fiji's economic woes: a nation in search of development ... · prasad, naidu and kumar 2001)....

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PACIFIC ECONOMIC BULLETIN

Pacific Economic Bulletin Volume 17 Number 1 May 2002 © Asia Pacific Press

Sunil KumarEconomics Department,University of the SouthPacific.

Biman C. PrasadFiji Centre andDepartment ofEconomics, Universityof the South Pacific.

Fiji’s economic woes: a nation insearch of development progress

Sunil Kumar and Biman C. Prasad

While recent economic stagnation is largely attributed to theMay 2000 putsch, Fiji is still grappling with the political andeconomic problems triggered by the military coups of 1987.Despite efforts by various governments over the last twodecades, economic decline has not been reversed. The lackof confidence in the economy and continuing decline ininvestment are major contributing factors to poor economicgrowth. The immediate challenge for Fiji is to reverse theeconomic decline through the promotion of private invest-ment and increasing export competitiveness. Continuingpolitical instability and the lack of a solution to the problemof property rights in land present difficult challenges.

Fiji’s economy has the potential to grow at amuch faster rate than that achieved over thelast decade. While much of the blame forpoor recent economic performance can beattributed to political instability, a great dealof the blame can be ascribed to economicpolicy failures. Following the putsch of May2000, efforts have been made to addresseconomic problems, but with little success.As a result of the political upheaval, mosteconomic sectors have experienced slowgrowth. As expected, tourism came to a nearstandstill, while the garment industry andmanufacturing suffered serious losses dueto international sanctions and industrialdisruptions at home. The political crisis alsoled to an escalation in the eviction ofsugarcane farmers from their native landleaseholdings and illegal occupation ofcommercial properties by landowners.

The SDL coalition government is facedwith the challenge of repairing the damagedone to the economy by the attempted coupof May 2000. So far the government’s effortsin this direction have been mixed. While onone hand the government rightly proposesmarket-based economic growth and hopesfor rejuvenation of the private sector, on theother hand, the 2002 Budget shows increasedgovernment expenditure which the govern-ment hopes to finance through domesticborrowings. The government’s desire forprivate sector initiatives is commendable butthe huge unproductive expenditure arisingfrom the expansionary policy measuresunder the 2002 Budget is incompatible withthese ambitions, since ‘domestic’ financingof the 6 per cent net budget deficit is likely toput strong upward pressure on interest rates.The projected budget deficit for 2002 is a 67

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per cent increase over the 2001 deficit (Reddy,Prasad, Naidu and Kumar 2001). If most ofthe F$244 million deficit is financed throughlocal borrowing it may effectively lead tocredit rationing and crowding out of privateinvestment. For its part, the government hasargued that interest pressure may not be sostrong due to excess liquidity in the moneymarket.

The expansionary policies of the govern-ment are a typical Keynesian prescription fora depressed economy, but unfortunately,expansionary policies alone will not lead tohigher levels of economic growth. In the shortrun, expansionary fiscal policy may helpcreate economic activities and generate someextra employment; but in the long run thecrucial issue for the economy is how to createconfidence to attract foreign direct investmentand facilitate exports. To increase exportcapacity the Fijian economy needs to becompetitive in international markets, and thisdepends on its ability to attract high levels offoreign investment.

Unfortunately, recent political instabilityhas seriously hampered efforts towardsbuilding confidence in the economy. Thecourt battle between the SDL Coalitiongovernment and the Fiji Labour Party hasdiminished hope for a speedy settlement ofthe existing political conflict. As long ago as1998, Chand (1998) pointed out the urgentneed for Fiji to resolve its political and landproblems before confidence in the economycan be restored.

After the coups of 1987 Fiji made adrastic economic policy shift from importsubstitution to niche market exports and thispaid significant dividends in the form ofincreased garment exports and employmentcreation. Much of the growth in the manu-facturing sector, and in particular in thegarment sector, was realised as a result ofthe creation of tax-free zones (TFZ). Underthe TFZ policy the government provided a13-year tax holiday to investors. Withincreased investment, garment exportsincreased significantly within a very short

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

1997 1998 1999 2000 2001

GDP at market prices (F$ million) 3,060.0 3,281.5 3,664.6R 3,504.8P 3,796.9P

Per capita GDP at current factor cost (F$ million) 3,316.0 3,516.3 3,889.2R 3,769.2P 3,943.5P

Constant price GDP growth rate (per cent) -0.9 1.4 9.7RR -2.8P 1.5P

Wage and salary earners (mid-year) (‘000) 112.9 112.5 .. .. ..Inflation (year-on-year per cent change, all items) 2.9 8.1 0.2 3 2.3Foreign debt outstanding (F$ million) 352.1 447.4 513.6P 529.7P ..Debt service ratio (per cent) 2.9 4.1 3.2 2.9 ..Foreign reserves (F$ million) 557.9 764.7 872.0 898.1 841.3E

Domestic credit (F$ million) 1,187.6 1,232.2 1,285.1 1,358.8 ..Time deposit rate (per cent) 5.2 4.0 2.9 3.0 3.3E

Lending rate (per cent) 10.2 9.1 8.5 8.4 8.4E

E estimated using existing dataR revised at sourceP projectedSource: Reserve Bank of Fiji, 2001. Quarterly Review, December, Suva; Reserve Bank of Fiji, 2000. QuarterlyReview, June, Suva.

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time. The value of garment exports rose fromF$8.8 million in 1987 to F$141 million in1994. By 1999 garment exports had increasedto a staggering F$332 million.

In 1999 the economy experienced stronggrowth of 9.7 per cent but contracted by2.8 per cent in 2000 due to the politicaldisturbances (Table 1). In 2001 the economygrew by a meagre 1.5 per cent, a slightimprovement over the forecast of 1 per cent.In November 2001, the government projectedan economic growth rate of 3.5 per cent in2002, based on its expansionary fiscal policy(Fiji 2001a). This projection has been revisedto 4.4 per cent (Reserve Bank of Fiji 2002c).Reserve Bank’s revision reasserts the earlierargument by the government that increaseddomestic demand would augur well for theeconomy and induce economic growth. Inparticular, the higher government allocationfor capital spending is expected to generatemuch-needed employment and spur activityin the private sector (Reserve Bank of Fiji2001a). Economic growth for 2002 is expectedto be broad-based with the exception ofsugar, which is projected to contract further.The major sectors and industries anticipatedto drive growth in 2002 are the wholesaleand retail trade, transport, community, socialand personal services, tourism, and miningand quarrying.

GDP growth and economicperformance

Fiji’s GDP growth rate over the past 31 yearshas been very low (Table 2). The economygrew only 124 per cent over the period1970–2001, equivalent to a 2.6 per centaverage annual growth rate for this period.Real per capita income, however, grew evenmore slowly, by a meagre 44 per cent in thesame period—equivalent to an average 1.2per cent annual growth rate.

The highest level of GDP growth wasachieved between 1970 and 1975—theperiod immediately after independence. Theperiod of lowest growth was in the 1981–85period—the period during which Fiji’sforeign debt was increasing and when adecisive economic policy switch from importsubstitution to niche market exports wasimplemented. It is, however, not implied herethat the decline in GDP was caused by thesefactors. It may be the case that the increase inforeign debt and the change in economicpolicy were pursued as a result of decliningeconomic performance. The comparativelybetter economic growth rate during the1986–90 period is observed to be as a resultof growth in the garment and tourism sectors.

