Fiji’s economy is growing at a very slow pace and that overshadows all other economic concerns.

This is according to the International Monetary Fund’s annual report which also states while urban poverty has declined, rural poverty remains stubbornly high.

The IMF said its mission team in the country had found the economy needs structural reforms and a “concrete plan” ahead of the first elections since the 2006 coup.

The report states Fiji’s economy expanded by about 2 percent in 2011 with political uncertainty and slow structural reforms having suppressed potential growth, and this, coupled with fiscal stimulus during the global financial crisis, has pushed Fiji’s public debt ratio to one of the highest levels in the region, leaving limited room to respond to future shocks.

The report added the economic outlook appears stable, but there are downside risks related to the political situation, structural weaknesses, and the global environment.

The IMF suggests removing structural impediments to growth is critically important and that many of the mission’s interlocutors suggest that relaxing the emergency regulation and establishing a clear path toward a 2014 election would be the key measure to boost investor confidence.

The IMF report states that Fiji rounded off 2011 with an inflation rate of 7.7% with government expecting that rate to come down to a comfortable level of three to five per cent in the coming months.

Ministry of Finance, Permanent Secretary Filimone Waqabaca said there were three main issues that pushed inflation up last year but two of these will not be a factor this year.

He said higher global prices for fuel and food had pushed up domestic prices as well, increase in VAT and the rise in the electricity tariff structure all contributed to an increase in inflation last year.

Waqabaca added there are several reasons why they expect the inflation figure to fall and top of the list is the easing of world crude oil and food prices.

The government is also forecasting a 2.3% economic growth that will help dampen prices.


Story by: William Waqavakatoga
[Source: IMF Republic of Fiji: 2011 Article IV Consultation]