Fiji Reserve Governor speaks frankly on the economy
Updated
The Governor of the Reserve Bank of Fiji says political developments in his country have had only a very minor impact on the Fiji economy. In an in-depth interview with Pacific Beat, Reserve Bank Governor, Sada Reddy, gave an upbeat assessment of Fiji's economic prospects and some insight into the direction the interim government will take in its 2010 budget, which is due to be announced in November. On the international front, Governor Reddy lashed out at countries, he said, are attempting to block Fiji's access to international loans.
Presenter: Jemima Garrett
Speaker: Fiji's Reserve Bank Governor, Sada Reddy
Fiji's Reserve Bank Governor, Sada Reddy, speaking with Jemima Garrett. And if you want to hear all of that interview with Sada Reddy tune in to Pacific Beat tomorrow, where it will be a feature in the second half of the program.
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GARRETT: Late last week Fiji's Reserve Bank announced the country's foreign reserves had hit 1 billion fiji dollars for the first time.
Reserve Bank Governor, Sada Reddy, describes the record foreign reserves figure as a major milestone, helped along by the 20% devaluation of the Fiji dollar in April, a 188 million fiji dollar line of credit from the International Monetary Fund and a reduction in imports.
The devaluation came shortly after the abrogation of Fiji's constitution and the imposition of strict media censorship.
Despite the ongoing political problems in Fiji Governor Reddy says political developments have only a very minor impact on the economy.
REDDY: That's really.. when you have a situation like that, it does affect the economy to some extent, especially in terms of aid flows and foreign loans and all that, but it has not had any major, major impact on the economy as such. Of course travel bans and all that do have an impact. Good people are unable to accept positions in the government and the statutory bodies, and so in that sense it has got an affect, but not directly on the economy as such.
GARRETT: Many experts are saying the political situation is now the biggest negative factor affecting Fiji's economy, because it's affecting investment and confidence. How do you respond to that.
REDDY: Well, on the margins certainly it may be affecting, but business people and many other countries are probably going through similar or worse political situations. The business people get on with business and as long as they see that their business is secure in the long term and the rules and regulations are transparent and certain, they will continue to do business. I don't think it is a major issue.
GARRETT: Fiji Reserve Bank Governor Sada Reddy.
Governor Reddy is optimistic about Fiji's economic outlook. He says the tourism industry is already picking up and, having spoken with key industry figures in fishing and bottled water, he expects those to follow suit.
Mr Reddy forecasts 2% growth in 2010, up from a .2 % contraction this year and he predicts the 2010 budget, due out in November will be milder than many expect.
REDDY: I don't think the budget will be tough, I think the budget will be more growth oriented in terms of promoting export. It will try and discourage imports and also try and I think the government is looking at making the civil service more efficient than it was in the past. I think more will be done in terms of investment, building investor confidence, providing a more certainty in terms of policy in the medium term I think. Those would be the thrust. Overall in terms of government framework, in terms of that deficit to GDP, all that will be contained. Government will spend more in terms of infrastructure. They are already starting. Our reserve bank message to government is to invest more in infrastructure which has been neglected for a number of years.
GARRETT: Next week, Governor Reddy will attend the annual meeting of the International Monetary Fund and the world bank Group in Istanbul in Turkey.
One of his tasks will be to look for loans from multi-lateral organisations for Fiji's infrastructure spending.
Fiji's interim government has complained Australia and New Zealand are using their clout to persuade international organisations to join their campaign for the return of democracy in Fiji, by refusing assistance.
Governor Reddy says he will urge those countries that have long term interests in Fiji to support Fiji's access to finance.
REDDY: Nobody gains by undermining any country's economy. We all will be losing in the long run. So I would urge those countries which are taking particular sides or want to impede our access to international capital markets, that they look at these policies in terms of long term interests of the region and of Fiji.
GARRETT: Would you include Australia among those countries?
REDDY: Well, I will not name countries here. I think the countries know which countries are taking certain positions with respect to Fiji and I would leave it at that.