The policy switch from import-substitution to export-oriented strategy,

Table 2 Fiji: average real GDP growth and real per capita GDP growth, 1970–2000 (at constant1990 prices)

Average GDP growth rate Average per capita GDPgrowth rate

1970–75 9.7 7.51976–80 2.3 0.31981–85 -1.3 -3.11986–90 1.2 0.21991–95 2.4 0.81996–2000 2.1 1.5

Source: Derived from Appendix Table A1.

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pursued vigorously after the coups of 1987,led to modest economic recovery in theperiods 1991–96 and 1996–2000. However,this policy shift has not as yet delivered ahigher average growth rate (Chand 1998).This result may be due to uncertainties onthe political front and in property rightsto land ownership. Chand (1998) alsoimputes that low and declining investmentin the economy to uncertainty over landrights.

Table 3 shows the change in the share ofGDP from 1996 to 2001. The most obviousand frequently discussed feature of thechange in the share of GDP is the shift awayfrom the agricultural sector though thiscontinues to be larger than the manu-facturing sector. The share of agriculture hasdeclined from 19.5 per cent in 1996 to 16.5per cent in 2001 and further decline ispredicted (Fiji 2001a).

Sectoral performances

Sugar

Sugar has been the mainstay of the Fijianeconomy. It employs more than 25 per centof Fiji’s total workforce and the prospect ofthe sector ’s collapse points to a bleakeconomic future for Fiji. Sugar production isexpected to continue to decline in 2002 dueto expiring land leases and declining levelsof productivity. Expiring land leases, poormill performance, high rates of cane burningand continuing transport problems plaguethe industry. Sugar industry politics and theunchanging position of the NLTB are likelyto make negotiations over the proposedrestructure of the industry very difficult. TheNLTB maintains that leases should not berenewed under ALTA and wants to replacethe current tenant farmers with landowners.Fiji Sugar Corporation (FSC) representatives

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

Sector 1996 1997 1998 1999 2000 2001Share of % of Share of % of

GDP GDP GDP GDP

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

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

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in a recent submission to the CabinetSubcommittee on investment, outlinedrecommendations including separation ofthe four sugar mills into individual entities,reduction of the workforce in the mills andplans to reduce production costs at the farmlevel. The FSC also requested a governmentguarantee of its debt until restructuring iscomplete. The restructuring proposals havebecome controversial amongst the variousstakeholders and this may create furtherproblems for the industry. There are plansto salvage the operational and financialdifficulties of the FSC, which incurred aF$3 million loss in 2000 and a F$20 millionloss in 2001 (see FSC 2001).

According to the available data, theGDP share of the sugar industry has beendeclining for some time and is likely todecline further in 2002. The industry’s shareof GDP fell from 11.3 per cent in 1996 to7 per cent in 2001 with a probable furtherdecline to 6.2 per cent in 2002. The sugarindustry’s share of all agricultural activity isprojected to decline from 41.2 per cent in 1996to 25.6 per cent in 2002. In 2001 the industry’scontribution to GDP stood at 29.6 per cent.The decline in the agricultural sector is astrong ‘push’ factor for rural–urbanmigration, which has probably acceleratedsince 2000 with the expiry of native landleases in the sugarcane belt and other farmingareas, and the accompanying civil unrest.

As a consequence of declining sugaroutput, the share of sugar industry manu-facturing in the sector has declined from22.4 per cent in 1996 to only 15.5 per cent in2001. The projection for 2002 is for a furtherdecline of 1.2 percentage points.

Due in part to the declining contributionof agriculture in the Fijian economy, and inparticular, the declining contribution of thesugar industry, the contribution of theservices sector, which includes tourism, is setto increase. While the trade sector hasexperienced an annual 3.5 per cent increasefor the period 1996–2001, the hotel and

restaurant sector has seen a slight decline inits growth rate from 3.2 per cent in 1999 to2.5 per cent in 2000. This decline in the growthrate was due to the decline in demand forhotel and catering services relating to thedecline in tourist numbers as a result of theMay 2000 crisis. This sector’s share of GDP,however, is projected to increase by 3 per centin 2002. The share of the transport andcommunications sector in GDP has increasedby 2.8 per cent in the period 1996–2001 from12.5 per cent to 15.3 per cent. The share ofthis sector is forecast to increase further by0.9 per cent in 2002 (for details of other sectorssee Table 3 and Appendix Table A3).

Tourism

According to policymakers in Fiji, thetourism sector holds the key to the futuregrowth of the Fijian economy. After thecoups of 1987 the idea of reducing economicreliance on sugar and expanding the tourismindustry was seen as a panacea for alleconomic ills (Prasad and Tisdell 1996).Bureau of Statistics data show that for theyear to October 2001, 287,327 visitors cameto our shores, a rise of 17.8 per cent over thesame period in the previous year. However,during October 2001, visitor arrivals totalled31,251, a drop of 6.6 per cent over theprevious month. The US market recorded animprovement, albeit marginally, over thesame period. However, poor performancesfrom the New Zealand and Japanese marketsmore than offset the increases in Australian,Continental Europe, United Kingdom,Canadian and US visitors. Visitor arrivalshave not regained pre 1999 levels (Figure 1).

Tourism earnings for the year 1999 wereestimated at F$558.6 million while that for2000 was estimated at F$413.5 million,which is a 26 per cent decline (Bureau ofStatistics 2002). According to the 2001 data,tourist numbers have increased by 18.3 percent over the 2000 figure. However, the totalnumber of visitor days has increased by 40per cent (Bureau of Statistics 2001b). Tourism

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earnings for 2001 are estimated to beF$489 million. It is expected that the earningswill be in the vicinity of the 1999 earnings.The current government estimate isF$536.7 million (Fiji 2001a:99).

During the months of June, July andAugust after the May 2000 crisis touristarrivals declined by 70 per cent from 1999levels but have continued to improve sinceSeptember 2000 (Figure 1). Visitor arrivalsfor January 2002 are slightly above the 1999figure and the projection is that the arrivalswill continue to increase. If this trendcontinues, earnings from tourism for 2002would easily exceed the projected F$536.7million. Tourism presently generates about30 per cent of Fiji’s gross foreign exchangeearnings and 17 per cent of total output andemploys about 30 per cent of the total labourforce. It could well be true that the tourismsector holds great potential for the economy.

