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IMF: Our Economy Keeps Growing

Our economy keeps growing and is recovering well from Cyclone Winston. This was highlighted by Pablo Lopez Murphy of the International Monetary Fund (IMF). Mr Murphy and his team visited
13 Dec 2017 11:41
IMF: Our Economy Keeps Growing
From left:International Monetary Fund Advisor - Executive Director Lanieta Rauqeuqe, IMF Economist Sio Guo, IMF Mission Chief Pablo Murphy Lopez, IMF Executive Director Juda Agung, IMF Resident Representative Tubagus Feridhanusetyawan and IMF Economist Rasmane Ouedraogo at the Reserve Bank of Fiji on December 12, 2017. Photo: Vilimoni Vaganalau.

Our economy keeps growing and is recovering well from Cyclone Winston.

This was highlighted by Pablo Lopez Murphy of the International Monetary Fund (IMF).

Mr Murphy and his team visited Fiji from November 29 to December 12, 2017, to conduct the discussions for the 2017 Article IV consultation.

“The economy is recovering well after Tropical Cyclone Winston and is expected to record its eighth consecutive year of expansion in 2017,” he said.

“Gross domestic product growth is expected to pick up to about four per cent in 2017, underpinned by reconstruction activities, a vibrant tourism sector, and the recovery of agriculture production.

“The growth momentum is projected to continue in the coming years. Inflation declined sharply in recent months as the supply of food items started to normalise and is projected to remain around three per cent.”

Mr Murphy also highlighted that the key economic challenge in sustaining strong growth in the coming years is the maintaining of financial stability, rebuilding fiscal policy buffers, and boosting private sector development.

“Improving the business environment will propel private investment and growth as fiscal and monetary policy support will be gradually withdrawn.

“As that happens, we think that the private sector will play a much more important role and so the most important economic challenge is to create a condition that will allow the private sector to thrive.” 

Another issue that the IMF team discussed was the significant rules to improve the business environment in Fiji.

Below are few rules that Mr Murphy highlighted:

Re-establish Data Bureau database

Data Bureau database  was shut down in 2016.

“We think it is important to open a new one, because that is an institution that plays an important role to cover better risk management,” said Mr Murphy.

“The process of financial determination will be less risky; we think it’s a key piece for the financial sector infrastructures to facilitate growth as it makes the lending business less risky.”

Mr Lopez added that the re-introduction of Data Bureau Database will facilitates the process of financial determination and would allow the lenders to know who has a good credit record and who hasn’t.

“That allows to cover better risk management, the process of financial inter mediation will be less risky.”

Meanwhile, Mr Murphy said the Government is currently working on this and he will be expecting a concrete news  next year.

Rationalisation of price control.

Government to engage with all stakeholders before doing major policy changes in a process of consultation.

“This is to avoid unpleasant surprises and will be better received by the private sectors,” said Mr Murphy. 

The existing mechanism to use land.

“The government has made several efforts to improve the land leases, and what we hear from Private Sectors is, the process to carrying a lease is time consuming and sometimes the lease conditions are not flexible enough to benefit both the owners of the land and the investors.

“We see spaces for improvement there,” he said.

Risks:

Mr Murphy said the risks to the economic outlook are largely related to external developments. “

“The economy is vulnerable to natural disasters that weigh on growth. A tightening of global financial conditions could affect capital inflows.”

He added that a possible growth slowdown in China could affect Fiji through its trading partners, especially Australia and New Zealand.

“On the domestic side, a stalling of structural reform momentum could discourage private sector development and investment.”

The IMF team will be departing Fiji tomorrow. Also part of the team was Lanieta Rauqeuqe, Fiji’s representative to IMF.

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