1633-37.
Luckett, Dudley G., Monetary Policy in Fiji (Fiji: Institute of Pacific Studies, University of the South Pacific, 1987)
Macdonald, Ronald, "Long-Run Exchange Rate Modeling," Staff Papers, International Monetary Fund (Washington), Vol. 42 (No. 3, 1995), pp. 457-89.
Sims, C., J. Stock, and M. Watson, "Inference in Linear Time Series with Some Unit Roots," Econometrica, Vol. 58 (January 1990), pp. 113-44.
Streeten, Paul, "The Special Problems of Small Countries," World Development, Vol. 21 (No. 2, 1993), pp. 197-202.
Sturton, Mark, and A. McGregor, Fiji: Economic Adjustment, J987-91 (Hawaii: Pacific Islands Development Program, East-West Center, 1991).
Taylor, Michael, ed., Fiji. Future Imperfect? (Sydney: Allen and Unwin, 1987).
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Table 5. Fiji: Gross Domestic Product by Industrial Origin, 1989-94 (In millions of Fiji dollars; at constant 1977 prices)
Prov. 1989 1990 1991 1992 1993 1994
Agriculture, forestry, and fisheries 189.5 181.9 179.4 184.9 191.2 207.5 Sugarcane 79.0 70.0 66.7 73.1 75.6 88.2 Other crops 26.4 28.0 27.6 26.8 28.2 28.1 Livestock products 7.4 7.5 7.7 7.8 7.6 8.7 Fishing 13.0 11.7 11.7 11.6 13.4 15.0 Forestry 12.5 12.9 13.2 12.2 14.6 14.6 Subsistence 51.2 51.8 52.5 53.3 51.7 52.7 Industry 140.2 141.3 150.1 158.8 151.6 163.9 Mining and quarrying 1.9 1.8 1.2 1.6 1.7 1.5 Manufacturing 92.8 99.1 103.7 102.9 108.0 116.7 Sugar 30.6 27.0 25.8 28.2 29.3 34.3 Other food industries 27.4 29.1 32.1 31.6 30.1 32.9 Other industries 322 40.3 43.1 40.3 45.9 46.7 Self employment 2.6 2.7 2.7 2.7 2.8 2.8 Electricity and water 10.1 10.6 11.0 12.0 12.3 13.3 Building and construction 35.5 29.7 34.2 42.2 29.6 32.3 Services 488.8 526.2 524.4 537.2 553.9 565.7 Distribution (incl. tourism) 160.7 183.4 172.6 168.9 183.4 193.5 Wholesale and retail trade 132.8 153.1 144.0 139.8 152.9 159.4 Hotels, cafes, etc. 27.9 30.4 28.6 29.1 30.4 34.0 Transportation and communications 112.7 121.1 124.1 135.9 136.5 142.3 Transportation 96.2 104.6 107.7 118.5 116.4 121.2 Communications 16.4 16.5 16.4 17.4 20.1 21.1 Finance and insurance 99.4 106.2 107.5 110.2 113.4 116.5 Finance 24.4 28.7 28.9 30.0 31.2 32.8 Insurance 9.0 9.2 9.5 9.8 10.2 10.2 Ownership dwelling 40.0 40.4 41.0 41.6 42.3 43.0 Real estate 26.0 27.8 28.1 28.8 29.7 30.5 Community and social services 138.6 142.5 147.2 150.3 150.0 144.1 Others 1.8 1.7 1.7 1.7 1.8 1.8 Less: Imputed bank service charges 24.4 28.6 28.7 29.8 31.1 32.6 GDP at factor cost 818.5 849.4 853.8 880.9 896.7 937.0 Memorandum items: GDP at current factor cost 1,661.4 1,810.9 1,938.3 2,098.3 2,224.2 2,338.2 GDP at current market prices 1,860.5 2,016.5 2,178.4 2395.5 2,581.4 2,704.9 Sugar production ('000 tons) 461.0 408.0 389.0 426.0 442.2 517.0 (Growth rate) (27.0) (-11.5) (-4.7) (9.5) (3.8) (16.9) Tourist arrivals 250.6 279.0 259.4 278.5 287.5 318.9 (Growth rate) (20.4) (11.3) (-7.0) (7.4) (3.2) (10.9) GDP growth rate (at factor cost) 12.6 3.8 0.5 3.2 1.8 4.5
Source: Fiji Bureau of Statistics.
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Table 6. Fiji: Gross Domestic Product by Expenditure at Current Market Prices, 1989-94
Prov. 1989 1990 1991 1992 1993 1994
(In millions of Fiji dollars)
Consumption 1,553.9 1,746.9 1,949.5 2,136.6 2,355.0 2,390.0 Private II 1250.0 1,393.1 1,588.4 1,700.5 1,841.3 1,935.8 Government 303.9 353.8 361.1 436.1 513.7 454.2
Gross fixed investment 266.1 367.9 302.2 319.9 402.7 403.1 Private 114.8 110.6 119.0 116.0 125.0 133.0 Government 56.8 64.3 78.2 67.9 62.7 71.1 Public enterprises 70.0 158.0 79.0 106.0 177.0 159.0 Change in stocks 24.5 35.0 26.0 30.0 38.0 40.0
Net exports 40.5 -98.3 -73.3 -61.0 -176.3 -88.2 Exports of goods and n.f. services 1,099.4 1,231.4 1,162.2 1,203.3 1,322.7 1,513.3 Imports of goods and n.f . services 1,058.9 1,329.7 1,235.5 1,264.3 1,499.0 1,601.5
GDP at factor cost 1,661.4 1,810.9 1,938.3 2,098.3 2,224.2 2,338.2 Net indirect taxes 199.1 205.6 240.1 297.2 357.2 366.7
GDP at market prices 1,860.5 2,016.5 2,178.4 2,395.5 2,581.4 2,704.9
(In percent of GDP)
Consumption 83.5 86.6 89.5 89.2 91.2 88.4 Private 11 67.2 69.1 72.9 71.0 71.3 71.6 Government 16.3 17.5 16.6 18.2 19.9 16.8
Gross fixed investment 14.3 18.2 13.9 13.4 15.6 14.9 Private 6.2 5.5 5.5 4.8 4.8 4.9 Government 3.1 3.2 3.6 2.8 2.4 2.6 Public enterprises 3.8 7.8 3.6 4.4 6.9 5.9 Change in stocks 1.3 1.7 1.2 1.3 1.5 1.5
Net exports 2.2 -4.9 -3.4 -2.5 -6.8 -3.3 Exports of goods and n.f. services 59.1 61.1 53.4 50.2 51.2 55.9 Imports of goods and n.f. services 56.9 65.9 56.7 52.8 58.1 59.2 Memorandum items: Gross national savings 18.9 14.8 14.0 14.0 11.2 11.7 Private 21 15.6 10.5 10.4 12.3 9.9 8.2 Government 3/ 3.3 4.4 3.5 1.6 1.3 3.5 Foreign savings 4/ -4.6 3.4 -0.1 -0.6 4.4 3.2
Source: Fiji Bureau of Statistics.
I/ Includes statistical discrepancy. 21 Includes public enterprises; derived as a residual. 3/ Defined as total government revenue less current expenditure. 4/ Defined as the external current account balance (with reverse sign), including transfers.
©International Monetary Fund. Not for Redistribution -34- APPENDIX
Table 7. Fiji: Sugarcane Production and Growers' Income, 1989-94
1989 1990 1991 1992 1993 1994
Sugarcane production Area harvested ('000 hectares) 71.0 70.0 73.0 72.0 74.0 74.0 Sugarcane output ('000 metric tons) 4,099.0 4,016.0 3,380.0 3,533.0 3,700.0 4,064.0 Average yield (metric tons/hectare) 57.7 57.4 46.3 49.1 50.0 54.6 Sugar output COOO metric tons) 461.0 408.0 389.0 426.0 442.0 516.6 Cane/sugar ratio 8.9 9.8 8.7 8.3 8.4 7.9
Growers' income (F$ mn.) Gross payments by Fiji Sugar Corporation 198.1 207.9 190.5 246.6 206.8 196.8 First quarter 57.7 59.7 52.1 59.7 35.8 44.5 Second quarter 26.2 28.6 41.9 60.5 41.7 34.8 Third quarter 34.9 35.0 44.9 49.2 44.8 49.2 Fourth quarter 79.3 84.6 51.6 77.2 84.5 68.3
Net payments by Fiji Sugar Corporation (F$ mn.) I/ 144.5 149.7 105.0 142.7 123.5 118.3 First quarter 40.6 40.1 27.2 33.2 25.1 29.9 Second quarter 25.2 24.3 35.9 53.2 35.1 30.3 Third quarter 22.0 23.3 29.9 20.5 17.2 17.5 Fourth quarter 56.7 62.0 12.0 35.8 46.1 40.6
Average prices to grower (F$/metric ton of cane) 47.7 41.3 50.9 52.8 48.0 50.0
Average cost of production (F$/metric ton of cane) 21 20.0 21.2 22.2 22.5 24.0 24.0
Number of growers 22,127 21,771 21,334 22,479 23,334 22,808
Source: Fiji Sugar Corporation Ltd.
I/ Net of all recoveries from growers, including those for harvesting expenses. 21 Based on surveys conducted by the Fiji Sugar Corporation.
©International Monetary Fund. Not for Redistribution -35- APPENDIX
Table 8. Fiji: Primary Production, 1989-94
(In thousands of metric tons, unless otherwise indicated)
1989 1990 1991 1992 1993 1994
Sugarcane 4,099.0 4,016.0 3,380.0 3,533.0 3,700.0 4,064.0 Copra 13.4 19.0 15.2 16.4 10.2 8.4 Paddy 31.8 26.9 29.0 22.5 20.1 18.0 Ginger (matured) 2.3 3.2 4.0 3.4 2.9 4.6 Cocoa 0.4 0.4 0.4 0.3 0.2 0.2
Fish 29.3 29.4 30.0 29.9 30.6 32.5 Commercial 13.5 13.4 13.8 13.5 14.0 15.7 Subsistence 15.8 16.0 16.2 16.4 16.6 16.8
Round logs ('000 cu. m.) 430.0 493.0 453.2 417.0 500.5 501.0
Livestock (metric tons) 9,403.0 9,697.0 10,110.0 10,112.0 9,573.0 12,002.0 Beef 3,136.0 2,903.0 2,847.0 2,624.0 2,429.0 2,306.0 Other V 6,267.0 6,794.0 7,263.0 7,488.0 7,144.0 9,696.0
Sources: Ministry of Agriculture, Forestry and Fishery; and Fiji Bureau of Statistics.
II Chicken, pork, and goat.
©International Monetary Fund. Not for Redistribution -36- APPENDIX
Table 9. Fiji: Industrial Production, 1989-95
(Index 1986 = 100)
1989 1990 1991 1992 1993 1994 1995 I/
Weight
Mining and quarrying 5.0 147.8 144.1 96.1 129.6 132.5 120.5 133.7
Manufacturing 69.7 96.8 106.4 112.9 109.7 117.8 123.6 126.9 Of which: Sugar 14.8 91.8 81.3 77.5 85.0 88.1 103.0 92.7 Canned fish 1.6 191.4 169.4 259.8 265.7 294.9 297.4 342.3 Coconut oil 1.7 53.9 82.3 62.1 65.4 44.1 33.3 34.7 Flour 0.9 115.3 100.6 109.6 113.0 135.5 152.9 158.7 Beer 2.9 109.4 120.8 114.2 108.2 104.6 100.9 106.1 Cigarettes 2.4 93.1 97.9 117.7 89.2 93.2 88.9 88.5 Garments 3.4 257.1 382.1 489.0 338.9 477.0 406.3 434.8 Saw milling 6.6 96.3 92.8 89.9 77.4 89.7 96.3 103.0 Veneer 1.1 112.8 109.3 89.8 97.1 106.0 117.4 125.6 Soap 2.0 93.1 96.0 102.6 100.0 101.6 105.2 116.1 Cement 5.4 62.9 84.4 85.5 91.7 86.2 101.5 106.6
Electricity and water 25.3 109.1 120.6 124.5 135.2 139.0 149.4 156.5
All items 100.0 103.7 111.9 115.0 117.2 123.9 130.0 134.7 (percentage change) 8.9 7.9 2.8 1.9 5.7 4.9 3.6
Source: Fiji Bureau of Statistics, Statistical News (various issues).
I/ March 1995.
©International Monetary Fund. Not for Redistribution -37- APPENDIX
Table 10. Fiji: Tourism Statistics, 1989-94
(In thousands; unless otherwise indicated)
1989 1990 1991 1992 1993 1994
Hotel statistics I/ Rooms available per day (Fourth quarter) 4,457.0 4,217.0 4,456.0 5,054.0 5,065.0 5,144.0 Room nights available (Fourth quarter) 410.0 388.0 410.0 465.0 466.8 469.4 Bed nights available (Fourth quarter) 1,140.0 1,065.0 1,106.0 1,240.0 1,235.0 1,248.0 Room occupancy rate (In percent) 55.9 59.3 51.7 51.2 51.1 54.3 Bed occupancy rate (In percent) 43.1 43.2 38.2 36.5 37.1 40.3
Visitor arrivals 2/ Australia 97.0 103.5 86.6 87.4 77.6 85.5 Canada 16.5 18.4 15.2 12.6 12.4 12.0 Japan 13.8 21.6 27.8 36.0 38.2 39.8 New Zealand 28.1 29.4 30.6 37.2 40.8 53.5 Other Europe 23.9 27.2 26.3 29.5 29.8 31.0 Pacific islands 18.1 17.5 16.2 15.6 17.0 17.9 United Kingdom 11.4 16.8 16.6 16.8 20.2 23.9 United States 34.4 36.9 31.8 34.8 42.5 45.4 Other 7.3 7.5 8.2 8.6 8.9 9.9
Totals/ 250.6 279.0 259.4 278.5 287.5 318.9
Average length of stay (days) 9.2 8.8 8.6 8.7 8.6 8.5 Visitor days (millions) 2.3 2.5 2.2 2.4 2.4 2.7 Expenditure (F$ mn.) 269.6 294.6 286.3 328.1 363.6 419.6
Source: Fiji Bureau of Statistics.
I/ Excludes hotels with fewer than 25 beds and guest houses. 21 Excludes cruise ship passengers. 3/ Components may not add up to totals owing to rounding.