Garment manufactures

The value of garment exports increasedsubstantially in 1998, from F$200 million in1997 to F$302.8 million in 1998 (Reserve

Bank of Fiji 2001a). Some of the gains inexports may have been due to the massivedevaluation of the Fijian dollar earlier in1998, however, these gains have been quicklyeroded within the last three years. Theworsening exchange rate and deterioratinglaw and order situation, and the absence ofwell-defined and enforced property rightshave been the main factors eroding overallconfidence in the economy and havediscouraged potential investors. The mostimportant factor causing the current declinein exports of garments has been the reductionin import duties under WTO arrangements,reducing preferential access in markets inAustralia, New Zealand and the UnitedStates. This loss of preferential access hascaused many factories to close down. In arecent development, a large garment factoryin Suva with 300 workers shut down itsbusiness overnight. More than five suchfactories have closed in the last twelvemonths as a result of dampening demandin the global market. Compared to the July–September 2000 period, garment exports in2001 declined by 6.4 per cent (Bureau of

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

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

-80

-60

-40

-20

0

20

40

Jan-99 Jul-99 Feb-00 Aug-00 Mar-01 Sep-01

Gro

wth

rate

(per

cen

t)

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Statistics 2001d). However, it is hopedthat the sector may see some increase inproduction as a result of the introduction ofthe Duty Suspension Scheme (DSS) from thisyear (Fiji 2000a). Under the DSS proposedin the 2002 Budget, exporters will be able toimport inputs duty free. They will alsobenefit from another measure that allows 100per cent waiver of tax until the end of 2002.The growth in this economic sector hingeson long-term confidence in the economy toattract high value investments ahead ofcountries like Indonesia, China, Malaysia,Bangladesh and Brazil.

Mining

The production of gold in November 2001amounted to 10,572 ounces, a decline of18 per cent over October 2000, largely due toa decline in the yield of high-grade ore fromEmperor Gold Mining. However, Octoberproduction was 13 per cent higher than forSeptember. From January to November 2001,the total output of gold was 114,248 ounces,2 per cent higher than for the same period in2000. Mining is among the few sectors in Fijithat has not been affected by events such asthe coups. The government has providedincentives for this sector in the 2002 Budget,including the removal of a 3 per cent exporttax as well as allowing the company to importplant and equipment duty free. Empire GoldMining has been a long-time beneficiary ofgovernment concessions (Fiji 2001a).

Construction

Usually the most visible sign of economicrecovery and increasing investment is activityin the construction sector, and so far not muchactivity has been observed. The building andconstruction sector declined steeply after May2000, and the construction of residentialproperties declined by about 33 per cent in2000, while overall building and constructiondeclined by 13 per cent (Bureau of Statistics2001c). There was, however, some increasein building and construction permits issued

for the third quarter in 2001 and towards theend of the year. A total of 365 permits wasissued in the third quarter in 2001. In theprivate dwelling category, 127 permits worthF$5 million were issued while for the sameperiod in 1999, 186 permits worth F$8.8million were issued. The number of permitsissued in 2001 was slightly higher than thoseissued in 2000 largely due to an increase inpermits issued for private dwellings andother buildings. A total of F$4 million worthof private dwellings were issued completioncertificates in the third quarter of 2001. Thiswas 20.1 per cent below the third quarter of1999 but represents a 47.8 per cent increaseover the second quarter of 2001. The ongoingconstruction of major projects and theincrease in government capital expenditurein 2002 is likely to improve growth prospectsfor this sector. However, long-term prospectsfor the sector are hard to predict sinceconfidence in the economy remains so low.The removal of economic sanctions by theEuropean Union is one positive sign for theconstruction sector. For example, the EU-funded Rewa bridge is likely to spur activityin the construction sector.

Fisheries and forestry

Timber and fisheries sectors did not sufferdirectly from the political instability. FromJanuary to September 2001, 351,000 cubicmetres of timber were produced. This wasan increase of 8.8 per cent over the sameperiod in 2000 (Reserve Bank of Fiji 2001a).This increase was realised as a result of a15 per cent rise in the production of pinepulp. The total output for 2002 is estimatedto increase by around 10 per cent. Thegovernment did not make any substantialstatement on this sector in the 2002 Budget,particularly regarding the mahogany issue,which could be a major investment venturein Fiji. The total raw value of mahogany isestimated at more than F$500 million.

The fishing industry is another industrywith huge potential in Fiji. In 2001 cumulative

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to September, total fresh fish productionamounted to 26,000 tons: an increase of10 per cent over the same period in 2000.While in 2000, fisheries sector exportsdeclined by about 17 per cent, there was a10 per cent increase in the January–Septemberperiod in 2001 due to new markets in theUnited States, Japan and other parts of Asia.A further 7 per cent increase is projected for2002.

Exchange rate, inflation and themoney market

The exchange rate in Fiji has been reasonablystable for the last three years. However, soonafter May 2000, restrictions were imposedon international transactions and creditfacilities by commercial banks for a briefperiod. The current Reserve Bank creditpolicies for commercial bank operations andforeign exchange regulations resemble thepre-coup situation (see Reserve Bank of Fiji2000b, 2000c, 2000d for the sequence ofpolicy actions taken by the Reserve Bank ofFiji). Overall monetary discipline has beenwell maintained by the Reserve Bank of Fiji,thereby avoiding deeper economic crisis ofthe kind that often takes place in politicallyunstable economies. For example, lack ofmonetary discipline in Papua New Guineabetween 1997 and 1999 led to the decline ofthe value of the kina from US$0.79 toUS$0.20 (Duncan 2001).

Over the early months of 2002, thenominal effective exchange rate (NEER) hasrisen marginally, reflecting no major move-ments in the Fiji dollar against othercurrencies. Bilateral movements over thelatter part of 2001 and early 2002 show thatthe Fiji dollar appreciated against the euro,yen and the US dollar, but weakened againstthe Australian and New Zealand dollars.As a measure of international competitive-ness, the real effective exchange rate index(REER), rose by 2.1 per cent over the year

2001, while it declined marginally over theDecember 2001 quarter. The increase in theREER reflects a slight deterioration in Fiji’sinternational competitiveness. This declinewas mainly due to domestic inflation earlierin 2001. The overall inflation rate in 2001was reported to be 3.5 per cent (whileinflation in the first three-quarters of 2001was recorded at 4.9 per cent it declined to2.3 per cent in the last quarter).

Inflation has not been a serious issue inFiji recently, however it has occasionallyraised concerns. In 1988 and 1998, forexample, inflation recorded 11.7 per cent and8.1 per cent respectively, due to massivedevaluation of the Fijian dollar aimed atencouraging exports and creating employ-ment. Inflation in 1999 was low, at 0.2 percent, partially due to the effect of the removalof the value-added tax from essential fooditems and to low inflation rates in Fiji’smajor trading partners such as Australia andNew Zealand. The Reserve Bank’s controlover the money market and exchange ratesis commendable and the Reserve Bank Actof 1985 is applied with absolute clarity.

Trade and balance of payments

Fiji’s small economy is heavily dependenton external trade and tourism. There aremore than 300 business establishments inFiji that manufacture or blend products thatare exported (Fiji Trade and InvestmentBoard 2002). These products include timberitems such as furniture, industrial coatings,foodstuffs, beverages, soaps, bottled water,handicrafts and footwear, garments andconstruction materials. A wide variety ofagricultural products are included in the listof exported items. The government’s currenteconomic growth strategy is based onexpanding exports and tourism. The govern-ment plans to create various incentives forexport ventures and help in the formation ofnew companies through the Fiji Investment

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Corporation. The government sees substantialopportunities for forestry diversification,commercial fisheries and shipbuilding(which has not been commercially successfulin the past). Agricultural diversificationinvolving fruit, vegetables, ginger, copra andtaro could also be areas of interest for thegovernment.

