FIJI: Bad policies to blame for Fiji's poor economic growth
Updated
The Fijian Reserve Bank has announced the country's highest inflation rate since 1998. Reserve Bank governor Savenaca Narube says hopes that Fiji might make up 2.2 percent of its lost economic ground have been dashed. Last year's predicted negative growth was 3.7%, but the actual figure has come in at more than 4%. Mr Narube blamed Fiji's poor economic performance on Cyclone Gene, record world oil prices, and recession fears following the credit crunch in the United States.
Presenter: Barbara Heggen
Speakers: Dr Biman Prasad, Professor of Economics at the University of the South Pacific
PRASAD: Well I think much of the current or existing infrastructure is in a bad shape. Even before the 2006 coup some of the infrastructure needed significant injection of funds to improve it and I think the coup of 2006 has made it worse and the government has not been able to put in the appropriate levels of funds to actually improve the deteriorating state of the infrastructure as well as look at possibilities of new infrastructure. Things like a port facility, airport facilities, road, water supply; these are serious issues for investors looking potentially for a new investment. And I'm afraid that the government has actually not looked at that very seriously and one would have hoped that a slightly higher level of deficit in the budget could have been used to actually improve the infrastructure.
HEGGEN: So is the current regime incompetent?
PRASAD: Well it's not about being competent or incompetent, I think it's about the right policy. And I think that when you have a situation where the economy is in a very depressed state where key industries are not doing well, where the private investment is down, you've got to look at government policy, government expenditure, and I thought government expenditure policy could have been used to kickstart the economy which would have then spiralled into incentives and motivations for the private sector.
HEGGEN: Now how important is tourism to the overall economy and what can be done to boost tourism figures?
PRASAD: Tourism as we know is the largest foreign exchange here and it employs a significant number of people and tourism I think is key to our economy recovery. I think what needs to be done is we need to work very hard to get Australia and New Zealand to lift some of those travel advisories and I think a lot of that will depend on the kind of progress we are making towards having the election in March 2009. And as you know in economics, expectations of what's going to happen in the future is very, very important for individuals and firms to make decisions. And if there is an expectation and if there's a clear path laid down by the interim government and as they have promised the international community that the elections are going to be held in March or April next year, and if that is maintained I think we can see some confidence coming back. And perhaps it's time that both Australia and New Zealand ought to re-look at their travel ban on people who are participating in the interim government or are being appointed by the interim government, because it's not serving anyone's interests to keep the ban on people who may possibly want to help the interim regime. So I think if that can be lifted I think that will also help boost the confidence of people who want to travel to Fiji from Australia and New Zealand as tourists.