©International Monetary Fund. Not for Redistribution -38- APPENDIX
Table 11. Fiji: Tax-Free Factories Sector, 1989-94
1989 1990 1991 1992 1993 1994
Projects implemented (number) I/ 83.0 114.0 110.0 119.0 132.0 141.0 (Of which: Garments) 53.0 78.0 79.0 84.0 89.0 92.0
Employment ('000) 7.9 9.5 10.2 11.9 12.4 12.6 (Ofwhich: Garments) 6.4 7.8 8.7 10.1 10.5 10.7
Gross investment (F$ mn.) I/ 34.7 53.0 56.3 70.3 86.4 88.0 (Ofwhich: Garments) 24.0 37.0 36.0 45.0 80.3 80.9
Exports (F$ mn.) 157.4 185.4 199.8 169.6 (Ofwhich: Garments) 99.3 115.8 131.1 116.8 128.8 141.0
Source: Data provided by the Fiji authorities.
I/ Cumulative totals.
©International Monetary Fund. Not for Redistribution -39- APPENDIX
Table 12. Fiji: Consumer Prices, 1989-95 I/
(Annual average percentage change)
New Old Weight Weight 1989 1990 1991 1992 1993 1994 1995 21
Food 35.4 33.9 10.1 8.2 1.6 -0.4 6.8 0.5 0.4
Drinks and tobacco 6.1 6.4 3.2 7.6 2.9 6.5 4.7 5.9 6.3
Housing 16.5 18.6 1.5 5.3 15.6 17.2 7.8 0.6 1.6
Heating and lighting 4.9 4.9 -0.1 10.7 11.8 -1.9 3.7 -0.7 -0.5
Durable household goods 6.5 7.6 7.8 5.3 3.2 3.6 2.4 -0.2 0.2
Clothing and footwear 5.4 6.3 9.2 5.0 3.0 1.5 -0.5 -0.6 1.8
Transportation 12.9 11.3 2.2 10.7 14.4 3.5 3.9 0.7 2.4
Services 7.6 6.7 1.4 20.6 10.0 11.9 4.4 3.0 4.3
Miscellaneous 4.8 4.3 9.2 5.2 3.6 3.0 2.7 -0.5 0.2
All items (average) 100 100 6.2 8.2 6.5 4.9 5.2 0.6 1.5 All items (end of period) 4.9 9.4 3.5 6.3 3.0 1.2 2.7
Source: Fiji Bureau of Statistics, Statistical News (various issues).
I/ Consumer price data after 1993 reflect rebased series using 1993 as base year. 21 Twelve-month average through August
©International Monetary Fund. Not for Redistribution -40- APPENDIX
Table 13. Fiji: Paid Employment by Sector, 1989-94 I/
(In thousands of persons)
Prov. 1989 1990 1991 1992 1993 1994
Economic activity
Agriculture, forestry, and fisheries 2.1 2.3 2.6 2.2 2.0 2.3 Mining and quarrying 1.5 1.3 1.1 1.4 1.9 1.9 Manufacturing 20.5 21.9 23.0 21.2 23.5 23.8 Electricity, gas, and water 2.3 2.4 2.7 2.7 2.7 2.2 Building and construction 5.3 6.1 6.7 8.5 6.8 7.4 Distribution (including tourism) 14.6 14.6 14.1 13.6 13.7 14.1 Transportation and communications 9.4 9.8 9.0 9.7 10.2 10.0 Finance and insurance 5.5 5.9 5.7 5.8 5.9 6.0 Other services 25.6 25.7 26.8 27.2 27.6 27.7
Total 86.7 90.0 91.7 92.3 94.3 95.4
Employing sector
Wage earners 52.5 50.9 52.3 52.8 53.9 54.7 Central government 9.2 8.9 9.1 9.2 9.4 9.5 Local government 0.6 0.6 0.6 0.6 0.6 0.6 Public enterprises 3.3 3.2 3.3 3.3 3.4 3.4 Private corporations 10.0 9.7 10.0 10.1 10.3 10.4 Other private sector 29.4 28.5 29.3 29.6 30.2 30.8
Salary earners 37.2 37.9 39.1 38.3 40.1 40.7 Central government 18.1 18.4 18.9 19.1 19.5 19.6 Local government 0.4 0.4 0.4 0.4 0.4 0.4 Public enterprises 3.5 3.6 3.7 3.7 3.8 3.8 Private corporations 9.6 9.8 10.0 10.1 10.3 10.4 Other private sector 5.6 5.7 6.1 5.0 6.1 6.1
Memorandum items: Population 724.0 732.0 742.0 758.0 765.0 777.3 Labor force 21 247.8 252.6 258.1 263.6 268.9 271.9 Employment 21 232.7 236.4 242.9 249.4 253.1 256.1 Unemployment rate (In percent) 6.1 6.4 5.9 5.4 5.9 5.8
Source: Fiji Bureau of Statistics, Labor Market Quarterly Surveys (various issues).
If Paid employment refers to wage and salary earners as opposed to subsistence workers and self-employed. Normally, the data are based on annual employment surveys of which 1990 was the last one published. These surveys exclude most cane cutters and other seasonal and temporary workers whose period of employment does not coincide with the survey period which is the last week of June. Figures for June 1990-1994, are from the Quarterly Sample Survey on Paid Employment. 21 Labor force estimated by applying 1986 census labor force participation rates to age-specific population estimates. Numbers in employment include paid employees, unpaid workers estimated using slightly modified census proportions, and estimates of cane cutters. Unemployment is a residual item.
©International Monetary Fund. Not for Redistribution -41 - APPENDIX
Table 14. Fiji: Domestic Sales and Prices of Petroleum Products, 1989-94
(In millions of liters)
1989 1990 1991 1992 1993 1994
Domestic sales 200.2 222.4 219.7 225.9 242.7 258.3 Motor fuel 50.1 54.7 53.3 53.3 58.0 59.8 Kerosene 21.7 21.9 20.3 14.8 21.8 23.5 Automotive distillate 95.5 107.1 111.8 115.5 121.7 127.1 Industrial distillate 27.9 32.4 26.3 35.3 33.8 39.7 Residual fuel oil 5.0 6.3 8.0 7.0 7.4 8.1
Aviation fuel and bunkers 136.2 101.0 139.0 124.1 134.1 141.2 Aviation turbine fuel 107.1 69.6 110.0 85.9 95.6 109.5 Aviation gasoline 0.1 0.1 0.1 1.5 1.5 1.6 Automotive distillate 10.2 15.6 10.8 12.9 17.2 11.1 Industrial distillate 11.4 7.7 6.3 6.9 7.1 6.8 Residual fuel oil 7.4 8.0 11.8 16.9 12.7 12.2
Domestic prices I/ Gasoline 0.7 0.8 0.8 0.8 0.8 0.8 Diesel 0.5 0.6 0.6 0.6 0,6 0.6 Benzine 0.5 0.5 0.5 0.5 0.5 0.5 Outboard fuel 0.6 0.7 0.8 0.8 0.8 0.8 Electricity (per kWh) 21 18.6 20.4 22.4 24.5 23.5 22.5
Source: Data provided by the Fiji authorities.
I/ Retail prices are for end of period and in F$/liter. 2/ Increase from 1991 level reflects imposition of the VAT.
©International Monetary Fund. Not for Redistribution -42- APPENDIX
Table 15. Fiji: Wage and Salary Earnings, 1989-94 I/
1989 1990 1991 1992 1993 1994
(In Fiji dollars)
Mean daily wages 12.64 13.36 14.03 15.01 15.76 16.23
Agriculture 11.92 10.96 11.51 12.31 12.93 13.31 Mining 13.04 14.80 15.54 16.63 17.46 17.98 Manufacturing 11.36 11.44 12.01 12.85 13.49 13.89 Construction 13.92 15.36 16.13 17.26 18.12 18.66 Electricity 15.60 18.16 19.07 20.40 21.43 22.07 Commerce 12.08 12.80 13.44 14.38 15.10 15.55 Transport 14.56 15.76 16.55 17.71 18.59 19.14 Services 13.04 13.96 14.66 15.69 16.49 16.98
Mean annual salaries 8,055 9,342 9,809 10,495 11,020 11,350
Agriculture 7,602 8,627 9,058 9,692 10,177 10,482 Mining 13,610 16,724 17,560 18,789 19,728 20,319 Manufacturing 9,728 10,668 11,201 11,985 12,584 12,961 Construction 7,188 10,618 11,149 11,929 12,526 12,902 Electricity 9,198 9,406 9,876 10,567 11,096 11,429 Commerce 7,839 8,920 9,366 10,022 10,523 10,838 Transport 8,711 9,761 10,249 10,966 11,515 11,860 Services 8,536 9,662 10,145 10,855 11,398 11,740
(Percentage change)
Memorandum items: Wages -2.5 5.7 5.0 7.0 5.0 3.0 Salaries 14.4 16.0 5.0 7.0 5.0 3.0
Source: Data provided by the Fiji authorities.
I/ For 1989-90, annual employment survey data collected in June, excluding cane cutters and other seasonal and temporary workers whose period of employment does not coincide with the survey period. 2/ Data for 1991, 1992, 1993, and 1994 are estimated by adjusting for cost of living increases by 5, 7, 5, and 3 percent respectively.
©International Monetary Fund. Not for Redistribution -43- APPENDIX
Tablel6. Fiji: Central Government Finances, 1989-95
(In percent of GDP at market prices)
Prov. Budget 1989 1990 1991 1992 1993 1994 1995
(In millions of Fiji dollars)
Total revenue and grants 480.0 551.2 576.2 602.5 654.0 697.8 693.8 Tax revenue 370.5 438.1 446.6 479.1 523.6 562.8 5783 Other 109.5 113.1 129.6 123.4 130.4 135.0 115.5 Of which: Grants 11.8 8.7 7.3 7.2 4.1 4.5 5.1
Expenditure 520.6 545.7 6053 671.2 741.5 733.0 755.7 Current 400.2 450.2 487.4 566.6 647.1 626.5 661.5 Wages and salaries 202.0 2323 255.8 283.8 304.6 309.1 310.1 Interest 73.1 78.6 73.1 71.5 75.6 73.2 97.6 Subsidies, transfers, and pensions 59.8 69.1 76.5 88.3 96.0 107.0 110.7 Goods and services 65.3 70.2 82.0 1063 1353 103.8 101.9 VAT 0.0 0.0 0.0 16.7 35.6 33.4 41.2 Capital 120.4 95.5 117.9 104.6 94.4 106.5 94.2 Construction 44.1 47.9 53.7 52.5 49.2 56.8 54.1 Purchases 9.4 8.8 20.3 9.7 9.5 8.3 5.8 Grants and transfers 66.9 38.8 43.9 42.4 35.7 41.4 34.3 Of which: Loans 28.6 6.8 10.2 9.5 12.4 17.8 11.7
Overall balance -40.6 5.5 -29.1 -68.7 -87.5 -35.2 -61.9
Financing 40.6 -5.5 29.1 68.7 87.5 35.2 61.9 Domestic 35.5 3.6 50.6 83.4 99.5 29.9 58.2 Banking system 0.3 -8.3 24.4 27.5 -3.2 -34.5 -8.7 Other 35.2 11.9 26.2 55.9 102.7 64.4 66.9 External 5.1 -9.1 -21.5 -14.7 -12.0 53 3.7 Borrowing 34.0 20.4 22.7 11.3 11.8 28.8 28.0 Repayments 28.9 29.5 44.2 26.0 23.8 23.5 243
(In percent of GDP at current market prices)
Total revenue and grants 25.8 27.3 26.5 25.2 25.3 25.8 24.8 Of which: Tax revenue 19.9 21.7 20.5 20.0 20.3 20.8 20.7
Expenditure 28.0 27.1 27.8 28.0 28.7 27.1 27.0 Current 21.5 22.3 22.4 23.7 25.1 23.2 23.7 Wages and salaries 10.9 11.5 11.7 11.8 11.8 11.4 11.1 Interest 3.9 3.9 3.4 3.0 2.9 2.7 3.5 Subsidies, transfers, and pensions 3.2 3.4 3.5 3.7 3.7 4.0 4.0 Goods and services 3.5 3.5 3.8 4.4 5.2 3.8 3.6 VAT expenditure 0.0 0.0 0.0 0.7 1.4 1.2 1.5 Capital 6.5 4.7 5.4 4.4 3.7 3.9 3.4
Overall balance -2.2 0.3 -13 -2.9 -3.4 -13 -2.2
Financing 2.2 -0.3 1.3 2.9 3.4 13 2.2 Domestic 1.9 0.2 2.3 3.5 3.9 1.1 2.1 External 0.3 -0.5 -1.0 -0.6 -0.5 0.2 0.1
Memorandum items: Expenditure on defense 2.3 2.2 2.2 1.9 1.9 1.8 Public debt 41.7 38.5 36.9 35.0 35.7 35.0 37.6 External 12.3 11.3 9.6 8.4 7.5 7.0 7.0 Domestic 29.4 27.1 273 26.6 28.2 28.0 30.7 GDP at market prices (F$ mn.) 1,861 2,017 2,178 2,3% 2,581 2,705 2,7%
Sources: Government of the Republic of Fiji, "Supplement to the Budget Address."