Sugar exports show a decline of 6.2 percent for the 2000 season (Table 4). In 2001,the total cane harvested amounted to onlyaround 2.8 million tons, generating just over293,000 tons of sugar, a decline of 14 percent in sugar output and a massive declineof 25.9 per cent in sugarcane output. Miningexports increased by 11.7 per cent for 2000,while timber and textiles exports declinedslightly. The increase of 2.8 per cent in totalexports for 2000 was realised as a result ofincreases in exports of other commodities.

Fiji’s balance of trade with its tradingpartners has not been favourable (Table 5).Between 1992 and 2000 Fiji had a tradedeficit with its major trading partners. It isimperative that Fiji’s exports be boostedthrough appropriate policy changes. Thegovernment’s decision to lift the moratoriumon tax-free factory/tax-free zone approvalshas contributed positively to the garmentindustry, but more needs to be done toattract new investments. Under the tax-freefactory/tax-free zone policy, 70 per cent of a

company’s products have to be exported orsold to another tax-free factory in Fiji. Inexchange, the company gains the benefit ofa 13-year tax holiday. In August 2001 theReserve Bank of Fiji introduced an exportcredit ratio policy, which requires the banksto lend a minimum of 5 per cent of theiraverage deposits to eligible exporters ofgoods and services (Reserve Bank of Fiji2001b). This policy was introduced toencourage exporters through tangiblefinancial support. The Governor of theReserve Bank defended the policy as apragmatic response to the special circum-stances that the Fijian economy currentlyfaces. He stated that it should not beinterpreted as a move away from the market-based implementation of monetary policysince the banks were free to set interest rateson such lending. The establishment of thisexport-financing ratio, together with theexisting export finance facility, reflects theimportance of exports to the whole economy.

From January to September 2001, dataon overseas exchange transactions (OET)showed that merchandise exports fell byaround 9 per cent, following a decline ofaround 7 per cent in the correspondingperiod in 2000. Generally, the decline inexports was broadly based but with sugarand garments showing the greatest decline.Consistent with the depressed domestic

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

Sugar Gold Timber Fish Textiles Total

1995 299.2 (10.9) 53.6 (5.3) 51.9 (40.7) 67.6 (15.0) 25.8 (-49.1) 650.3 10.7

1996 322.4 (7.8) 72.5 (35.3) 45.3 (-12.7) 65.8 (-2.7) 50 (93.8) 706.7 (8.7)1997 194.2 (-39.8) 46.6(-35.7) 39.2 (-13.5) 44.4 (-32.5) 88.3 (76.6) 547.5 (-22.5)1998 197.5 (1.7) 46.2 (-0.9) 41.7 (6.4) 55.5 (25.0) 93.1 (5.4) 637.4 (16.4)1999 302.3 (53.1) 36.8(-20.3) 21.1 (-49.4) 78.8 (42.0) 87.6 (-5.9) 657.2 (3.1)2000 283.5 (-6.2) 41.1 (11.7) 20.8 (-1.4) 65 (-17.5) 87 (-0.7) 675.6 (2.8)

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

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demand, merchandise imports declined byaround 6 per cent compared to an increase of1.6 per cent in the same period in 2000. Thefall in imports was largely due to a decline inthe demand for consumption goods of 2 percent and a decline in the demand forintermediate goods of 26 per cent. At the endof December 2001, foreign reserves remainedhealthy at around F$837 million, equivalentto 4.4 months of imports. By the end of March2002, the foreign reserves had declined toF$787 million as was to be expected due tothe government’s current expansionary fiscalpolicy and the relaxation of capital controlsin the 2002 Budget. Foreign reserves areanticipated to decline further during the lasttwo quarters of 2002. The Reserve Bank statesthat the decline in foreign reserves would bea sign of higher economic activity and isconfident that the level of foreign reserves willremain within a comfortable range even withthe current relaxation of control policy(Reserve Bank of Fiji 2002b).

Merchandise exports do not show anystriking fluctuation in the period after the May2000 event. The year 2000 trade deficit wasrecorded at F$407.8 million, which was lower

than the 1999 deficit of F$477.4 million. Thisdecline in the trade deficit was due to thedecline in imports (see Table A5 for data onthe trade deficit with major trading partners).The trade balance for 2001 is anticipated tohave worsened as exports continued todecline during the year. However, there aresigns of improvement in 2002 economicgrowth and exports. The latest projectionof growth in economic output for 2002 is4.4 per cent. The earlier projection for 2002was 3.5 per cent (see Reserve Bank of Fiji2002b for the reasons pertaining to therevised projection). Economic growth for2001 has been revised upwards to 2.6 per centfrom an earlier estimate of 1.5 per cent. Thesedata do not, however, show how the tradefigure may be affected in light of the newinformation available.

Unemployment, wages and thelabour market

The cumulative number of emigrants of allethnic backgrounds from 1987 to 2001 isestimated at 70,660. Of the total number who

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

Exports Imports Balance of Services Investment Income and Currenttrade (net) income transfers (net) account

(net) balance

1992 525.7 809.8 -284.1 258.8 -75.2 42.2 16.81993 571.9 1,006.5 -434.6 286.7 -83.6 22.9 -125.01994 717.7 1,053.7 -336.0 290.3 -126.1 -55.9 -101.61995 730.8 1,070.8 -340.0 278.7 -101.2 25.1 -36.21996 911.3 1,178.7 -267.4 326.9 -86.0 26.7 86.21997 803.8 1,182.8 -379.0 427.6 -104.1 0.9 50.11998 839.5 1,221.1 -381.6 351.5 -162.8 18.2 -11.41999 1,047.1 1,524.5 -477.4 400.5 -196.9 -72.4 -149.32000 1,096.3 1,504.1 -407.8 140.9 47.0 167.5 -99.4

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

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migrated during the 1987–2000 period,89 per cent were Indo-Fijians. It is estimatedthat in the years 2000 and 2001, these were5,275 and 6,316 emigrants, respectively(Reserve Bank of Fiji 2001a, 2002c). Most ofthose who migrated were professional andskilled people (Reserve Bank of Fiji 2001a;Mohanty 2001). Because of this loss of skilledlabour, Fiji is likely to face a major challengein its efforts to increase investment andexports.

The labour market generally remainedweak over 2001. From January to November2001, more than 2,600 jobs were lost in thegarment sector alone. The situation is likelyto worsen in this sector but there are someoffsets from new investments expected in2002 (Reserve Bank of Fiji 2001a). Aside fromgarments, the employment situation in thenon-agricultural sectors is improving slightly.With the exception of sugar, employment inagriculture is likely to improve as well, albeitmarginally. The number of newly registeredtaxpayers with the Inland Revenue Depart-ment, a partial indicator of employment,recorded 1,789 new entrants in February2002. While this alludes to growth inemployment levels, some of these jobs mayhave become vacant due to emigration.

