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ANZ Economist: Fijian Debt Levels OK

The large amount of government spending in the country’s infrastructure is sending the right signals in the economy, says a foreign economist. Daniel Wilson, ANZ Asia-Pacific Economist, stressed this yesterday
30 Apr 2015 11:15
ANZ Economist: Fijian Debt Levels OK

The large amount of government spending in the country’s infrastructure is sending the right signals in the economy, says a foreign economist.

Daniel Wilson, ANZ Asia-Pacific Economist, stressed this yesterday during a press conference at the Holiday Inn Suva.

He stated: “The whole point of Government infrastructure plan is to build this backbone and then have the private sector come in a fill that gap. And we are seeing signs that this is happening.

“So Government spending and investment is being met with private sector and foreign sector.

“The lending rates within the country on the business side quite strong and it is broadening.”

 

Debt level

A bid to improve the country’s neglected infrastructure, has resulted in Government debt rising which has been an issue for some people.

But Mr Wilson said debt was ok as long as it was being taken to be invested in the right area which would bring returns.

“So if a country is taking on debt and raising salaries and building a stadium and spending on consumption goods – then it is not going to create returns in a long run,” he said.

“But if a country is taking on debt and putting it in long-term durable infrastructure which should have long-term gain for the economy as a whole, then it will is positive.

“This would be debt which we would be comfortable with if the country is taking.

Mr Wilson said because the Fijian Government’s debt level had increased but the money was being used to build up infrastructure, they were comfortable with this.

 

ANZ forecast

Meanwhile, ANZ forecasts around four per cent GDP growth for Fiji for the remainder of the year.

It says healthy domestic demand, robust investment activity and increased levels of private lending should drive strong economic growth in Fiji.

This, it says if structural reforms, including infrastructure spending and privatisation, continue to be implemented by the government.

ANZ said the Fijian economy will be supported by sustained commodities demand from neighbouring Asian countries as well as rising tourism numbers.

With its heavy reliance on oil imports, the economy will also receive a boost from the sharp decline in the price of crude oil.

ANZ Pacific chief executive, Vishnu Mohan, said: “Fiji’s imports and exports have surged over the past decade in response to the dramatic expansion of Asia’s economies.

“The country has a diversified economic base which positions it well for the future. However, the continued implementation of structural reforms will be critical in order to expand productive capacity and attract inward investment.”

Feedback: rachnal@fijisun.com.fj

 

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