©International Monetary Fund. Not for Redistribution -44- APPEMDIX
Table 17. Fiji: Central Government Revenue and Grants, 1989-95
Prov. Budget 1989 1990 1991 1992 1993 1994 1995
(In millions of Fiji dollars)
Total revenue and grants 479.99 551.24 576.15 602.49 653.80 697.81 693.77
Tax revenue 370.50 438.10 446.60 479.10 523.56 562.78 57830
Income tax 167.40 195.70 206.90 194.00 188.51 202.00 20820 Individual 112.10 116.50 119.70 109.90 94.81 111.60 100.69 Corporate 55.30 79.20 87.20 84.10 93.70 90.40 107.51
Taxes on goods and services 57.50 72.70 76.80 136.80 19833 21328 215.00 Value-added tax 0.00 0.00 0.00 76.90 156.40 169.77 172.00 Excise duties 42.70 52.40 56.40 48.20 40.89 42.81 43.00 Turnover taxes 14.80 20.30 20.40 11.70 1.04 0.70 0.00
Taxes on international trade 145.60 169.70 162.90 14830 136.72 147.50 155.10 Import duties 138.80 154.70 15720 138.50 127.64 13725 145.00 Export duties 6.80 15.00 5.70 9.80 9.08 10.25 10.10
Nontax revenue 91.14 100.10 116.85 109.89 121.94 126.24 105.54 Peacekeepers 17.95 17.50 28.70 23.88 28.10 19.40 17.24 RBF profits 10.21 13.35 14.20 11.95 14.30 19.26 3.00 FPTL 3.46 4.42 6.20 4.20 4.25 4.64 4.91 P.E. dividends 4.93 6.02 7.00 7.07 7.56 9.21 10.83 Fees and charges 51.99 55.84 58.30 59.29 63.85 70.67 66.36 Other 2.60 2.97 2.45 3.50 3.88 3.06 3.20
Capital revenue 18.35 13.04 12.70 13.50 8.30 8.79 9.93 Grants 11.80 8.70 7.50 7.20 4.10 4.47 5.10 Capital 6.55 4.34 5.20 6.30 4.20 4.32 4.83
(In percent of GD?)
Total revenue and grants 25.80 27.34 26.45 25.15 25.33 25.80 24.82
Tax revenue 19.91 21.73 20.50 20.00 20.28 20.81 20.69
Income tax 9.00 9.70 9.50 8.10 7.30 7.47 7.45 Individual 6.03 5.78 5.49 4.59 3.67 4.13 3.60 Corporate 2.97 3.93 4.00 3.51 3.63 3.34 3.85
Taxes on goods and services 3.09 3.61 3.53 5.71 7.68 7.88 7.69 Value—added tax 0.00 0.00 0.00 3.21 6.06 6.28 6.15 Excise duties 2.30 2.60 2.59 2.01 1.58 1.58 1.54 Turnover taxes 0.80 1.01 0.94 0.49 0.04 0.03 0.00
Taxes on international trade 7.83 8.42 7.48 6.19 5.30 5.45 5.55 Import duties 7.46 7.67 7.22 5.78 4.94 5.07 5.19 Export duties 0.37 0.74 0.26 0.41 0.35 0.38 0.36
Nontax revenue 4.90 4.96 5.36 4.59 4.72 4.67 3.78 Peacekeepers 0.96 0.87 1.32 1.00 1.09 0.72 0.62 RBF profits 0.55 0.66 0.65 0.50 0.55 0.71 0.11 FPTL 0.19 0.22 0.28 0.18 0.16 0.17 0.18 P.E. dividends 0.26 0.30 0.32 0.30 0.29 0.34 0.39 Fees and charges 2.79 2.77 2.68 2.48 2.47 2.61 2.37 Other 0.14 0.15 0.11 0.15 0.15 0.11 0.11
Capital revenue 0.99 0.65 0.58 0.56 0.32 0.32 0.36 Grants 0.63 0.43 0.34 0.30 0.16 0.17 0.18 Capital 0.35 0.22 0.24 0.26 0.16 0.16 0.17
Source: Government of the Republic of Fiji, "Supplement to the Budget Address."
©International Monetary Fund. Not for Redistribution -45- APPENDIX
Table 18. Fiji: Central Government Debt, 1989-94
(In millions of Fiji dollars; end of period)
1989 1990 1991 1992 1993 1994
Domestic debt by instrument 546.5 547.1 593.9 637.8 733.4 792.0
Treasury bills 21.0 34.0 49.0 67.3 123.5 64.4 Bonds 268.2 260.4 293.8 319.4 360.6 478.3 Inscribed stock 257.3 252.7 251.1 251.1 249.3 249.3
Domestic debt by holder 546.5 547.1 593.9 637.8 733.4 792.0
Reserve Bank of Fiji 9.0 0.1 0.1 0.0 6.7 0.0 Treasury bills 4.0 0.0 0.0 0.0 6.7 0.0 Bonds 5.0 0.1 0.1 0.0 0.0 0.0
Commercial banks 70.3 60.4 82.1 91.6 89.8 80.7 Treasury bills 10.0 5.0 21.0 24.0 34.1 26.2 Bonds 60.3 55.4 61.1 67.6 55.7 54.5
Fiji National Provident Fund 375.8 397.0 444.6 481.8 573.9 642.1 Treasury bills 0.0 15.0 24.0 40.8 82.8 36.0 Bonds 118.5 129.3 169.5 189.9 241.8 356.8 Inscribed stock 257.3 252.7 251.1 251.1 249.3 249.3
Insurance companies 62.6 59.3 52.2 52.0 54.3 58.3 Treasury bills 0.0 0.0 0.0 2.5 0.0 0.0 Bonds 62.6 59.3 52.2 49.5 54.3 58.3
Sinking fund 7.1 22.9 7.8 7.4 5.7 7.9 Treasury bills 0.0 14.0 4.0 0.0 0.0 2.2 Bonds 7.1 8.9 3.8 7.4 5.7 5.7
Other 21.7 7.4 7.1 5.0 3.0 3.0 Treasury bills 7.0 0.0 0.0 0.0 0.0 0.0 Bonds 14.7 7.4 7.1 5.0 3.0 3.0
Foreign debt 228.7 228.4 209.4 200.6 187.5 187.3
Total government debt 775.2 775.5 803.3 838.4 920.9 979.3
Memorandum item: Total government debt excluding amounts owed to sinking fund 768.1 752.6 795.5 831.3 915.2 971.4
Source: Data provided by the Fiji authorities.
©International Monetary Fund. Not for Redistribution -46- APPENDIX
Table 19. Fiji: Financial Position of Major Public Enterprises, 1989-93
(Net worth in millions of Fiji dollars; end of period)
1989 1990 1991 1992 1993
Non financial public enterprises Agriculture, forestry, and fisheries Fiji Meat Industry Board 3.5 3.6 3.6 3.9 4.2 Fiji Pine Limited -20.1 -38.9 61.8 62.2 61.5 Fiji Sugar Corporation I/, 21 88.4 92.7 96.2 105.5 108.9 IKA Corporation Limited 3/ 2.7 1.0 0.7 0.6 -1.0 National Trading Corporation I/, 21 3.4 3.5 3.6 4.9 4.6 Pacific Fishing Company 11 6.4 8.5 11.8 11.6 9.4 Rewa Rice Limited 21 1.8 1.7 2.2 2.7 Yalavou Rural Development Board 0.0 0.0 0.0 0.6 0.5 Yaqara Pastoral Company Limited 0.5 0.8 1.2 1.9 1.9
Housing and urban development Housing Authority 2.7 1.7 1.6 2.1 4.3 Public Rental Board -11.4 •10.3 -10.6 -11.7 -11.6
Infrastructure and aviation Civil Aviation Authority 4/ 38.0 40.5 42.3 43.5 237.9 Ports Authority of Fiji 34.1 34.6 35.0 34.4 27.8
Air transportation Air Fiji Limited 1.2 0.9 1.3 0.6 -0.1 Air Pacific Limited 21 13.2 31.5 32.2 34.4 37.0
Electricity and telecommunications Fiji Electricity Authority -5.9 -3.9 13.2 204.4 224.8 Fiji International Telecommunications Limited 18.4 21.5 22.5 23.5 20.5 Fiji Post and Telecommunications Limited 21 69.5 81.5 86.0 87.0 89.9 Fiji Broadcasting Commission 1.3 1.1 1.1 0.8 2.1
Financial public enterprises Financial institutions Fiji Development Bank I/, 4/ 49.1 50.6 54.0 60.0 Home Finance Limited 4.1 4.2 4.4 4.6 4.9
Banking institutions National Bank of Fiji 4/ 5.6 7.5 9.6 13.1 14.1 Reserve Bank of Fiji 58.5 59.4 58.4 60.3 ...
Memorandum item: Fiji National Provident Fund 4/ 769.1 858.8 960.0 1085.1 1209.0
Source: Government of the Republic of Fiji, Supplement to the Budget (various issues).
I/ Operating profit is shown after interest, and before income tax and extraordinary items. 2! Financial year ended March of the subsequent calendar year. 3/ The 1990 results for IKA are for the period since incorporation on February 2, 1990 to the end of the same calendar year. 4/ Financial year ended June of the same calendar year.
©International Monetary Fund. Not for Redistribution -47- APPENDIX
Table 20. Fiji: Operating Profits and Losses of Major Public Enterprises, 1989-94 I/
(In millions of Fiji dollars)
Government equity shares 1989 1990 1991 1992 1993 1994 (percent)
Non financial pubttc enterprises 72.8 50.9 52 51.2 48.4 -2.6 Agriculture, forestry, and fisheries 30.1 10.5 12.7 14.7 6.2 1.1 Fiji Meat Industry Board 100 0.0 0.0 -0.1 0.2 0.4 ... Fiji Pine Limited 99.9 -0.1 -1.9 0.7 0.5 -0.8 ... Fiji Sugar Corporation I/, 21 68 29.7 11.5 10.2 17.0 10.3 ... IKA Corporation Limited 3/ 100 -0.1 -0.7 -1.1 -1.1 -1.6 ... National Trading Corporation I/, 21 100 0.0 0.1 0.1 -0.7 -0.3 ... Pacific Fishing Company 11 98 2.0 2.2 3.2 -0.1 -2.1 Rewa Rice Limited 21 100 -0.5 -0.3 0.2 -0.6 0.2 1.1 Yalavou Rural Development Board 100 -0.6 -0.5 -0.5 -0.5 0.1 ... Yaqara Pastoral Company Limited 100 -0.3 0.1 0.0 0.0 0.0 ...
Housing and urban development -3.0 -3.8 -5.1 -2.9 0.6 0.0 Housing Authority 100 -1.1 -1.1 -1.9 0.2 0.5 ... Public Rental Board 100 -1.9 -2.7 -3.2 -3.1 0.1 ...
Infrastructure and aviation 4.1 2.5 2.6 0.7 -4.4 -2.6 Civil Aviation Authority 4/ 100 2.1 1.6 1.8 1.3 2.4 ... Ports Authority of Fiji 100 2.0 0.9 0.8 -0.6 -6.8 -2.6
Air transportation 17.6 18.8 3.5 2.9 4.5 0.0 Air Fiji Limited 11.5 0.1 -0.1 -0.4 -0.5 -0.7 ... Air Pacific Limited 21 78 17.5 18.9 3.9 3.4 5.2 ...
Electricity and telecommunications 24.0 22.9 38.3 35.8 41.5 -1.1 Fiji Electricity Authority 100 2.9 -4.1 13.2 15.1 15.6 ... Fiji International Telecommunications Limited 51 14.9 16.2 16.2 16.9 18.9 ... Fiji Post and Telecommunications Limited 2 100 7.3 12.0 10.1 4.9 8.2 Fiji Broadcasting Commission 100 -1.1 -1.2 -1.2 -1.1 -1.2 -1.1
Financial public enterprises 17.0 16.7 16.1 19.9 22.5 0.0 Financial institutions 1.6 1.6 1.7 1.9 1.0 0.0 Fiji Development Bank I/, 4/ 100 0.6 0.7 0.9 1.1 ...... Home Finance Limited 25 1.0 0.9 0.8 0.8 1.0
Banking institutions 15.4 15.1 14.4 18.0 21.5 0.0 National Bank of Fiji 4/ 100 0.8 0.9 1.0 2.2 2.2 ... Reserve Bank of Fiji 100 14.6 14.2 13.4 15.8 19.3 ...
Total 89.8 67.6 68.1 71.1 70.9 -2.6
Memorandum item: Fiji National Provident Fund 4/ 26.2 31.7 31.1 36.7 36.9 ...
Source: Government of the Republic of Fiji, Supplement to the Budget (various issues).
I/ Operating profit is shown after interest, and before income tax and extraordinary items 21 Financial year ended March of the subsequent calendar year. 3/ The 1990 results for IKA are for the period since incorporation on February 2,1990 to the end of the same calendar year. 4/ Financial year ended June of the same calendar year.
©International Monetary Fund. Not for Redistribution -48- APPENDIX
Table 21. Fiji: Budgetary Aj^ropriations to Major Public Enterprises, 1989-94
(In millions of Fiji dollars)
1989 1990 1991 1992 1993 1994
Non financial publk enterprises 23.4 13.9 30.2 24.0 25.9 26.9 Agriculture, forests, and fisheries 9.1 5.4 11.8 4.9 3.6 4.8 Fiji Meat Industry Board 0.0 0.0 0.0 0.0 0.0 0.0 Fiji Pine Limited 4.5 3.0 5.5 3.3 3.3 3.3 Fiji Sugar Corporation 0.0 0.0 0.0 0.0 0.0 0.0 IKA Corporation Limited 3.4 2.0 1.5 1.0 0.0 0.0 National Trading Corporation 0.0 0.0 0.0 0.0 0.0 0.0 Pacific Fishing Company 1.0 0.0 4.5 0.0 0.0 1.5 Rewa Rice Limited 0.0 0.0 0.0 0.0 0.0 0.0 Yalavou Rural Development Board 0.2 0.4 0.3 0.6 0.3 0.0 Yaqara Pastoral Company Limited 0.0 0.0 0.0 0.0 0.0 0.0
Housing and urban development 1.0 3.2 7.6 7.4 7.8 8.1 Housing Authority 1.0 0.2 4.4 5.4 6.3 6.2 Public Rental Board 0.0 3.0 3.2 2.0 1.5 1.9
Infrastructure and aviation 1.5 2.7 3.2 3.7 5.1 5.7 Civil Aviation Authority 1.5 2.7 3.2 3.7 5.1 5.7 Ports Authority of Fiji 0.0 0.0 0.0 0.0 0.0 0.0
Air transportation 2.5 0.0 0.0 0.0 0.0 0.0 Air Fiji Limited 0.0 0.0 0.0 0.0 0.0 0.0 Air Pacific Limited 2.5 0.0 0.0 0.0 0.0 0.0
Electricity and telecommunications 9.3 2.6 7.6 8.0 9.4 8.3 Fiji Electricity Authority 4.0 0.0 0.0 3.2 5.0 0.0 Fiji International Telecommunications Limited 0.0 0.0 0.0 0.0 0.0 0.0 Fiji Post and Telecommunications Limited 4.3 1.6 6.6 3.3 3.3 7.1 Fiji Broadcasting Commission 1.0 1.0 1.0 1.4 1.0 1.2
Financial publk enterprises 5.0 5.3 9.8 9.8 7.0 4.5 Financial institutions 4.0 4.3 8.8 8.8 6.5 4.5 Fiji Development Bank 4.0 4.3 8.8 8.8 6.5 4.5 Home Finance Limited 0.0 0.0 0.0 0.0 0.0 0.0
Banking institutions 1.0 1.0 1.0 1,0 0.5 0.0 National Bank of Fiji 1.0 1.0 1.0 1.0 0.5 0.0 Reserve Bank of Fiji 0.0 0.0 0.0 0.0 0.0 0.0
Total 28.4 19.2 40.0 33.8 32.9 31.4
Source: Government of the Republic of Fiji, Supplement to the Budget (various issues).