On the wages front, private sector wagegrowth ranged between 3 and 7 per cent. Inthe public sector, civil servants received a3 per cent cost of living increase in December2001, backdated to 1 January 2001. Otherstatutory bodies received similar or evenhigher increases. In the twelve months toNovember 2001, inflation averaged 4.9 percent. Effectively, this could mean that realwages fell by more than 1 per cent in 2001.Overall, real wage rates have declined by21.5 per cent over the period 1986–99. Thebiggest reduction of 34 per cent was recordedin the manufacturing sector. The only sectorexperiencing an increase in real wage rateswas the mining sector, with an increase of28.3 per cent (see Appendix Table A8 fordetails). An increase of 23.5 per cent wasrecorded for all sectors. The salaries of

established employees in the agriculturalsector have increased by 14.4 per cent,mining 15.5 per cent, construction 17.9 percent, electricity 27.9 per cent, transport 13.9per cent and in services by 28.1 per cent.Manufacturing and commerce have showna decrease of 2.1 per cent and 1.7 per centrespectively.

Poverty alleviation

The Fiji Poverty Report indicated that 25 percent of households in Fiji lived in povertyand another 15 per cent of households wereabout to drift into poverty if their realincomes were not sustained or increasedover time (UNDP 1997). With the currentstate of the economy, it is believed more than25 per cent of households are now in poverty.The government has allocated a total ofF$157 million for poverty alleviation in the2002 Budget compared to F$101 million in2001. This increase in the poverty alleviationbudget is commendable but the governmentneeds to define its target clearly. The FamilyAssistance Scheme, which is the only directassistance to affected households, has onlybeen increased from F$8.6 million toF$11 million. This is far too little in terms ofthe large number of people in need of directassistance as a result of lost income and lostprospects of work. An estimated 40,000people are in need of direct assistance,particularly as a result of displacement ofsugarcane farmers and loss of jobs as a resultof the May 2000 upheaval. During the lastdecade Fiji has been drifting towards theorbit of low-wage developing economies andfor this reason the issue of poverty associatedwith low wages must be addressed (Reddy etal. 2001).

Public sector reforms

Privatisation and corporatisation in Fiji havebeen undertaken as part of the country’soverall public enterprise reforms. The first

12

Economic survey



major step towards this was taken in the1993 Budget in which the government clearlyindicated that public enterprise reformwould allow many loss-making enterprisesto be reorganised so that better returns couldbe achieved. These reforms were laterencapsulated in the Public Enterprise Act of1996. According to the government, publicenterprise reform is aimed at• ensuring that government will obtain

higher returns from its investments• improved productivity• better quality services provided by the

entities• increased efficiencies• stricter accountability for the manage-

ment of government’s investment.The government’s share of public enter-

prise assets has increased from F$3,816.38million in 1998 to F$4,981.21 million in2000, an increase of about 30 per cent(Appendix Table A10). The net worth ofthese public enterprises has also increasedfrom F$2,936.67 million in 1998 to F$3,407.79million in 1999, an increase of about16 per cent.

One of the reasons for privatisation andcorporatisation has been the poor perform-ance of public enterprises. Compared to theusual private sector returns of a minimumof 10 per cent, the returns on public enter-prises has been very poor (Table 6). Thegovernment, however, fails to point out thatsome of the public enterprises that are being

privatised or corporatised were makingabove-average returns. These include TelecomFiji, Post Fiji Limited and Fiji InternationalTelecommunications Limited (FINTEL).

Public sector reform is vital for Fiji’seconomic progress. Particularly importantis the reform of the civil service. In Fiji’s case,it is common knowledge that the perform-ance of the civil service since 1987 hasdeteriorated to an extent where it is affectingthe performance of the private sector. Reformof the civil service therefore should betargeted towards making it more efficientand productive. According to Duncan,Cuthbertson and Bosworth (1999) a welldeveloped market economy can absorbresources and people released from civilservice reform and this may lead to betterutilisation of resources.

Investment and savings

Investment in Fiji has continued to declinesince 1980 and this has been pointed out asa key factor in the sluggish economic growthover the past 20 years. In the late 1970s andearly 1980s, total investment was as high as29.4 per cent of GDP (Appendix Table A11).In 2000 it reached a record low of 10 per centof GDP. Political instability, labour marketrigidities, institutional constraints and lackof property rights have been pointed out asfundamental factors accounting for the lackof confidence in the economy (Prasad and

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

1998 1999 2000

Return on assets 1.35 -0.31 1.42

Return on shareholders’ funds 1.76 -0.43 2.08

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

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Economic survey



Kumar 2000; Sepehri and Akram-Lodhi2000; and Chand 1998). The largest declinetook place between 1981–85 and 1986–90,that is, in the period following the 1987coups (Table 7).

Investment depends on the availabilityof domestic or foreign savings. The savingsdata for Fiji show that savings have fallendrastically, from a high of 21.7 per cent ofGDP between 1978 and 1982 to a low of 13.3per cent between 1988 and 1993 (Table 8).There are various reasons for this decline inthe savings rate. From the fluctuations in thedata, the political instability appears to havecontributed to the decline. Households andbusinesses tend to place their savings in safehavens at such times and spend their incomeon investments such as education. On theother hand, the government has not

encouraged savings through its policyinstruments. On the whole, time depositinterest rates paid by commercial banks andrate differentials have not been attractive forindividual savings.

Economies that grow at rates higherthan 5 per cent normally have a domesticsavings rate greater than 20 per cent. Thishas not been the case in Fiji for the past 20years and particularly so during the post1987 period.

The other factors that affect savingsand investment in Fiji besides politicaluncertainty are natural disasters, lack ofdefined property rights and unfavourablelabour market conditions. The outward flowof skilled labour is obviously a discouragingfactor for potential investors. Focus oneconomic fundamentals such as enhancing

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

Government Public Private Total

1977–80 5.6 5.9 13.5 24.71981–85 4.8 6.6 12.1 23.51986–90 3.0 3.6 8.3 14.81991–95 2.9 5.5 4.3 12.81996–99 2.9 4.2 4.3 11.4

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

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

Average domestic savings Domestic savings as($F) average of GDP (per cent)

1973–77 81.50 16.01978–82 186.00 21.71983–87 193.90 16.01988–93 235.20 13.31992–96 335.00 14.5

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

14

Economic survey



savings and maintaining market-basedforeign exchange rates is imperative forpolicymakers. The level of interest rates doesnot seem to have a significant effect oninvestments, as argued by Kumar and Prasad(2001), but encouraging savings may helpimprove the fundamentals of the economy.

Conclusions and policyrecommendations

Fiji’s economy since the coups of 1987 hasnot been stable. Economic growth hasfluctuated greatly despite the policy shift fromimport substitution to an export-led strategy.Why has the policy shift not producedtangible results? First, there have been manycontradictions in the reform agenda pursuedby various governments since 1987. Forexample, the government has concentratedits reform agenda on the deregulation of theproduct market, and the labour market andto some extent public sector reform. Whilesome success has been achieved in these areasother institutional constraints remain. Forexample, the biggest constraint to investmenthas been the problem of property rights inland. This issue remains one of the keyproblems. Until there is a clear definition ofproperty rights in land, investors willcontinue to shy away from Fiji.

The second constraint is the lack ofpolitical stability in Fiji. There is always alink between political stability, policyinstability, investment and economic growth.Fiji faces competition from many other smalldeveloping nations that offer a better politicalenvironment for investors. Fiji has continuedto develop its economic policies against abackdrop of political instability and this hasaffected economic performance. For example,despite the economic incentives offered toinvestors, the level of investment has declinedover the last one and half decades.

