SUNBIZ

The International Monetary Fund’s Top Man Suggests Way Forward For Fiji

Now that the economy is rebounding, Fiji can start talking about fiscal consolidation and structural reform to bring the economy and public debt back on a sustainable growth path.
24 May 2022 13:00
The International Monetary Fund’s Top Man Suggests Way Forward For Fiji
From left: Resident representative for PIC’s Neil Saker, International Monetary Fund’s Deputy Managing Director, Bo Li, Governor of the Reserve Bank of Fiji Arif Ali and Division Chief, Asia Pacific Department Todd Schneider at the RBF conference room on May 23, 2022. Photo: Selita Rabuku.

Now that the economy is rebounding, Fiji can start talking about fiscal consolidation and structural reform to bring the economy and public debt back on a sustainable growth path.

This was highlighted by the International Monetary Fund’s Deputy Managing Director, Bo Li.

Mr Li arrived yesterday and met with the Governor of the Reserve Bank of Fiji Arif Ali.

 

He said Fiji was in a safer position however, this does not mean that there were no challenges.

He was concerned about the high level of public debt and inflation rate and said it was because of the global environment and the rise in
energy and food prices.

He suggested that it was important to have a combination of macroeconomics policies like fiscal policy, monetary policy, financial and structural reform to move the country forward.

 

“A lot of vulnerable people are affected by this high price in food and energy so in this kind of situation, a targeted fiscal policy that will support the vulnerable group is important,” he said.

“The fiscal policy has to be designed properly so that we can target and support the group without creating additional pressure on Government debt.”

He said because of the pandemic, Government has to spend more to support the economy and its people so this rise in public debt was understandable

 

Future Shock
Mr Li said public debt in a small developing country like Fiji makes the country very susceptible to external shocks, including the turbulence and volatility in international markets.

“That’s why we have been advising the Fijian Government that; now that the economy is rebounding, we need to think about a fiscal consolidation plan in the medium term to create space so that we can withstand shocks better in the future.”

 

Fiji and Shri Lanka
Mr Li said Fiji’s economy was different from Shri Lanka in some important ways including:

• Public debt in Shri Lanka is much higher than Fiji

• We are predicting a double digit rebound of the economy this year

• Foreign Reserves are sufficient to cover 7-8 months of imports, Shri Lanka can only cover one month

 

He said Fiji was in a much safer position now.

Managing director Li said there were ways in which the IMF could help Fiji through policy advice, surveillance, capacity developments, and technical assistance.

He added that the IMF would continue to engage with the Fijian Government to talk about diversification, market development and other potential areas which could help bring the economy back to its sustainable path.

 

Review Recommendations
Governor Ali said they would review some of the recommendations IMF made and their meeting yesterday was to relook at the opportunities that were available in Fiji.

He said there were a number of fronts that Fiji could work on to increase the growth potential from three to at least five per cent.

One of the areas to look at was structural reform and human capital.

Meanwhile Mr Li will be meeting with Government officials and also attend a Steering Group meeting for the IMF’s Pacific Financial and Technical Assistance Centre.

 

Feedback: selita.bolanavanua@fijisun.com.fj



Fijisun Ad Space


Get updates from the Fiji Sun, handpicked and delivered to your inbox.


By entering your email address you're giving us permission to send you news and offers. You can opt-out at any time.


Subscribe-to-Newspaper