©International Monetary Fund. Not for Redistribution -49- APPENDIX
Table 22. Fiji: Monetary Survey, 1989-95
March June Sept. Dec March J une
1 989 1 990 1991 1 992 199 1994 195
(In millions of Fiji dollars; end of period)
Foreign assets (net) 311.3 373.0 376.0 462.5 406.2 350.9 340.3 394.5 381.0 332.5 313.7
Domestic credit 628.2 762.7 935.9 1061.9 1198.2 1258.0 1292.6 1283.6 1250.7 1293.4 1313.9 Claims on Government (net) 19.4 11.1 35.5 63.0 59.8 85.7 92.6 44.1 25.3 47.1 41.6 Claims on official entities 68.0 75.2 97.6 118.5 144.1 155.7 156.6 176.9 144.5 148.5 168.0 Claims on private sector 540.8 676.4 802.9 880.4 994.4 1016.5 1043.4 1062.6 1080.9 1097.9 1104.3
Broad money (M2) 789.2 988.2 1129.8 1291.5 1377.5 1376.4 1416.5 1400.1 1414.4 1394.6 1414.1 Narrow money (Ml) 263.6 265.3 274.4 314.1 363.8 326.7 347.1 335.2 344.6 338.1 372.2 Of which: Currency outside banks 78.0 86.0 91.0 103.1 112.4 103.0 99.3 105.8 115.6 101.0 107.3 Quasi-money 525.6 722.9 855.4 977.4 1013.7 1049.7 1069.4 1064.9 1069.7 1056.5 1041.9
Reserve Bank notes 36.6 35.5 55.6 103.7 64.4 74.5 79.2 112.8 82.5 71.3 66.4
Other items (net) 113.7 112.0 126.5 129.2 162.5 158.0 137.1 165.1 134.7 160.0 147.7
(Twelve-month rate of change)
Domestic credit 27.8 21.4 22.7 13.5 12.8 12.5 15.7 10.7 4.4 2.8 1.6 Claims on Government (net) 100.4 -42.8 219.8 77.5 -5.1 -1.3 54.5 -29.2 -57.7 -45.1 -55.1 Claims on official entities -3.5 10.6 29.8 21.4 21.6 15.2 22.7 34.8 0.3 -4.6 7.3 Claims on private sector 31.4 25.1 18.7 9.7 12.9 13.4 12.2 10.0 8.7 8.0 5.8
Broad money (M2) 9.4 25.2 14.3 14.3 6.7 5.0 8.2 2.6 2.7 1.3 -0.2 Narrow money (Ml) -3.4 0.7 3.4 14.4 15.8 0.7 4.7 -8.2 -5.3 3.5 7.2 Quasi-money 17.2 37.5 18.3 14.3 3.7 6.5 9.4 6.6 5.5 0.6 -2.6
(Change as a percent of M2 at the beginning of period)
Foreign assets (net) -0.7 7.8 0.3 7.7 -4.4 -3.2 -3.7 1.9 -1.8 -1.3 -1.9 Domestic credit 18.9 17.0 17.5 11.2 10.6 10.7 13.4 9.1 3.8 2.6 1.5 Public sector 1.7 -2.0 0.2 0.6 -2.2 -1.7 0.3 -4.7 -2.5 -2.3 -4.4 Private sector 17.9 17.2 12.8 6.9 8.8 9.2 8.7 7.1 6.3 5.9 4.3
Memorandum items: Money velocity (M2) 11 2.5 2.2 2.1 2.0 1.9 ... 1.9 Money multiplier (M2) 21 5.2 5.8 6.0 5.7 6.3 6.9 6.7 6.8 6.3 6.9 6.7 Reserve money (percent change; 12-month) -23.7 11.3 11.7 19.7 -2.9 -7.6 3.7 -3.6 1.7 0.6 -1.3 Interest rate (in percent, end of period) 3/ 7.5 8.5 8.5 8.0 7.0 8.0 8.0 8.0 8.0 8.0 8.0 Interbank rate 3.0 4.7 5.0 3.0 4.7 5.1 2.8 3.1 4.0 5.3 4.7
Inflation (in percent, period average) 6.2 8.2 6.5 4.9 5.2 3.7 1.9 1.2 0.6 0.7 1.0
Sources: Reserve Bank of Fiji, Quarterly Review (various issues); and IMF, Economic Information System.
I/ Ratio of GDP to broad money (monthly averages for 1989-94). 21 Ratio of broad money to reserve money (December). 3/ On 12-24-month time deposits of less than F$250,000.
©International Monetary Fund. Not for Redistribution - 50 - APPENDIX
Table 23. Fiji: Assets of the Financial System, 1985-94 I/
(In millions of Fiji dollars; end of period)
Banking System Nonbank Of which: -- Financial System — Central Commercial Financial Fiji National F$ ran. Ratio to Total Bank Banks 21 Institutions 3/ Provident Fund GDP
1985 754 186 568 747 482 1,501 1.3 (50) (12) (38) (50) (32) (100)
1986 976 258 718 714 599 1,690 1.3 (58) (15) (42) (42) (35) (100)
1987 877 241 636 916 628 1,793 1.3 (49) (13) (35) (51) (35) (100)
1988 1,203 400 803 1,024 729 2,227 1.6 (54) (18) (36) (46) (33) (100)
1989 1,330 406 924 1,140 811 2,470 1.5 (54) (16) (37) (46) (33) (100)
1990 1,639 463 1,176 1,215 908 2,854 1.6 (57) (16) (41) (43) (32) (100)
1991 1,797 483 1,314 1,373 1,018 3,170 1.6 (57) (15) (41) (43) (32) (100)
1992 2,082 608 1,474 1,557 1,148 3,639 1.7 (57) (17) (41) (43) (32) (100)
1993 2,182 532 1,650 1,793 1,287 3,975 1.8 (55) (13) (42) (45) (32) (100)
1994 2,156 434 1,722 2,011 1,417 4,167 1.8 (52) (11) (41) (48) (34) (100)
Source: Reserve Bank of Fiji.
I/ Figures in parentheses reflect shares in total assets. 21 Australia and New Zealand Banking Group; Bank of Baroda; Habib Bank (as of 1991); National Bank of Fiji, Westpac Banking Corporation; and Bank of Hawaii (as of 1993). 3/ Fiji Development Bank; Fiji National Provident Fund; Home Finance Company Limited; Housing Authority; Merchant Bank of Fiji (as of 1992); Unit Trust of Fiji; and Credit Corporation Limited (as of 1993).
©International Monetary Fund. Not for Redistribution Table 24. Fiji: Balance Sheet of Monetary Authorities, 1989-95 I/
(In millions of Fiji dollars; end of period)
March June Sept. Dec. March June IQftiyoOy ico\yy\jn 100iyy 1i iyy1009z iyyj1QQ3 19Q4 1005
Foreign assets 315.2 381.5 399.7 498.2 414.8 360.3 355.2 405.1 384.8 350.7 351.1
Claims on Government 9.0 0.1 0.1 0.0 6.7 7.4 3.9 0.0 0.0 0.5 0.0
Claims on official entities 0.1 0.1 0.1 0.1 2.2 10.4 12.8 10.4 0.1 0.1 1.2
Claims on commercial banks 6.3 5.0 0.0 0.0 0.0 3.1 0.1 0.1 20.1 21.0 29.0
Unclassified assets 21.4 21.0 20.7 21.3 21.6 13.7 15.4 17.0 29. i 14.8 17.1
Assets = liabilities 352.0 407.6 420.6 519.6 445.3 394.9 387.5 432.6 434.2 387.2 398.4
Reserve money 152.1 169.3 189.1 226.4 219.9 199.6 212.5 204.6 223.6 200.8 209.8 Currency 87.8 100.4 103.8 113.9 124.5 112.0 108.6 115.5 127.7 109.7 117.0 Outside banks 78.0 86.0 91.0 103.1 112.4 103.0 99.3 105.8 115.6 101.0 107.3 With banks 9.9 14.4 12.9 10.9 12.1 9.0 9.3 9.7 12.1 8.7 9.7 Bankers' deposits 63.2 68.8 84.9 112.5 95.4 87.6 103.8 89.1 95.8 91.1 92.7 Statutory reserves 44.8 56.7 64.0 74.5 81.7 82.1 84.0 84.9 86.9 86.9 86.7 Settlement balances 18.4 12.1 20.9 38.0 13.8 5.5 19.8 4.1 8.9 4.2 6.0 Deposits of official entities 1.1 0.1 0.3 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.1
Reserve Bank notes 56.9 96.2 95.4 163.9 108.9 95.0 92.3 138.1 126.6 118.2 113.7
Foreign liabilities 1.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Government deposits 42.0 36.1 31.7 21.8 14.3 12.7 16.9 13.3 14.8 5.4 15.8 Of which: Sinking fund 33.7 18.1 25.4 19.2 9.6 7.1 16.0 5.5 6.0 5.1 9.5
Capital accounts 80.7 83.4 73.0 82.8 62.7 55.4 54.8 54.8 45.8 50.3 47.9
Unclassified liabilities 19.1 22.6 31.4 24.6 39.5 32.1 11.1 21.8 23.5 12.4 11.3
Source: IMF, Economic Information System.
I/ As of the last Wednesday of the month for 1988; as of the last working day of the month from December 1989 onward.
©International Monetary Fund. Not for Redistribution Table 25. Fiji: Liquidity Position of Commercial Banks, 1989-95 I/
March June Sept. Dec. March June 1989 1990 1991 1992 1993 1994 1995
Actual liquid assets 226.5 273.1 309.3 381.4 357.2 349.7 364.2 342.4 355.3 350.0 374.3 Vault cash 9.9 14.4 12.9 10.9 12.1 9.0 9.3 9.7 12.1 8.7 9.7 Deposits with Reserve Bank 63.2 68.8 84.9 112.5 95.5 87.6 103.8 89.1 95.8 91.1 92.7 Statutory reserves 44.8 56.7 64.5 74.7 81.8 82.1 84.0 84.9 86.9 86.9 86.7 Settlement balance 18.4 12.1 20.4 37.8 13.7 5.5 19.8 4.1 8.9 4.2 6.0 Eligible assets 11 153.4 189.9 211.5 258.0 249.6 253.1 251.1 243.6 247.4 250.2 271.9
Required liquid assets 164,3 207.8 235.2 273.2 299.5 301.1 308.1 311.4 318.7 318.7 317.9 SRD cash and deposits 3/ 44.8 56.7 64.5 74.5 81.7 82.1 84.0 84.9 86.9 86.9 86.7 ULAR eligible assets 4/ 119.5 151.1 170.7 198.7 217.8 219.0 224.1 226.5 231.8 231.8 231.2
Excess liquid assets 62.2 65.3 74.1 108.2 57.6 48.6 56.1 31.0 36.5 31.2 56.4 Cash and deposits 28.3 26.5 33.3 48.9 25.8 14.5 29.1 13.9 21.0 12.8 15.7 Eligible assets 33.9 38.8 40.8 59.3 31.8 34.1 27.0 17.1 15.5 18.4 40.7
Loans and advances 543.1 671.4 779.2 872.1 994.1 1,022.4 1,043.5 1,073.6 1,085.7 1,103.1 1,115.3
Excess liquid assets 8.3 7.0 6.8 8.7 4.2 3.6 4.0 2.2 2.5 2.2 3.9 Cash and deposits 3.8 2.8 3.1 3.9 1.9 1.1 2.1 1.0 1.4 0.9 1.1 Eligible assets 4.5 4.2 3.8 4.8 2.3 2.5 1.9 1.2 1.1 1.3 2.8
Memorandum item: Liability base for SRD and ULAR 5/ 748.6 934.9 1,087.4 1,241.4 1,361.4 1,368.6 1,400.8 1,415.7 1,449.0 1,448.8 1,444.7
Sources: Reserve Bank of Fiji, Quarterly Review (various issues); and IMF, Economic Information System.
I/ As of the last Wednesday of the month for 1988; as of the last working day of the month from December 1989 onward. 21 Comprises government securities and bonds, promissory note issues of statutory bodies, and Reserve Bank notes. 3/ Since 1987, the Statutory Reserve Deposit is 6 percent of deposits and similar liabilities. 4/ Since 1985, the Unimpaired Liquid Assets Ratio is 16 percent of deposits and similar liabilities. 5/ Adjusted for checks in transit and includes bills payable.