The third constraint relates to govern-ance. Corruption and mismanagement ofpublic funds is not new to Fiji. Scandals such

as the collapse of the National Bank of Fijiand the recent scam in the agricultureministry do not provide confidence withrespect to long-term investment. In thecurrent global economic climate, the role ofthe government in providing institutionalsupport to the development of the privatesector will determine a country’s ability toattract private investment and to becomecompetitive. Good governance thereforerequires strict adherence to the rule of lawand a well-functioning judiciary and policeforce. Recents events demonstrate that Fiji isfar from this position.

The fourth issue that needs urgentattention is the development of humanresources. One of Fiji’s comparative advant-ages has been in the supply of skilled labourto private investors. The continuing emigrat-ion of large numbers of skilled persons hasmeant the erosion of this comparativeadvantage. This issue will have to beaddressed through changes in curriculumand through the development of a broad-based human-resource development strategy.

The fifth issue is the development of anaffirmative action program and targeting ofeconomic incentives and policies. Affirm-ative action programs are state-managedprograms aimed at helping minorities anddisadvantaged groups. In the case of Fiji,these programs have been politicallymotivated, inefficient and not targeted at thedisadvantaged in the community. Suchpolicies have created distortions in theeconomy and hindered the development ofefficient private enterprises. This is anobvious contradiction in the economicstrategy pursued by the government.

While international economic trendsand economic conditions in its tradingpartners can have some impact on Fiji’seconomic performance, Fiji’s economicproblems are homegrown. The choice for Fijiis not difficult; it has to resolve its decade-long political instability and the problemsrelating to property rights in land. It alsoneeds to continue with its economic reform

15

Economic survey



program to further streamline its institutionsso that it supports private sector investmentand export competitiveness. Furthermore,Fiji needs to adopt the principles of goodgovernance and achieve a high degree offiscal discipline. Fiscal discipline will helpthe government to increase its effectivenessand provide more funds for public infra-

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

GDP GDP per capita CPI GDP Per capita GDP(F$ million) (1990=100) (1990 prices) (1990 prices)

1970 168.9 324.2 17.3 976 1,8741971 184.7 346.5 18.9 977 1,8331972 238.5 423.7 23.1 1,032 1,8341973 300.6 540.6 25.7 1,170 2,1041974 410.5 726.5 29.4 1,396 2,4711975 515.4 894.8 33.2 1,552 2,6951976 570.6 975.4 37.0 1,542 2,6361977 605.7 1,016.3 39.6 1,530 2,5661978 642.9 1,059.2 42.0 1,531 2,5221979 779.4 1,255.1 45.3 1,721 2,7711980 901.0 1,421.2 51.9 1,736 2,7381981 953.7 1,476.2 57.7 1,653 2,5581982 1,020.5 1,550.9 61.7 1,654 2,5141983 1,031.8 1,535.3 65.9 1,566 2,3301984 1,151.7 1,678.9 69.3 1,662 2,4231985 1,177.7 1,689.7 72.4 1,627 2,3341986 1,326.1 1,857.3 73.7 1,799 2,5201987 1,329.2 1,843.6 77.9 1,706 2,3671988 1,433.3 1,993.5 87.0 1,647 2,2911989 1,558.0 2,151.9 92.4 1,686 2,3291990 1,728.0 2,360.7 100.0 1,728 2,3611991 1,834.8 2,472.8 106.5 1,723 2,3221992 2,019.0 2,681.3 111.7 1,808 2,4001993 2,170.7 2,837.5 117.5 1,847 2,4151994 2,268.9 2,912.6 118.2 1,920 2,4641995 2,351.3 2,961.3 120.8 1,946 2,4511996 2,523.6 3,264.7 124.5 2,027 2,6221997 2,616.2 3,316.0 128.1 2,042 2,5881998 2,804.9 3,516.3 138.5 2,025 2,5391999 3,139.1 3,889.2 138.8 2,262 2,8032000 3,084.8 3,769.2 142.9 2,158 2,6372001 3,203.1E 3,943.5E 146.2 2,191 2,697

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

Appendix

structure development. Finally, ethnically-based economic policies and programs willnot release the energies of investors and thepeople of Fiji to make it an efficient economy.These policies are only likely to create moredistortions and affect the efficiency of theeconomy. It is hoped that Fiji will learn fromthe mistakes of the past two decades.

16

Economic survey



Table A2 Fiji: basic social indicators

GDP per capita (PPP $US) as of 1999 US$4,799Public expenditure on education

(percentage of GDP, 2002 Budget) 5.4 For 1985-87 it was at 6 per cent and 5.2and 4.7 in 2000 and 2001 respectively.

Public expenditure on health (per cent of GDP) 2.6 It has been 2.0, 2.9, 2.8 and 2.4 for 1990,1998, 2000 and 2001 respectively

Life expectancy for males in years (female) 67.0 (71) Overall life expectancy is 68.8 yearsMale literacy rate as a percentage of

population 15 years and over (female) 94.7 (91) Overall literacy rate is 92.6 per centInfant mortality rate (per ’000 live births) in 1999 18.0 Infant mortality rate in 1970 was 50Under 5 mortality rate (per ’000 live births)

in 1999 22.0 Under 5 mortality rate was 61 in 1970Children underweight for age

(per cent under age 5, average 1995–2000) 8.0Children under height for age

(per cent under age 5, average 1995–2000) 3.0Children with low birth weight

(per cent of all births, average 1995–99) 12.0HIV cases (per cent age 15-49) in 1999 0.07TB cases (per 100,000 people) in 1998 21.0Population with access to essential drugs

(per cent) for 1999 100.0Population using improved water sources

(per cent) in 1999 47.0Population using adequate sanitation in 1999 43.0

1970 1999 2015Population (million) 0.6 0.8 0.9Urban population as per cent of total 36.8 48.6 60.0

1975–99 1999–2015Annual population growth rate 1.4 0.9

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

17

Economic survey



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

Sector 1996 1997 1998 1999 2000 2001 2002Agriculture, forestry and fisheries 369.5 321.3 298.3 352.9 342.1 340.4 353.8

Crops 193.5 154.8 125.0 171.7 157.9 149.6 142.6 Sugarcane 152.1 116.3 85.7 126.4 112.2 100.7 90.5 Other crops 41.3 38.5 39.3 45.3 45.6 48.9 52.0Livestock products 19.4 15.9 17.6 17.2 17.7 18.1 19.0Fishing 28.8 24.9 26.2 36.5 36.8 40.5 43.3Forestry 20.6 16.9 19.7 16.4 17.7 18.3 20.2Subsistence 107.3 108.8 109.7 111.0 112.2 113.8 115.0

Mining and quarrying 61.2 62.7 50.2 59.5 51.1 52.1 58.5Manufacturing 276.9 274.7 287.9 317.8 295.9 279.6 287.4

Sugar 62.0 47.4 35.0 51.5 45.9 43.4 41.2Other food industries 66.9 61.1 64.9 71.1 65.1 67.7 71.7Clothing and footwear 58.1 74.5 97.3 106.0 100.1 85.1 89.4Other industries 83.4 85.2 84.1 82.6 78.1 76.5 78.1Self employment 6.5 6.5 6.6 6.7 6.7 6.9 7.1

