Moody’s Investors Service (“Moody’s”) has changed its outlook to stable from negative in respect of the Fijian economy.

It also affirms the local and foreign currency long-term issuer ratings and local currency senior unsecured ratings at B1.

Attorney-General and Minister for Economy Aiyaz Sayed-Khaiyum said this was good news.

“This is an external party that is saying that the outlook for Fiji is stable from the negative space that we were in,” he said.

“Overall we have seen the economy now is growing at a rate that is much faster than expected, our GDP is getting larger and we are looking forward to everyone, our development partners, working together.”

He thanked the development partners for their confidence in the financial management of the economy by the Government and that confidence has come by way in their willingness to participate in various types of finance.

According to Moody, the decision to change the outlook to stable reflects its assessment that risks to the credit profile were balanced.

On the upside, the recovery in the tourism sector is stronger than previously expected. With the sector accounting for a significant share of the economy, this bodes well for the real GDP growth in the next few years.

In tandem with the robust economic recovery, Moody’s expects the government to run smaller fiscal deficits, which will support a gradual decline in the debt burden. On the downside, moderating global and regional growth may weaken demand for tourism in Fiji and result in greater fiscal and external challenges than Moody’s currently expects.

The B1 rating is supported by Moody’s assessment that Fiji’s improving governance and institutions strength and continued engagement with development partners will drive continued progress on reforms, adding some economic resilience.

The associated financial assistance from development partners will also provide some stability to government debt affordability and contain government liquidity risks.

At the same time, the rating also takes into account Fiji’s small economy and limited diversification that will continue to constrain the economy’s capacity to absorb shocks, including shocks and negative trends related to climate change. A relatively high debt burden, albeit declining, that is sensitive to exchange rate pressure, also constrains the rating.

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