©International Monetary Fund. Not for Redistribution -53- APPENDIX
Table 26. Fiji: Structure of Interest Rates, 1989-95
(In percent per annum; end of period)
March June Sept. Dec. March June 1989 1990 1991 1992 1993 1994 1995
Reserve Bank Minimum lending rate 8.0 8.0 8.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 Deposit rate Commercial banks I/ 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5
Commercial banks Interbank rate 3.0 4.7 5.0 3.0 4.7 5.1 2.8 3.1 4.0 5.3 4.7 Loan rates 21 11.5 12.3 12.4 12,5 11.6 11.6 11.5 11.4 11.3 11.3 11.3 Deposit rates Savings deposits 4.0 3.7 4.1 4.1 3.3 3.2 3.2 3.1 3.1 3.1 3.2 Small time deposits 3/ 7 days-1 month 2.5 3.0 3.3 1.5 1.5 3.0 4.0 1-3 months 4.0 5.0 3.8 4.0 4.0 4.0 4.0 4.0 5.0 4.1 5.5 3-6 months 5.3 5.5 5.0 5.3 4.5 4.3 5.0 4.0 5.0 5.0 5.1 6-12 months 5.5 7.0 6.5 6.0 7.0 6.0 6.5 5.5 6.0 6.5 6.0 1-2 years 7.5 8.5 8.5 8.0 7.0 8.0 7.5 7.5 7.8 8.0 8.0 2-3 years 9.0 9.5 8.8 9.0 7.0 8.0 7.8 8.0 8.3 6.8 8.0 3 years and longer 10.0 11.0 10.3 10.0 7.0 8.5 8.0 8.5 8.1 8.0 8.0 Large time deposits 4/ 7 days-1 month 3.5 5.5 4.5 2.3 5.0 10.0 4.0 5.0 1.5 6.8 4.0 1-3 months 1.7 4.8 4.0 4.5 6.0 8.0 5.0 5.0 5.5 5.3 5.3 3-6 months 4.8 6.0 6.1 5.0 6.0 6.0 5.5 5.0 5.5 6.0 7.0 6-12 months 6.0 7.0 7.5 8.0 7.3 9.0 10.0 7.3 6.8 7.5 6.6 1-2 years 6.9 8.5 9.0 8.0 8.0 8.5 8.0 8.0 8.0 8.0 8.0
Public sector securities Treasury bills 5/ 3.1 4.9 5.8 3.5 2.3 2.3 2.8 2.9 3.3 3.1 3.0 3-year bonds 61 5.5 7.7 7.7 8.0 6.0 6.3 6.3 6.6 7.2 7.2 7.1 5-year bonds 11 7.4 8.5 8.6 9.0 7.1 7.5 7.6 7.7 8.1 8.0 8.0 10-year bonds 8/ 8.8 9.2 9.1 8.4 8.6 8.5 8.4 8.7 8.8 Promissory notes 5/ Fiji Sugar Corporation 3.3 6.3 7.2 3.9 2.7 3.3 4.6 3.5 3.2 4.5
Source: Data provided by the Reserve Bank of Fiji.
I/ Paid on statutory reserve deposits of commercial banks. 21 Weighted average for the year. 3/ Deposits below F$250,000. 4/ Deposits over F$250,000. 5/ Weighted average over the last quarter for the 91-day maturities. 6/ Weighted average over the last quarter for 3-4-year bonds. II Weighted average over the last quarter for 5-9-year bonds. 8/ Weighted average over the last quarter for 10-15-year bonds.
©International Monetary Fund. Not for Redistribution Table 27. Fiji: Deposit Money Banks, 1988-95 I/
(In millions of Fiji dollars; end of period)
March June Sept. Dec. March June 1988 1989 1990 1991 1992 1993 100/1 — 1995
Reserves 131.5 73.1 83.2 97.8 123.3 107.5 96.6 113.1 98.8 107.9 99.8 102.4 Cash 9.9 9.9 14.4 12.9 10.9 12.1 9.0 93 9.7 12.1 8.7 9.7 Statutory reserves 41.7 44.8 56.7 64.5 74.7 81.8 82.3 84.3 85.1 87.1 87.7 87.8 Settlement balances 80.0 18.4 12.1 20.4 37.8 13.7 5.3 19.5 3.9 8.8 3.4 4.9
Reserve Bank notes ... 20.3 60.7 39.9 60.2 54.8 30.7 23.2 35.5 49.1 46.9 47.3
Foreign assets 53.9 77.7 113.6 73.5 69.6 90.4 91.5 84.5 86.6 88.6 83.5 68.2
Claims on Government 83.6 71.6 60.8 82.2 91.6 88.9 113.9 116.2 89.0 80.7 72.9 83.6
Claims on official entities 70.4 67.9 75.2 97.5 118.4 141.9 145.3 143.8 166.5 144.4 148.4 166.8
Claims on private sector 411.5 540.8 676.4 802.9 880.4 994.4 1016.5 1043.4 1062.6 1080.9 1097.9 1104.3
Other assets 51.9 72.2 106.0 120.6 130.7 128.1 130.2 115.5 111.4 116.4 137.8 130.3
Assets = Liabilities 802.8 923.6 1175.8 1314.3 1474.2 1605.9 1624.8 1639.8 1650.4 1668.1 1687.0 1703.4
Demand deposits 21 205.2 184.5 179.2 183.1 211.0 251.4 223.7 247.7 229.5 229.0 237.1 264.8
Time and savings deposits 448.4 525.6 722.9 855.4 977.4 1013.7 1049.7 1069.4 1064.9 1069.7 1056.5 1041.9
Government deposits 26.4 18.2 13.6 15.1 6.8 21.5 22.9 10.7 31.6 40.5 20.9 26.1
Foreign liabilities 58.4 81.3 121.1 97.3 105.1 99.1 100.9 99.5 97.2 92.5 101.8 105.7
Other liabilities 64.4 107.7 134.0 163.4 173.9 220.2 224.5 212.3 227.1 216.1 249.7 236.0
Source: IMF, Economic Information System.
I/ As of the last Wednesday of the month for 1988; as of the last working day of the month from December 1989 onward. 21 Includes local bills payable.
©International Monetary Fund. Not for Redistribution Table 28. Fiji: Loans and Advances of Commercial Banks, 1989-95
March June Sept. Dec. March June 100iyy1i inni 1OQ/1 1995 ..
(Twelve-month percentage change)
Agriculture, forestry, and fisheries 75.0 31.1 29.8 -1.3 -2.2 -8.9 -6.4 -6.8 0.5 1.1 -7.2 Mining and quarrying 147.8 -50.9 78.6 0.0 44.0 60.5 -29.2 -36.5 -2.4 10.8 25.0 Manufacturing 30.9 22.6 9.7 0.4 -3.6 1.1 4.5 11.8 20.1 15.7 17.0 Building and construction 21.1 56.3 1.7 -1.4 -13.1 -10.6 -3.8 6.9 17.2 22.1 17.4 Real estate 33.3 11.5 8.4 -12.6 4.6 -5.7 -9.3 -6.9 16.0 25.7 24.2 Financial institutions -6.7 3.6 31.0 28.9 44.9 58.2 25.0 87.8 62.5 4.8 19.8 Wholesale and retail trade I/ 11.4 10.7 22.1 17.1 9.2 10.1 10.1 7.3 5.8 -0.7 0.2 Transportation, communications, and storage 43.0 26.8 25.3 11.5 -0.7 2.7 4.7 •9.1 0.2 2.1 -3.0 Electricity, gas, and water -13.8 68.0 35.7 -17.5 6.4 1.3 0.4 6.0 3.9 -2.0 -3.3 Professional and business services 49.1 27.6 27.2 -12.7 -12.0 1.4 2.7 26.3 17.1 13.7 9.8 Private individuals 36.9 29.8 23.8 18.7 14.9 14.8 14.0 14.3 10.0 16.1 16.2 Government, including statutory bodies 8.4 10.8 47.2 0.0 59.4 117.6 47.1 -9.0 -32.8 -52.1 -39.9 Other 15.1 66.9 -25.7 87.6 158.2 172.8 115.8 74.2 15.6 10.9 4.8
Total 30.8 24.0 19.0 10.0 13.2 14.1 12.0 10.9 9.1 7.5 6.5
(As percent of total)
Agriculture, forestry, and fisheries 15.5 16.4 17.8 16.0 13.8 13.4 13.2 13.1 12.8 12.6 11.5 Mining and quarrying 1.1 0.4 0.6 0.6 0.7 0.7 0.7 0.6 0.6 0.7 0.8 Manufacturing 14.8 14.6 13.5 12.3 10.5 10.6 11.1 11.4 11.6 11.3 12.2 Building and construction 4.1 5.2 4.4 4.0 3.1 2.9 3.1 3.2 3.3 3.3 3.4 Real estate 5.3 4.8 4.3 3.5 3.2 3.1 3.1 3.1 3.4 3.6 3.6 Financial institutions 0.5 0.4 0.5 0.6 0.7 0.8 0.7 0.9 1.1 0.8 0.8 Wholesale and retail trade I/ 26.7 23.9 24.5 26.1 25.2 25.6 25.9 25.0 24.4 23.6 24.3 Transportation, communications, and storage 2.8 2.9 3.0 3.1 2.7 2.6 2.7 2.5 2.5 2.5 2.5 Electricity, gas, and water 0.6 0.6 0.7 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.4 Professional and business services 3.1 3.2 3.4 2.7 2.1 2.1 2.1 2.3 2.3 2.3 2.2 Private individuals 21.2 22.2 23.1 24.9 25.3 25.0 24.8 25.5 25.5 27.0 27.0 Government, including statutory bodies 1.2 1.1 1.3 1.2 1.7 2.2 1.7 1.1 1.0 1.0 1.0 Other 3.2 4.3 2.7 4.6 10.5 10.5 10.4 10.8 11.2 10.9 10.2
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: Data provided by the Fiji authorities.
I/ Includes duty-free trade of hotels and restaurants.
©International Monetary Fund. Not for Redistribution -56- APPENDIX
Table 29. Fiji: Ownership of Deposits of Commercial Banks, 1989-95 I/
March June Sept. Dec. March June 1QQA 1QQC _ 1989 1990 1991 1992 1993 -—---—— A S S-T — •"•• ——— — \.ssj — — «• •«»—
(In millions of Fiji dollars; end of period)
Demand deposits 224.8 214.5 233.0 259.6 307.8 276.9 293.1 294.3 298.3 278.5 315.8 Central government 18.2 13.6 15.1 6.8 11.5 12.9 10.7 28.6 25.5 5.9 11.1 Official entities 45.9 28.9 41.6 51.2 72.0 47.1 69.4 31.4 45.9 68.2 66.4 Residents 148.6 163.5 158.0 178.5 202.2 195.5 186.9 209.1 204.0 179.4 215.0 Nonresidents 12.1 8.4 18.4 23.0 22.1 21.4 26.1 25.3 22.9 25.0 23.3
Savings deposits 197.8 245.2 242.1 265.4 299.3 291.3 294.7 302.2 307.3 296.4 305.9 Residents 194.0 240.9 235.3 258.0 291.6 282.9 285.9 293.0 299.3 287.1 296.3 Nonresidents 3.8 4.3 6.8 7.4 7.7 8.4 8.8 9.3 8.1 9.3 9.6
Time deposits 336.0 488.4 628.7 725.1 738.2 781.7 789.4 780.9 795.7 794.1 772.3 Central government 0.0 0.0 0.0 0.0 10.0 10.0 0.0 3.0 15.0 15.0 15.0 Local governments 0.0 0.2 0.4 1.0 0.4 0.6 0.7 0.6 0.6 0.7 1.0 Official entities 66.6 133.7 159.2 205.3 235.0 266.3 279.0 260.2 251.3 239.7 223.0 Residents 265.0 348.0 460.4 513.1 486.7 499.8 503.8 511.2 518.5 529.0 521.6 Nonresidents 4.4 6.5 8.6 5.6 6.0 4.9 5.9 5.9 10.2 9.8 11.6
Total deposits 758.6 948.2 1,103.9 1,250.1 1,345.3 1,349.9 1,377.2 1,377.4 1,401.3 1,369.0 1,393.9
(In percent of total deposits)
Demand deposits 29.6 22.6 21.1 20.8 22.9 20.5 21.3 21.4 21.3 20.3 22.7 Savings deposits 26.1 25.9 21.9 21.2 22.2 21.6 21.4 21.9 21.9 21.7 21.9 Time deposits 44.3 51.5 57.0 58.0 54.9 57.9 57.3 56.7 56.8 58.0 55.4
Source: IMF, Economic Information System.
I/ Excludes nonresidents' foreign currency deposits.
©International Monetary Fund. Not for Redistribution Table 30. Fiji: Maturity of Time Deposits of Commercial Banks, 1989-95 I/
March June Sept. Dec. March June 1989 1990 1991 1992 1993 1QQ/1 iqq<
(In millions of Fiji dollars)
Maturity 7 days- 1 month 2.8 5.5 4.4 23.9 7.0 37.3 19.0 11.7 0.0 16.2 3.8 1-3 months 22.8 26.3 49.7 29.3 39.0 39.3 31.6 39.9 48.9 40.1 35.5 3-6 months 28.6 32.7 55.3 39.6 55.7 56.5 67.6 63.0 66.4 66.9 56.8 6-12 months 31.6 39.6 49.0 70.9 58.7 64.8 76.4 67.0 75.1 79.4 84.8 12-24 months 127.9 175.6 176.9 179.2 225.9 246.9 266.9 281.6 304.6 332.6 384.1 24-36 months 29.7 43.5 68.3 76.1 64.0 60.5 61.2 60.9 61.2 60.2 52.1 More than 36 months 92.5 165.2 225.0 306.0 287.9 276.5 266.6 256.7 239.5 198.8 155.2
Total 335.9 488.4 628.6 725.0 738.2 781.8 789.3 780.8 795.7 794.2 772.3
(In percent of total)
Maturity 7 days- 1 month 0.8 1.1 0.7 3.3 0.9 4.8 2.4 1.5 0.0 2.0 0.5 1-3 months 6.8 5.4 7.9 4.0 5.3 5.0 4.0 5.1 6.1 5.0 4.6 3-6 months 8.5 6.7 8.8 5.5 7.5 7.2 8.6 8.1 8.3 8.4 7.4 6- 12 months 9.4 8.1 7.8 9.8 8.0 8.3 9.7 8.6 9.4 10.0 11.0 12-24 months 38.1 36.0 28.1 24.7 30.6 31.6 33.8 36.1 38.3 41.9 49.7 24-36 months 8.8 8.9 10.9 10.5 8.7 7.7 7.8 7.8 7.7 7.6 6.7 More than 36 months 27.5 33.8 35.8 42.2 39.0 35.4 33.8 32.9 30.1 25.0 20.1
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: Reserve Bank of Fiji, Quarterly Review.
I/ Excludes nonresidents' foreign currency deposits.