Electricity and water 77.0 79.1 81.7 89.8 87.6 90.7 95.0Construction 76.9 82.6 94.6 99.3 88.4 91.0 98.3Trade, hotels, cafes, etc 308.0 315.9 335.6 332.0 382.0 398.1 422.0

Wholesale and retail trade 254.3 259.9 275.5 266.2 331.8 341.7 358.8Hotel, cafes, etc 53.7 56.0 60.1 65.9 50.2 56.3 63.1

Transport and communications 236.3 247.2 261.6 303.0 270.0 289.8 306.1Transport 163.9 174.2 186.7 221.9 176.6 192.5 203.6Communication 72.3 73.0 74.9 81.0 93.5 97.3 102.5

Finance, insurance, real estate,business services 255.3 237.2 235.9 251.5 248.3 240.6 245.7Finance 126.2 117.1 108.9 120.9 115.8 111.6 114.9Insurance 13.2 12.1 12.7 12.9 14.7 14.8 14.5Real estate and business services 43.0 39.9 39.7 42.3 41.8 36.8 37.9Ownership dwellings 72.9 73.5 74.6 75.4 76.0 77.4 78.4

Community, social and personal services 356.6 364.6 363.5 367.4 376.4 384.7 388.5Others 15.2 15.1 15.3 16.5 16.3 16.5 17.1Less: Imputed Bank Service Charges 137.2 121.4 118.4 131.4 125.8 121.3 124.9GDP at factor cost 1,895.6 1,878.9 1,906.0 2,058.4 2,032.2 2,062.1 2,133.7Per cent change on previous year 3.1 -0.9 1.4 8.0 -2.8 1.5 3.5

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

18

Economic survey



Arrivals Growth(‘000) rate (per cent)

1981 190.0 -1882 203.6 7.21983 191.6 -5.91984 235.2 22.81985 228.2 -3.01986 257.8 13.01987 189.9 -26.3

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

Imports Domestic Re-exports Total exports Trade(c.i.f) exports (f.o.b.) (f.o.b.) (f.o.b.) deficit/surplus

Australia 1998 576.4 339.0 12.7 351.7 -224.71999 730.9 385.1 135.6 520.8 -210.22000p 689.9 336.9 79.7 416.6 -273.3

New Zealand 1998 202.2 39.1 4.4 43.5 -159.61999 236.9 45.2 3.2 48.4 -188.62000p 290.3 57.3 1.7 58.9 -231.3

United Kingdom 1998 13.3 210.5 0.4 210.8 197.51999 12.9 135.6 0.2 135.7 122.82000 16.7 174.2 - 174.2 157.5

United States 1998 213.2 128.1 3.3 131.4 -81.81999 220.9 125.7 2.8 128.5 -92.42000 80.4 239.1 - 239.1 158.7

Japan 1998 76.3 41.6 0.1 41.7 -34.71999 114.0 36.6 0.5 37.1 -76.92000p 80.3 45.5 0.4 45.9 -34.3

Singapore 1998 72.8 0.4 0.4 0.8 -721999 78.0 1.3 0.2 1.6 -76.52000 100.7 1.6 - 1.7 -99.1

China 1998 28.2 2.0 - 2.0 -26.21999 82.0 0.4 0.1 0.5 -81.52000 34.2 1.2 - 1.3 -32.9

Hong Kong 1998 27.4 5.5 0.1 5.6 -21.81999 47.8 10.0 - 10.0 -37.82000 68.2 16.8 - 16.8 -51.3

Taiwan 1998 43.8 0.5 0.2 0.7 -43.11999 32.9 5.4 0.1 5.5 -27.42000 36.2 18.4 - 18.4 -17.8

Pacific islands 1998 3.8 52.5 39.5 92.0 88.21999 4.2 61.9 34.1 96.0 91.82000 7.2 120.0 18.7 138.7 131.6

Others 1998 176.8 86.6 49.4 136.0 -40.91999 218.3 140.4 76.2 216.6 -1.62000 352.4 14.4 117.6 132.0 -220.4

Total 1998 1,434.20 905.6 110.7 1,016.3 -417.91999 1,778.70 947.6 252.9 1,200.5 -578.22000 1,756.40 1,025.5 218.1 1,243.7 -512.7

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

1988 208.2 9.61989 250.6 20.41990 279.0 11.31991 259.4 -7.01992 278.5 7.41993 287.5 3.21994 318.8 10.9

Table A4 Fiji: annual tourist arrivals, 1981–2001

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

1995 318.5 -0.11996 339.6 6.61997 359.4 5.91998 371.3 3.31999 410.0 10.42000 294.1 -28.32001 348.0 18.3



19

Economic survey



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

Total exports Total Trade Net Investment Net income Current(including imports balance services income net and accountre-exports) transfers balance

1998March 178.7 286.6 -107.9 81.7 -33.8 -24.8 -50.9June 182.0 198.5 -16.5 103.3 -50.1 -25.2 61.6September 263.6 330.8 -67.2 107.2 -19.1 52.2 92.1December 215.2 405.1 -189.9 59.7 -59.9 15.9 -114.3

1999March 202.7 279.0 -76.3 90.6 -41.0 -21.5 -7.3June 240.3 337.5 -97.2 97.3 -29.1 -33.9 -33.9September 273.4 415.8 -142.4 108.0 -67.8 31.4 -3.0December 330.7 492.1 -161.4 104.6 -59.0 -48.4 -106.6

2000March 248.1 396.3 -148.2 36.0 119.2 129.6 17.4June 222.2 375.2 -153.0 73.7 -17.7 -17.3 -96.6September 306.9 334.2 -27.3 -24.4 -47.1 -5.8 -57.5December 319.1 398.3 -79.2 55.5 -7.4 61.0 37.3


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

Government and Direct Banks and Capital Overall balancestatutory bodies investments others account balance

1992 -38.1 105.3 21.0 88.2 89.21993 -48.8 116.9 -47.4 20.7 -70.41994 -48.6 99.9 -10.7 40.6 -16.61995 -23.0 76.2 48.0 101.2 109.01996 -9.8 -33.0 38.0 -4.8 97.41997 -6.7 -10.6 -11.2 -28.5 -41.21998 44.5 139.9 24.1 208.5 67.01999 107.2 -78.5 142.6 171.3 99.32000 14.4 -69.3 203.2 148.3 99.4


20

Economic survey



Tabl

e A

8Fi

ji: s

ecto

r an

d w

age

rate

s, 1

986–

99 (c

onst

ant 1

990

pric

es)

Agr

icul

ture

Min

ing

Man

ufac

turi

ngC

onst

ruct

ion

Elec

tric

ityC

omm

erce

Tran

spor

tSe

rvic

esM

ean

wag

e

1986

11.2

14.5

16.1

16.8

20.6

15.3

17.9

16.4

16.3

1987

10.6

14.6

15.8

17.0

20.7

15.0

18.1

16.3

16.2

1988

9.8

14.3

14.4

15.9

18.3

13.8

16.6

15.2

14.9

1989

12.9

14.1

12.3

15.1

16.9

13.1

15.8

14.1

13.7

1990

11.0

14.8

11.4

15.4

18.2

12.8

15.8

14.0

13.4

1991

10.8

14.6

11.3

15.1

17.9

12.6

15.5

13.8

13.2

1992

11.0

14.9

11.5

15.5

18.3

12.9

15.9

14.0

13.4

1993

11.3

17.4

11.8

15.5

19.1

13.4

16.3

13.8

13.7

1994

11.6

17.8

12.1

15.4

19.5

13.7

16.7

14.2

14.0

1995

11.7

17.6

12.0

15.8

19.3

13.6

16.5

14.0

13.9

1996

12.6

19.5

13.1

15.2

19.8

16.1

15.9

15.4

15.0

1997

10.1

19.1

11.8

15.6

20.3

13.2

15.6

13.1

13.7

1998

9.6

18.3

10.5

14.8

19.5

12.7

14.9

11.5

12.5

1999

9.8

18.6

10.6

15.1

19.8

12.9

15.2

11.7

12.8

Sou

rce:

Res

erve

Ban

k of

Fiji

, 20

01a.

