Ineffective fscal and exchangepolicies, says World Bank

Fiji’s fiscal, monetary, and external policies have not smoothed business cycles, the World Bank said.

During boom-and-bust years, its macroeconomic policies moved broadly in the same direction and by the same magnitude, the World Bank said.

In its background report on Fiji’s economic memorandum 2025, the bank said Fiji’s fiscal, monetary, and exchange rate policies were procyclical or neutral and therefore unable to smooth the economy’s volatility in consumption and output.

“Policy improvements are needed,” the bank said.

“Fiji’s fiscal, monetary, and exchange rate policies have been ineffective in mitigating macroeconomic volatility due to its increasing dependence on the tourism sector.

“Accordingly, the main thrust of the policy recommendations that follow is on sound macroeconomic policies aimed at smoothing consumption rather than production.”

Fiji was the fourth worst globally affected country during the coronavirus pandemic partly because of the three tropical cyclones that came with it, making the country’s recession unprecedented, the economy contracting cumulatively by 21.9 per cent during 2020–2021, the bank said.

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