©International Monetary Fund. Not for Redistribution -58- APPENDIX
Table 31. Fiji: Consolidated Assets and Liabilities of Nonbank Financial Institutions, 1989-94 I/
(In millions of Fiji dollars; end of period)
1989 1990 1991 1992 1993 1994
Cash 43.6 78.4 137.7 146.0 153.3 166.5
Claims on Government 410.1 434.8 497.5 582.8 640.3 718.2
Claims on official entities 125.1 151.2 230.2 235.0 302.7 329.2
Claims on private sector 306.9 314.9 323.4 400.4 486.7 563.8
Assets = liabilities 885.7 979.3 1188.8 1364.2 1583.0 1777.7
Contributions (FNPF) 594.9 654.9 729.7 821.2 911.8 1007.2
Borrowings from the Government 5.4 2.5 1.2 1.0 0.4 6.4
Commercial banks 18.7 26.8 40.3 49.8 85.5 42.2
Foreign liabilities 15.4 23.5 25.9 25.8 23.2 32.9
Capital and reserves 290.0 313.8 352.7 398.6 458.1 494.6
Other items, net 21 -38.7 -42.2 39.0 67.8 104.0 194.4
Source: Data provided by the Fiji authorities.
I/ Includes the Fiji Development Bank, the Fiji National Provident Fund, the Housing Authority, the Home Finance Company Limited, the Unit Trust of Fiji, the Merchant Bank of Fiji (as of 1992), and the Credit Corporation Limited (as of 1993); and excludes insurance companies. 21 Includes insurance companies.
©International Monetary Fund. Not for Redistribution -59- APPENDIX
Table 32. Fiji: Balance of Payments,1989-94
Prov. 1989 1990 1991 1992 1993 1994
(In millions of U.S. dollars)
Trade balance -111.8 -226.0 -188.4 -190.2 -285.2 -241.0 Exports, f.o.b 377.1 415.6 360.9 348.6 367.6 484.7 Of which: Sugar 153.9 151.1 149.4 147.2 149.6 172.3 Imports, f.o.b 489.0 641.6 549.3 538.8 652.8 725.7
Services (net) 114.2 133.4 117.9 122.1 142.2 124.2 Non factor (net) 139.1 159.6 138.7 149.6 170.8 180.7 Of which: Travel receipts 182.4 200.5 195.0 219.0 238.4 289.0 Factor (net) -24.9 -26.2 -20.8 -27.5 -28.6 -56.6
Private transfers (net) -14.5 -22.3 -24.6 -16.3 -11.1 -23.8 Official transfers (net) 69.4 68.5 96.3 94.4 81.2 82.2
Current account 57.2 -46.3 1.2 10.0 -72.8 -58.4 Capital, net -57.1 50.6 -8.1 48.4 -4.3 20.4 Official, net -30.9 -30.2 -31.0 -25.3 -31.7 -33.2 Other -45.6 13.0 26.9 3.7 -27.0 -15.0 Commercial banks -6.4 2.1 11.0 3.0 -13.6 -2.9 Short-term trade credit -39.2 10.9 15.9 0.7 -13.5 -12.1 Direct investment 19.3 67.8 -4.0 70.1 54.4 68.6 Net errors and omissions -4.2 38.9 21.9 6.9 37.2 29.2
Overall balance -4.1 43.2 15.0 65.2 -40.0 -8.8 (In percent of GDP)
Trade balance -8.9 -16.6 -12.8 -11.9 -17.0 -13.0 Current account 4.6 -3.4 0.1 0.6 -4.4 -3.2 Overall balance -0.3 3.2 1.0 4.1 -2.4 -0.5 External debt 27.9 23.5 19.4 18.6 16.6 13.6 Debt service I/ 12.1 12.6 11.0 9.6 9.4 8.8 Memorandum items: Total domestic exports 327.3 348.7 310.0 288.7 327.5 406.0 Imports, c.i.f. 21 532.7 679.5 592.7 589.6 715.9 769.6 Valuation adjustment (F$ mn.) -15.9 5.2 -4.6 -18.1 -8.9 12.9 Gross reserves (F$ mn.) 213.4 261.8 272.3 319.3 270.4 274.5 (In months of imports, c.i.f.) 21 (4.8) (4.6) (5.5) (6.8) (4.5) (4.1)
Sources: Data provided by the Fjii Bureau of Statistics and the Reserve Bank of Fiji.
I/ In percent of exports of goods and services. 21 Corrected for re-exports.
©International Monetary Fund. Not for Redistribution -60- APPENDIX
Table 33. Fiji: Exports by Commodity, 1989-1994
(In millions of U.S. dollars)
Prov. 1989 1990 1991 1992 1993 1994
Sugar Value 152.8 153.4 149.6 141.4 149.7 179.0 Of which: Transfer from EU I/ (42.5) (52.6) (66.4) (65.9) (54.4) (60.3) Volume COCO tons) 398.0 394.3 357.1 364.9 439.1 472.0 Unit value (USSfton) 277.2 255.7 233.1 206.9 217.1 251.4 162.5 149.8 136.6 121.3 127.3 147.4 Molasses Value 6.6 4.4 9.0 8.4 6.5 9.7 Volume ('000 tons) 140.0 87.8 155.3 136.7 117.7 140.3 Unit value (US$/ton) 46.9 50.0 58.1 61.3 55.1 68.8 116.8 124.5 145.0 152.7 137.5 171.5 Coconut oil Value 3.5 3.4 1.6 3.6 2.4 2.7 Volume COOO tons) 7.2 11.0 3.6 7.9 6.0 4.1 Unit value (US$/ton) 492.7 305.3 433.8 461.2 400.2 657.8
Gold Value 51.0 51.9 31.6 38.8 43.3 44.4 Volume COOO fine oz.) 127.1 133.8 87.0 118.8 121.6 112.6 Unit value (US$/oz.) 401.3 388.2 363.7 326.6 356.0 394.6
Fish 30.0 33.8 31.6 25.1 28.0 46.7 Of which: Canned fish 3/ Value 26.4 26.9 24.2 18.3 20.4 27.8 Volume COOO metric tons) 7.2 6.7 5.7 5.7 4.7 9.7 Unit value (US$/ton) 3,672.3 4,009.6 4,252.6 3,218.3 4,336.0 2,860.8
Fresh fish 1.7 3.0 2.6 1.7 5.4 9.2
Forestry products 4/ 21.6 26.0 21.3 22.9 20.1 22.1
Other domestic exports 104.3 128.4 131.6 114.3 131.9 161.7 Of which: Garments 66.5 79.4 89.0 74.7 83.6 100.1
Total domestic exports 21 327.3 348.7 310.0 288.7 327.5 406.0
Re-exports (BOP basis) 71.6 98.9 74.4 74.7 67.5 98.0 Less: Aircraft and shipstore 21.9 25.2 18.9 20.5 21.3 15.5 Air Pacific fuel 2.1 2.0 3.9 5.1 5.9 6.5 Market value aircraft re-export ...... 17.2
Total exports, to.b. 375.0 420.3 361.5 337.8 367.8 482.0
Source: Fiji Bureau of Statistics.
I/ Exports to the EU in excess of world market price. 2/ Excludes exports to the EU in excess of world market price. 3/ Domestic exports plus imported fish processed at the cannery. 4/ Logs, sawn timber, veneer, and plywood.
©International Monetary Fund. Not for Redistribution -61- APPENDIX
Table 34. Fiji: Sugar Exports by Destination, 1989-94
1989 1990 1991 1992 1993 1994
(In U.S. dollars per metric ton)
Unit value European Union 526.7 602.5 627.3 581.5 568.2 578.1 New Zealand 294.2 276.9 0.0 0.0 0.0 0.0 Malaysia 239.7 217.9 226.4 231.5 229.1 231.3 China 0.0 171.0 284.6 235.1 0.0 0.0 Other I/ 320.0 318.4 242.8 221.0 210.8 242.7 Of which: United States 429.8 369.6 388.5 311.9 396.8 396.4
Average (weighted) 386.7 392.5 418.3 396.6 340.8 364.9
(In thousands of metric ton) Volume European Union 173.0 153.0 164.0 177.0 154.2 175.8 New Zealand 22.0 40.0 0.0 0.0 0.0 0.0 Malaysia 108.0 110.0 88.0 117.0 105.9 112.2 China 0.0 15.0 25.0 15.0 0.0 0.0 Other I/ 95.0 66.9 80.1 62.0 179.1 184.0 Of which: United States 24.0 19.0 15.0 16.0 8.5 11.2
Average (weighted) 398.0 394.3 357.1 364.9 439.2 472.0
(In millions of U.S. dollar; f.o.b.)
Value European Union 91.1 92.2 102.9 102.9 87.6 101.6 New Zealand 6.5 11.1 0.0 0.0 0.0 0.0 Malaysia 25.9 24.0 19.9 27.1 24.3 26.0 China 0.0 2.6 7.1 3.5 0.0 0.0 Other I/ 30.4 21.3 19.4 13.7 37.8 44.7 Of which: United States 10.3 7.0 5.8 5.0 3.4 4.4
Average (weighted) 153.9 154.8 149.4 144.7 149.7 172.2
Sources: Fiji Bureau of Statistics.
I/ Includes exports to the Pacific islands.
©International Monetary Fund. Not for Redistribution -62- APPENDIX
Table 35. Fiji: Total Imports and Re-exports, 1989-94 I/
(In millions of U.S. dollars)
Prov. 1989 1990 1991 1992 1993 1994
Total imports 580.1 751.5 644.3 637.7 756.2 846.5
Food, beverages, and tobacco 88.3 102.0 92.8 96.0 114.7 121.0 Crude materials 5.2 5.1 5.4 4.8 4.2 4.8 Mineral fuels 74.0 106.1 99.1 88.8 86.1 93.8 Oil and fats 6.5 7.6 6.8 7.5 8.5 8.7 Chemicals 52.7 55.1 49.3 52.3 53.2 61.2 Manufactured goods 138.9 164.9 166.2 159.1 163.2 194.9 Machinery and transportation 149.7 230.6 146.9 163.2 235.0 272.2 Of which: Aircrafts (lease value) 0.0 55.8 0.0 18.9 23.1 81.7 Aircrafts (market value) 0.0 55.8 0.0 26.9 59.5 95.0 Miscellaneous goods 64.9 80.1 77.9 65.9 91.3 89.7
Re-exports 71.6 98.9 74.4 74.7 67.5 98.0
Food, beverages, and tobacco 3.6 3.6 0.7 1.1 1.4 0.9 Crude materials 0.4 0.3 0.2 0.3 0.2 0.2 Mineral fuels 21 40.6 54.0 46.4 38.3 45.3 40.3 Chemicals 0.5 0.7 1.0 1.0 1.4 1.4 Manufactured goods 6.9 6.6 8.2 7.0 6.5 6.4 Machinery and transportation 12.8 24.8 11.2 21.6 6.7 40.5 Of which: Aircrafts (lease value) 0.0 0.0 0.0 0.0 0.0 34.2 Miscellaneous goods 6.8 8.9 6.7 5.5 5.9 8.3
Less: Air Pacific fuel 2.1 2.0 3.9 5.1 5.9 6.5
Source: Fiji Bureau of Statistics.
II C.I.F. values; by SITC classification. 21 Includes fuel sold to foreign aircraft and ships.
©International Monetary Fund. Not for Redistribution -63- APPENDIX
Table 36. Fiji: Petroleum Product Imports, Re-exports, and Retained Imports, 1989-94 (In millions of U.S. dollars; unless otherwise specified)
Prov. 1989 1990 1991 1992 1993 1994
Petroleum product imports, elf. 74.0 106.1 99.1 88.8 86.1 93.8
Of which: Aviation turbine fuel Value 15.6 14.7 11.8 8.8 16.5 27.1 Volume (mn. liters) 91.1 60.1 56.2 46.9 97.9 173.5 Unit value (Fiji cents/liter) 17.1 24.4 21.0 18.7 16.9 15.6
Automotive distillate Value 20.9 31.6 34.6 27.3 28.6 26.2 Volume (mn. liters) 128.8 151.3 168.3 153.3 168.4 173.3 Unit value (Fiji cents/liter) 16.2 20.9 20.5 17.8 17.0 15.1
Motor spirit Value 12.2 19.2 16.1 14.8 14.7 15.7 Volume (mn. liters) 77.0 92.0 90.2 106.8 89.8 110.4 Unit value (Fiji cents/liter) 15.8 20.8 17.9 13.9 16.4 14.2
Industrial distillate Value 8.2 10.9 8.9 8.6 7.9 9.1 Volume (mn. liters) 53.5 51.9 46.3 49.4 48.3 62.1 Unit value (Fiji cents/liter) 15.4 20.9 19.3 17.5 16.4 14.6
Petroleum product re-exports I/ 40.6 54.0 46.4 38.3 45.3 40.3 Retained imports, c.i.f. 21 33.4 52.1 52.7 50.5 40.7 53.5
Source. Fiji Bureau of Statistics.
If Includes fuel sold to foreign aircraft and ships. 21 Petroleum product imports less re-exports.
©International Monetary Fund. Not for Redistribution -64- APPENDIX
Table37. Fiji: Direction of Trade, 1989-94
(In percent of total)
1989 1990 1991 1992 1993 1994
Exports (f.o.b.) I/
Australia 21.8 20.2 17.7 19.9 25.6 25.6 New Zealand 16.1 13.4 9.2 6.2 5.5 5.8 Pacific islands 5.5 7.0 6.3 6.8 6.0 5.6
European Union 28.5 29.3 26.7 33.0 25.9 24.5 United Kingdom 27.4 28.7 25.9 32.0 24.2 23.6 Other 1.1 0.6 0.8 1.0 1.7 0.9
Canada 3.1 2.5 3.6 3.2 7.2 5.6 United States 6.3 9.2 13.1 15.2 12.2 13.7
China 0.2 0.6 1.9 1.0 0.3 Hong Kong 0.4 0.8 1.2 1.0 0.5 0.5 Japan 7.3 7.0 6.8 6.1 8.7 8.2 Singapore 0.2 3.7 0.2 0.2 0.5 0.1 Taiwan Province of China 0.8 0.8 2.0 0.1 0.1 0.9
Other 9.8 5.5 11.3 7.3 7.8 9.2
Total 100.0 100.0 100.0 100.0 100.0 100.0
Imports (c.i.f.) 2/
Australia 29.6 27.8 31.4 32.1 32.8 33.0 New Zealand 17.2 16.3 18.3 16.9 19.2 16.9 Pacific islands 0.8 1.0 0.3 0.3 0.3 0.6
European Union 6.3 6.9 5.8 7.1 5.6 3.7 United Kingdom 3.0 3.0 3.0 3.2 3.1 1.7 Other 3.3 3.9 2.8 3.9 2.5 2.0
Canada 0.3 0.3 0.5 0.3 0.4 0.3 United States 5.3 12.9 4.3 8.8 7.6 14.8
China 3.2 2.8 2.9 3.4 3.4 3.2 Hong Kong 3.2 2.9 3.6 3.2 3.3 2.1 Japan 13.5 11.0 11.4 10.3 11.0 8.1 Singapore 5.3 5.8 6.2 6.4 5.6 7.4 Taiwan Province of China 4.9 4.0 4.6 2.7 2.3 2.4
Other 10.4 8.3 10.7 8.6 8.5 7.5
Total 100.0 100.0 100.0 100.0 100.0 100.0
Sources: Fiji Bureau of Statistics; and Reserve Bank of Fiji, Quarterly Review, various issues.