Qua

rter

ly R

evie

w,

Dec

embe

r, R

eser

ve B

ank

of F

iji,

Suva

.

Tabl

e A

9Fi

ji: s

ecto

r an

d s

alar

y ra

tes

in r

eal d

olla

rs, 1

990–

99 (

cons

tant

199

0 pr

ices

)

Agr

icul

ture

Min

ing

Man

ufac

turi

ngC

onst

ruct

ion

Elec

tric

ityC

omm

erce

Tran

spor

tSe

rvic

esSa

lary

1990

8,62

7.0

16,7

24.0

10,6

68.0

10,6

18.0

9,40

6.0

8,92

0.0

9,76

1.0

9,66

2.0

9,34

2.0

1991

8,50

5.2

16,4

88.3

10,5

17.4

10,4

68.5

9,27

3.2

8,79

4.4

9,62

3.5

9,52

5.8

9,21

0.3

1992

8,67

6.8

16,8

20.9

10,7

29.6

10,6

79.5

9,46

0.2

8,97

2.2

9,81

7.4

9,71

8.0

9,39

5.7

1993

8,72

6.8

15,7

23.4

11,4

45.1

11,7

40.4

9,95

7.4

9,30

3.0

11,0

18.7

9,92

6.0

9,58

2.1

1994

8,93

5.7

16,0

99.0

11,7

18.3

12,0

21.2

10,1

95.4

9,52

5.4

11,2

81.7

10,1

63.3

9,81

1.3

1995

8,85

6.8

15,9

57.0

11,6

15.1

11,9

15.6

10,1

06.0

9,44

1.2

11,1

82.1

10,0

73.7

9,72

6.0

1996

11,8

64.3

18,4

38.6

10,1

73.5

12,1

43.8

11,3

39.0

8,99

7.6

11,4

33.7

10,5

06.0

9,75

0.2

1997

9,73

6.9

18,5

92.5

10,6

19.8

12,7

98.6

11,2

78.7

9,25

5.3

11,4

09.1

12,8

86.8

10,0

64.0

1998

9,69

4.6

18,9

75.5

10,2

59.9

12,3

02.5

11,8

16.6

8,61

2.3

10,9

21.3

12,1

58.8

11,3

38.6

1999

9,86

7.4

19,3

13.4

10,4

42.4

12,5

21.6

12,0

26.7

8,76

5.9

11,1

16.0

12,3

75.4

11,5

40.3

Sou

rce:

Res

erve

Ban

k of

Fiji

, 20

01a.

Qua

rter

ly R

evie

w,

Dec

embe

r, R

eser

ve B

ank

of F

iji,

Suva

.

21

Economic survey



State enterprises

Government commercial companiesAirports Fiji LimitedFiji Broadcasting Corporation LimitedFiji Hardwood Corporation LimitedPorts Terminal LimitedRewa Rice LimitedUnit Trust of Fiji LimitedViti Corporation LimitedYaqara Pastoral Company LimitedPost Fiji LimitedNational Trading Corporation Limited

Commercial statutory authoritiesCivil Aviation Authority of the Fiji IslandsFiji Electricity AuthorityHousing AuthorityMaritime and Ports Authority of the Fiji IslandsPublic Rental Board

Majority-owned government companiesAir Pacific LimitedFiji Pine LimitedFiji Sugar Corporation LimitedFiji International Telecommunications LimitedPacific Fishing Company

Minority-owned companiesAir Fiji LimitedColonial National BankAmalgamated Telecom Holdings LimitedFiji Reinsurance Company LimitedPacific Forum Line LimitedShipbuilding Fiji Limited

Reorganised enterprisesFiji Broadcasting CommissionGovernment Supplies DepartmentPorts Authority of FijiCivil Aviation Authority of FijiDepartment of Forestry- Hardwood PlantationsPublic Trustee OfficeFiji Electricity AuthorityMarine DepartmentWater and Sewerage, Public Works DepartmentGovernment Handicraft Centre

Table A10 Government shareholdings in state enterprises in Fiji

Government shareholding(per cent)

100100100100100100100100100100

100100100100100

5199.9

685198

11.54949202349

100100100100100100100100100100

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

22

Economic survey



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

Investments Investments(F$ million) (per cent of GDP)

Government Public Private Total Government Public Private Total1977 38.5 20.5 69.9 128.9 6.4 3.4 11.5 21.31978 33.0 31.3 85.4 149.7 5.1 4.9 13.3 23.31979 35.2 58.9 110.9 205.0 4.5 7.6 14.2 26.31980 45.4 70.1 134.3 249.8 5.0 7.8 14.9 27.71981 72.8 77.2 130.4 280.4 7.6 8.1 13.7 29.41982 61.0 88.5 113.2 262.7 6.0 8.7 11.1 25.71983 36.3 90.7 112.2 239.2 3.5 8.8 10.9 23.21984 37.9 49.2 130.9 218.0 3.3 4.3 11.4 18.91985 40.8 37.8 160.4 239.0 3.5 3.2 13.6 20.31986 43.2 26.7 145.4 215.3 3.3 2.0 11.0 16.21987 33.6 51.7 144.6 229.9 2.5 3.9 10.9 17.31988 40.4 42.9 108.2 191.5 2.8 3.0 7.5 13.41989 56.8 39.5 114.8 211.1 3.2 2.3 6.4 12.01990 62.1 130.8 110.6 303.5 3.1 6.6 5.5 15.31991 81.8 103.0 109.5 294.3 4.0 5.0 5.2 14.41992 68.7 94.7 83.9 247.3 3.0 4.1 3.6 10.71993 63.2 178.8 119.3 361.3 2.5 7.1 4.7 14.31994 68.9 141.4 110.1 320.4 2.6 5.3 4.1 12.01995 66.6 168.4 115.0 350.0 2.4 6.0 4.1 12.51996 88.3 83.5 125.0 296.8 3.0 2.8 4.2 10.01997 95.6 98.9 112.0 306.5 3.1 3.2 3.7 10.01998 98.6 233.0 154.0 485.6 3.0 7.1 4.7 14.81999 94.8 128.0 167.4 390.2 2.6 3.5 4.6 10.6

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

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——, 2001a. Key Indicators: December 2000,Bureau of Statistics, Suva.

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fiji's economic woes: a nation in search of development ... · prasad, naidu and kumar 2001)....

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