I/ Domestic exports only. 21 Including imports for re-export.
©International Monetary Fund. Not for Redistribution -65- APPENDIX
Table38. Fiji: Services and Transfers, 1989-94
(In millions of U.S. dollars)
Prov. 1989 1990 1991 1992 1993 1994
Services, net 114.2 133.4 117.9 122.1 142.2 124.2
Receipts 416.3 466.1 479.5 505.5 543.8 599.3
Freight, insurance, and other transportation 102.3 128.9 128.2 138.4 143.8 150.8 Travel 182.4 200.5 195.0 219.0 238.4 289.0 Investment income 28.4 27.8 32.7 29.7 26.2 19.6 Direct investment 14.4 10.3 8.1 6.7 0.5 1.1 Reinvested earnings 13.1 9.0 7.8 5.5 -0.5 0.3 Dividends and profits 0.4 0.5 0.2 0.1 0.3 0.1 Interest 0.9 0.7 0.1 1.2 0.6 0.7 Government interest 14.0 16.7 24.7 23.0 25.6 18.4 Other 0.0 0.7 0.0 0.0 0.1 0.1 Government, n.i.e. 38.8 40.4 45.3 39.8 42.8 44.8 Of which: Peacekeeping 12.1 11.8 19.4 15.2 19.5 15.3 Other 64.3 68.5 78.3 78.6 92.6 95.1 Of which: Non resident expenses 27.5 34.1 37.5 32.1 28.4 32.4 Compensation of employees 22.9 21.3 19.1 22.6 25.9 29.6 Royalties 1.0 1.1 0.9 1.2 1.4 1.2
Payments 302.1 332.6 361.5 383.4 401.5 475.1
Freight, insurance, and other transportation 123.7 149.1 135.2 143.4 156.2 161.1 Travel 40.7 40.8 45.3 44.1 46.6 62.4 Investment income 75.7 75.2 72.4 79.8 80.4 105.7 Direct investment 51.5 49.4 50.7 61.6 64.8 91.0 Reinvested earnings 30.6 22.6 4.9 12.6 12.5 46.0 Dividends and profits 16.7 18.4 24.5 22.7 28.5 26.8 Interest 4.2 0.9 4.9 10.7 1.8 1.6 Lease (excluding depreciation) 0.0 7.6 16.4 15.6 22.1 16.5 Government interest 23.5 24.9 21.7 17.4 15.2 14.2 Central Government 10.9 13.8 12.1 9.9 9.3 8.7 Statutory authorities 12.5 11.1 9.6 7.5 6.0 5.5 IMF 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.7 0.9 0.0 0.8 0.4 0.5 Government, n.i.e. 20.4 18.0 28.7 25.8 25.2 24.7 Of which: Peacekeeping 1.1 1.1 1.2 1.1 1.2 1.6 Other 41.7 49.5 80.0 90.4 93.0 121.2 Of which: Insurance 9.4 9.3 9.5 13.7 14.7 18.4 Expenses 12.1 12.2 12.8 13.2 18.9 23.6 Royalties 1.5 1.1 1.2 1.3 1.7 1.2 Professional fees 12.7 18.3 17.3 15.8 18.4 19.7
Private transfers, net -14.5 -22.3 -24.6 -16.3 -11.1 -23.8 Receipts 28.5 24.9 32.5 35.1 40.4 38.2 Payments 42.9 47.2 57.1 51.4 51.5 61.9
Official transfers, net 69.4 68.5 96.3 94.4 81.2 82.2 Receipts 69.9 69.0 97.9 96.5 84.6 86.4 Of which: Aid in cash 8.4 8.8 12.3 9.2 2.7 2.8 EU sugar 11 42.8 51.8 66.3 68.6 54.4 58.1 Payments 0.5 0.5 1.6 2.1 3.4 4.2
Memorandum items: Tourist arrivals ('000) 250.6 279.0 259.4 278.5 287.5 318.9 (Growth rate) (13.7) (7.7) (-4.8) (4.9) (2.1) (7.5) Average length of stay (days) 6.2 5.9 5.8 5.8 5.5 5.5 Gross per capita spending (US$/day) 79.6 81.8 87.0 90.6 96.8 105.7
Source: Fiji Bureau of Statistics.
I/ Exports to the EU in excess of world market price.
©International Monetary Fund. Not for Redistribution . 66 - APPENDIX
Table 39. Fiji: Capital Account, 1989-94
(In millions of U.S. dollars)
Prov. 1989 1990 1991 1992 1993 1994
Total capital, net -57.1 50.6 -8.1 48.4 -4.3 20.4
Official capital, net -30.9 -30.2 -31.0 -25.3 -31.7 -33.2
Government -12.2 -1.8 -15.5 -11.5 -8.2 3.6 Receipts 7.2 15.1 19.7 7.4 9.1 19.7 Repayments -19.4 -16.9 -35.2 -18.9 -17.4 -16.1
Public enterprises -18.7 -28.4 -15.5 -13.8 -23.4 -36.8 Receipts 7.2 6.6 4.3 9.3 1.2 0.0 Repayments -25.9 -35.0 -19.8 -23.2 -24.6 -36.8
Other capital -45.6 13.0 26.9 3.7 -27.0 -15.0
Commercial banks -6.4 2.1 11.0 3.0 -13.6 -2.9 Change in liabilities 15.9 20.6 -16.1 5.2 -3.9 -4.5 Change in assets -22.3 -18.5 27.1 -2.2 -9.7 1.6
Short-term trade credit -39.2 10.9 15.9 0.7 -13.5 -12.1 Trade credit extended -16.4 -10.6 13.4 -2.4 -29.3 -3.4 Trade credit received -22.8 21.5 2.5 3.1 15.8 -8.7
Direct investment 19.3 67.8 -4.0 70.1 54.4 68.6
Net equity 26.2 81.6 4.7 34.1 33.7 75.5
Investment abroad -12.2 -2.6 -6.6 -4.5 -21.0 3.7 Equity capital 0.9 6.5 1.2 1.0 -21.5 4.0 Reinvested earnings -13.1 -9.0 -7.8 -5.5 0.5 -0.3
Investment in Fiji 38.4 84.1 11.3 38.6 54.7 71.9 Equity capital -1.6 -1.7 -2.7 -7.2 -6.9 -14.3 Real estate 6.1 5.1 8.9 5.5 2.7 3.9 Other investement 3.3 58.1 0.1 27.7 46.4 36.3 Reinvested earnings 30.6 22.6 4.9 12.6 12.5 46.0
Loans -6.8 -13.8 -8.7 35.9 20.6 -7.0 Drawings 5.2 6.9 1.0 52.8 47.5 25.4 Repayments -12.0 -20.7 -9.7 -16.9 -26.9 -32.4
Source: Fiji Bureau of Statistics.
©International Monetary Fund. Not for Redistribution -67- APPENDIX
Table 40. Fiji: External Debt and Debt Service, 1989-1994 (In millions of U.S. dollars; end of period)
1989 1990 1991 1992 1993 1994
Total external debt I/ 347.7 325.2 286.5 284.1 278.5 261.7
Public sector 285.6 275.5 246.0 211.4 184.1 165.7 Government 159.1 162.8 148.6 133.8 124.9 134.4 Reserve Bank (IMF) 0.8 0.0 0.0 0.0 0.0 0.0 Public enterprises 125.6 112.7 97.4 77.6 59.1 31.3
Private sector 62.2 49.7 40.5 72.7 94.4 96.0
Debt service 89.1 106.2 86.8 73.7 80.6 94.9
Amortization 59.9 73.0 63.3 55.1 63.9 79.5 Public sector 45.0 51.3 53.6 38.9 37.0 45.8 Government 19.3 17.1 35.3 18.2 17.4 16.7 Public enterprises 25.7 35.6 19.8 22.2 24.6 38.3 Private sector 11.9 21.0 9.7 16.2 26.9 33.6 IMF repurchases 3.0 0.8 0.0 0.0 0.0 0.0
Interest payments 29.2 33.2 23.4 18.6 16.7 15.4 Public sector 23.3 24.6 21.2 16.2 14.9 13.5 Government 10.8 14.0 12.2 9.5 9.3 9.0 Public enterprises 12.5 11.2 9.6 7.2 6.0 5.7 Private sector 5.0 7.9 2.2 2.4 1.8 1.9 IMF charges 0.9 0.7 0.0 0.0 0.0 0.0
Memorandum items: Borrowing (BOP) 19.5 29.1 25.1 66.8 57.9 46.8 Government 7.2 15.4 19.8 7.1 9.2 20.4 Public enterprises 7.2 6.7 4.3 8.9 1.2 0.0 Private 5.2 7.0 1.0 50.8 47.6 26.4
Exports of goods and n.f . services 741.2 831.5 787.6 800.6 857.9 1,033.6 Nominal GDP 1,245.4 1,381.9 1,479.1 1,531.2 1,675.4 1,919.7 External debt/GDP 27.9 23.5 19.4 18.6 16.6 13.6 Debt-service ratio 21 12.0 12.8 11.0 9.2 9.4 9.2
Source: Fiji Reserve Bank, "Debt Recording Management System."
I/ Medium- and long-term debt outstanding at end of period. 21 In percent of exports of goods and services.
©International Monetary Fund. Not for Redistribution - 68 - APPENDIX
Table 41. Fiji: International Reserves, 1989-1995 I/
(In millions of U.S. dollars; end of period)
1989 1990 1991 1992 1993 1994 1995
Net official reserves 213.4 261.8 272.3 319.3 270.4 274.5 323.3
Reserve Bank 210.3 260.6 271.4 318.4 269.2 273.1 321.9 Assets 211.06 260.55 271.39 318.44 26921 273.12 321.9 Liabilities 0.7 0.0 0.0 0.0 0.0 0.0 0.0 Central Government 3.1 1.2 0.9 0.9 12 1.4 1.4 Assets 3.1 12 0.9 0.9 12 1.4 1.4 Liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Commercial banks -14.0 -27.8 -25.3 -26.4 -12.6 -62 8.2 Assets 59.0 79.2 51.4 50.5 60.9 62.6 74.8 Liabilities 73.0 107.0 76.7 76.9 73.5 68.8 66.6
Total net reserves 199.4 234.0 246.9 292.9 257.9 268.3 331.5 Assets 273.2 341.0 323.7 369.8 3313 337.1 398.1 Liabilities 73.8 107.0 76.7 76.9 73.5 68.8 66.6 Gross official reserves 213.4 261.8 272.3 319.3 270.4 274.5 323.3 In months of imports, c.i.f. 21 4.8 4.6 5.5 6.8 4.5 4.1 4.9
Source: Reserve Bank of Fiji.
I/ Data for 1995 refer to June. 21 Corrected for re-exports.
©International Monetary Fund. Not for Redistribution APPENDIX -69-
Table 42. Fiji: Items Under Import Licensing, 1989-94
Pre-1989 1989 Mini Budget 1991 1993 1994
Baked beans canned Brown Rice Butter Bulk butter Bulk butter Blending compound Butter Canned fish Canned fish Lubricating oil of incense sticks Canned fish Coffee Coffee Brown rice Cheese and other Corned meat of bovine Gold Butt hinges and barrel bolts pastry products animal (sheep and lamb) Lubricants and Butter Chili sauce and pasta Gold hydraulic fluids Cement and clinker Corned meat of bovine animal Lubricants and Rice Chili sauce and pasta (sheep and lamb) hydraulic fluids Seed potatoes Coffee Eggs Milk and cream Timber Corned meat of bovine animal Gold Petroleum products (sheep and lamb) Live poultry Rice Crown cork Meat and edible offal Seed potatoes Dried leguminous vegetables Oranges and Timber Eggs orange products Electric cables and wiring clips Pineapple products Flur and sharps Poultry products Gold Prawns Knitted fabrics Powdered milk Lamb and mutton Timber Liqueurs Tomato products Live poultry Louvre window frame Margarine Matches Meat and edible offal Mild steel bars and rods Milk powder Multi-wall paper bags Noodles Onions Orange and orange products Pineapple products Polypropylene bags and fabrics Poultry products Powdered milk Prawns Prepared incense sticks PVC pipes and sheeting Ropes of manmade fiber Shirts of all kinds Steel shelving and rackings Sweetened forage Tea Timber Tomato products Tubes and pipes of iron or steel Vegetable ghee Wet cell batteries Wick-type kerosene stoves Wood screws
Sources: UNIDO, Tariff Restructuring Review, May 1993; and data provided by the authorities.
©International Monetary Fund. Not for Redistribution Fiji: Summary of Structural Reforms
Planned Reforms Objective Implementation Status (as of August 1995)
1. External sector
1.1 Liberalization of exchange system
Relaxation of controls involved in the wake Achieve a freely convertible currency. After the 1987 crisis, controls on invisible payments, transfers, and of the 1987 crisis. capital transactions have been progressively liberated. Delegation to commercial loans has been broadened, with limits on foreign exchange that authorized dealers can provide without prior approval of the Reserve Bank of Fiji (RBF). Limits on capital transfers have also been increased. Nonbank financial institutions have been allowed to invest offshore up to a certain limit. Allowances to travelers and migrants have been increased. Exporters have been allowed to retain 10 percent of their earnings in foreign currency accounts; and restrictions on access to domestic financing by foreign investors have been relaxed.
1.2 Trade liberalization
Reduction of import tariffs and removal of Develop an economy which is geared to successful The maximum rate of import tariff has been reduced from 50 percent licenses and quotas, with quantitative exporting through developing manpower resources, to 22.5 percent. Initial plans to reduce maximum rate to 20 percent restrictions to be phased out over time and ensuring internal cost structures are competitive, and the are on hold to allow domestic producers time to adjust. Protective replaced with appropriate protective tariffs environment is attractive to domestic and foreign tariffs have been introduced for canned fish, rice, and powdered milk. for a limited number of goods. investors. Licensing has been abolished over the past few years for all domestic goods, except bulk butter and lubricating oil. Bring domestic prices more closely into line with world prices and allow for removal of price controls on consumer goods with the aim of enhancing efficiency of markets.
2. Fiscal consolidation
Achieve a balanced budget over the medium Reduce role of government in the economy, increase The desirability of achieving a balanced budget has been announced term. national savings, and enhance private sector participation. periodically. So far, no specific time frame has been proposed.
©International Monetary Fund. Not for Redistribution Fiji: Summary of Structural Reforms
Planned Reforms Objective Implementation Status (as of August 1995)
2.1 Tax reform
Reduce marginal tax rates on incomes, Establish a broad based, efficient, and equitable tax In 1992, the personal income tax was modified by: reducing the broaden tax base, and shift from direct to system. number of brackets for individuals to three; increasing the income tax indirect taxes. threshold for individuals; reducing the number of allowed deductions Minimize market distortions and improve incentives for and allowances to two (family and National Provident Fund); risk-taking and effort. removing the minimum tax; and lowering the top individual bracket to 35 percent (which aligns with the corporate rate).
In July 1992, a flat 10 percent value-added tax (VAT) was introduced, which replaced most custom (fiscal) and excise duties, hotel turnover tax, and the miscellaneous services tax.
In 1993, the personal income tax credit for company tax paid on dividends was increased as a step toward reducing the double taxation of dividends.
2.2 Expenditure
Reduce operating expenditures by Improve infrastructure and alleviate supply constraints. Surcharge action against Chief Accounting Officers for over improving expenditure controls and increase expenditures was implemented in 1993. allocation to capital expenditure. Quarterly warrants were introduced in 1993.
A reduction in the proportion of government expenditure relative to GDP has not yet been achieved. A study of the means by which such a reduction could be accomplished was made in early 1992, suggesting areas where the government could achieve savings through contracting out services.
©International Monetary Fund. Not for Redistribution Fiji: Summary of Structural Reforms
Planned Reforms Objective Implementation Status (as of August 1995)
3. Investment promotion Improve investment climate and raise investment.
3.1 Establishment of tax-free zones
Provide fiscal incentives in export Attract foreign investment and promote investment in Tax-free zones (TFZ) and tax-free factories (IFF) were established in industries. export-oriented industries. 1989 to stimulate exports. Fiscal incentives for TFZs and TFFs include a 13-year tax holiday and waiver of import duties and excise taxes. Restrictions on repatriation of capital and profits are also waived, if exports represent more than 95 percent of sales.
3.2 Streamline investment approval system Expedite approval of investment projects. The Trade and Investments Board is being restructured into a "one- stop shop" for investors having to obtain regulatory approvals and licensing from the government.
3.3 Simplify and streamline fiscal incentives Eliminate distortionary aspects of existing system. The rationalization of fiscal incentives is still under discussion. system
4. Public enterprises
4.1 Commercialization of existing Reduce burden of public enterprises on the budget. The "User Pays" principle for services offered by state-owned public departments involved in commercial enterprises and statutory bodies will be encouraged and continued. activities The level of budgetary appropriations to public enterprises has declined in recent years, reflecting increases in utility tariffs.
4.2 Corporatization of government-owned Increase accountability and efficiency of public A revised corporatization model was included in the 1993 budget, and statutory bodies enterprises. the Privatization Committee was established in August 1993 to oversee the development and implementation of the Government's public enterprise reform policy.
The Fiji Public Enterprise Reform Program, adopted in October 1993, led to the corporatization of a number of public enterprises, including Fiji Pine, Fiji Posts and Telecommunications, and National Trading Corporation.
©International Monetary Fund. Not for Redistribution Fiji: Summary of Structural Reforms
Planned Reforms Objective Implementation Status (as of August 1995)
4.3 Privatization of public enterprises Reduce size of public sector and encourage The Public Enterprise Bill is now under consideration in Parliament. entrepreneurship. A draft corporatization plan, which sets forth the program of privatization and corporatization for the period July 1995 to June 1996, was recently submitted to Cabinet for approval.
5. Labor market
5.1 Wage deregulation
Allows wages to be determined freely by A wages policy that recognizes the paramount importance Government-determined wage guidelines under the Counter Inflation negotiation between employees and of maintaining international competitiveness. Act were repealed in August 1991. employers. Greater differentiation of wage increases based upon enterprise-specific Wage deregulation was accompanied by legislation in November considerations. 1991, which was intended to increase the accountability of, and competition among, trade unions by: eliminating mandatory check-off of union dues; removing immunity from prosecution; broadening the definition of what constitutes a strike; and requiring that strike action be approved by secret ballot.
5.2 Introduction of a flexible wage system Maintain international competitiveness through a flexible The Permanent Arbiter ruled in 1992 that the CPI was an under which wage increases are linked to labor market. inappropriate basis for wage settlements, thereby eliminating an productivity improvement impediment to linking wage increases to productivity improvements.
An International Round Table Conference was held in August 1995 to develop ideas for establishing closer linkage between wages and productivity.
5.3 Training and education Enhance labor productivity. The authorities plan to shift expenditure toward education and training within their fiscal consolidation strategy.
©International Monetary Fund. Not for Redistribution Fiji: Summary of Structural Reforms
Planned Reforms Objective Implementation Status (as of August 1995)
6. Price refomi
Eliminate price control in conjunction with To eliminate price distortions and bring domestic prices A significant reduction in the number of goods subject to price control, trade liberalization. more in line with world prices with the aim of enhancing primarily in the form of a fixed mark-up percentage, has occurred. It efficiency of the market. is estimated that controls now apply to 37 percent of the goods which compose the CPI basket. Petroleum products, flour, and bread remain subject to controlled prices.
Commercial rents were decontrolled in 1992.
7. Financial sector
7.1 Strengthen monetary policy framework Improve monetary management using market Interest rates on bank deposits and loans were deregulated in July instruments. 1987. RBF notes were introduced in March 1989.
In the past year, the authorities have revised the monetary programming framework and modified monetary operations. Measures include: i) use of net domestic asset as an intermediate target in monetary programming; ii) establishment of short-term information system; iii) modifying the modalities for issuance of RBF notes; and iv) collateralization of RBF lending to banks.
7.2 Develop secondary market in Improve responsiveness of interest rates to market A number of steps to strengthen the secondary debt market, including government securities conditions. issuance of reserve notes and treasury bills in book entry form and establishing a central debt registry for all securities issued or managed by RBF, are under consideration.
©International Monetary Fund. Not for Redistribution Fiji: Summary of Structural Reforms
Planned Reforms Objective Implementation Status (as of August 1995)
7.3 Improve regulatory and supervisory framework of the banking system
Revise Banking Act. Strengthen banking system. The Banking Act of 1983 was revised in 1995. This revision strengthened the RBF's supervisory powers over licensed banks and credit institutions. The revised Act implements capital adequacy requirements, imposes an annual audit requirement, and increases the role of external auditors in the verification of information reported to the central bank. The capital adequacy requirements were introduced at the end of 1993 at a level of 4 percent, which is scheduled to increase by 1 percent a year until it reaches 8 percent in January 1998.
7.4 Introduce Investment Act To promote the growth of capital markets in Fiji. Work to prepare an Investment Act to provide the regulatory framework necessary for the development of secondary debt and equity markets is expected to commence in the near future.
©International Monetary Fund. Not for Redistribution Fiji: Summary of the Tax System as of October 19,1995
Tax Nature of Tax Exemptions and Deductions Rates
1. Taxes on income and profits
1.1. Taxes on individuals The tax year is the calendar year. Deductions are allowed for: a 0-5,000 Nil Residents are taxed on their worldwide percentage of dividends ranging from 5,001-7,000 15 percent income. Taxes on wages and salaries 100 percent for individuals with total 7,001-15,000 25 percent are withheld as earned under a pay- incomes of less than F$ 10,000 to > 15,001 35 percent as-you-earn (PAYE) system. Taxable 50 percent when total income exceeds income includes: wages and salaries; F$l 5,000; contributions to specified employee allowances; business income; charities; life insurance premiums; and dividends; interest; and rents. Fringe contributions to certain provident benefits are included in taxable income, funds. In addition, personal specifically: the value of vehicle for exemptions exist for: wife (FS750) and personal use; housing subsidies, with dependents up to 5 children (FS200 furnished housing being valued at 1/8 each). (1 /9 when unfurnished) of basic emoluments up to a ceiling of F$72,000, with special provisions applying to shareholders, directors, and hotel employees; subsidized employee loans; discounts on purchases; subsidized travel; excess contributions to social security; and entertainment allowances.
©International Monetary Fund. Not for Redistribution Fiji: Summary of the Tax System as of October 19,1995
Tax Nature of Tax Exemptions and Deductions Rates
1.2 Corporate tax Payable on worldwide income for Incentive for tax free zones (TFZ) and Resident resident companies. Payable on tax free factories (TFF) include: a companies: 35 percent chargeable income accruing in or 13-year tax holiday; waiver of import derived from Fiji for nonresident duties and excise taxes; and waiver of Nonresident companies. restrictions on repatriation of capital companies: 45 percent and profits. An eight-year tax holiday Tax losses may be carried forward for a on export profits is also granted if six-year period. Capital gains are not exports represent at least 30 percent of taxed. Depreciation provisions allow a sales. One five-year extension may 30 percent initial allowance for all also be granted. assets, except buildings, on which a 10 percent initial allowance is provided. Pioneer industries, considered Asset values are depreciated at historical important for Fiji's economic growth, costs. qualify for tax concessions for five years. Income derived from natural Companies are required to make resources may be exempted, if payments of provisional tax with approved. Accelerated depreciation 25 percent of the estimated tax due by allowances are available for a number the end of the financial year and another of sectors. 25 percent due within three months of financial year-end. The balance is due The tourism sector benefits from a upon issuance of a notice of assessment. 55 percent initial investment allowance Companies may adopt an accounting on the full cost of hotel construction period other than the normal calendar and broadly defined building extensions year. and refurbishments.
Many public coiporations are exempted.
©International Monetary Fund. Not for Redistribution Fiji: Summary of the Tax System as of October 19,1995
Tax Nature of Tax Exemptions and Deductions Rates
2. Taxes on property
2.1 Capital gains tax None
2.2 Estate and death duties None.
2.3 Land sales tax Levied on the profit from any transaction Land tax is not levied where: the seller,
©International Monetary Fund. Not for Redistribution Fiji: Summary of the Tax System as of October 19,1995
Tax Nature of Tax Exemptions and Deductions Rates
3. Taxes on goods and services
3.1 Value-added tax (VAT) Imposed on all goods and services In the case of a person exclusively 10 percent supplied by registered persons in Fiji, supplying goods, registration is not excluding goods for exports, Imported required if the total value of supplies in goods are exempt, except for those the preceding 12 months did not exceed Exports (and a few other consumed within Fiji. F$20,000. This registration threshold services) are zero-rated. is F$ 10,000 for persons not exclusively A VAT return must be submitted for supplying goods. each calendar month before the last day of the following month. Individuals with Financial services and the letting of taxable supplies of less than F$ 100,000 residential accommodations are may apply to submit reporting forms on exempted from the VAT. a quarterly basis.
3.2 Excise duties Levied on tobacco and alcoholic None. Cigarettes: FS59.42/10 rolls products manufactured in Fiji. Beer: 90^/Lt Spirits: Overproof: F$28.89/Lt Underproof: F$16/Lt
3.3 Business licenses A business license fee is required to None. The rates range from F$10 for a engage in any business in Fiji. The handcart hawker to F$2,000 for license fee is set and administered by an oil company with most respective city and town councils with businesses having a fee between the approval of the Minister for Urban FS100 and FS200 per annum. Development and Housing, or the Chief Accountant for areas outside the municipalities.
©International Monetary Fund. Not for Redistribution Fiji: Summary of the Tax System as of October 19,1995
Tax Nature of Tax Exemptions and Deductions Rates
3.4 Licenses Annual registration fee on motor cars None. The average registration fee is and vessels. F$140 for a vessel weighing 100 tons. The registration fee for cars is F$30 for cars not exceeding 1,000 c.c., with an additional F$3 for every additional 100 c.c.
3.5 Stamp duty tax Levied on agreements, insurance Many transactions involving various FS0.50 for every F$100 of a policies, bills of sales and exchange, government agencies are exempted. mortgage, share of corporate promissory notes, and various property stock, or insurance policy; and title transfers, such as land leases. FS2.00 for every FS100 of property other than shares or stock.
Lease term Tax payment (years) (per F$50)
<;10 0.50 10-21 3.00 21-50 8.00 >50 16.00
3.6 Gambling turnover tax Levied on bettings, raffles, lotteries, etc. None. 10 percent
©International Monetary Fund. Not for Redistribution Fiji: Summary of the Tax System as of October 19,1995
Tax Nature of Tax Exemptions and Deductions Rates
4. Taxes on international trade
4.1 Taxes on imports Under the Customs Act, 1986, the Fiji Exemptions apply to a wide range of The maximum rate has been Customs Tariff is a single column tariff food items, essential materials, and reduced to 22.5 percent. with no preferential treatment for any equipment. Concessions are most Minimum rate is set at trading partner. widely granted to manufacturing firms 5 percent. which may seek concessions for the startup of business. Cigarettes: 70.21/Kg Beer: $1.55/Lt Spirits: Overproof: F$45.08/Lt Underproof: F$25.75/Lt
4.2, Taxes on exports A uniform duty is imposed on the export 3 percent of sugar, molasses, silver, gold, and base metals or silver covered with gold.
5. Social security contribution
5.1 National Provident Fund Compulsory social security scheme for Members beyond age 55 may draw an 14 percent of earnings all public and private employees. annual pension equal to 25 percent of (7 percent by employee, their account for the remainder of their 7 percent by employer). lives. A revised plan with reduced Employer's contribution may be benefits is before the Cabinet and is increased up to 23 percent. expected to go to Parliament shortly.
©International Monetary Fund. Not for Redistribution