www.fijilive.com - 24/02/2009
Fiji’s central bank is working on revising its prediction for the economy given less than three months ago as it braces for an unexpected downturn.
Reserve Bank of Fiji Governor Savenaca Narube said the Macroeconomic Policy Committee, which helps government formulate policies and make forecasts, is “extremely busy” revising the prediction for the economy in light of the floods last January and the global economic meltdown.
“Given what is happening around us, we will do extremely well to achieve the 2.4 per cent growth that was released in November last year,” Narube said, while addressing guests at the launch of a book, “A Voice of Reason: The Writings of Savenaca Siwatibau”, at the University of the South Pacific yesterday.
“I hope that the Reserve Bank will not be blamed for this economic scenario.”
Earlier this week the Fiji Labour Party issued a statement putting much of the blame for Fiji’s rapidly declining foreign reserve levels, falling exports, tight liquidity and escalating interest rates on the RBF.
The party said the latest RBF economic review revealed that foreign reserves were down to $767 million, liquidity was tight, rising interest rates and expected decline of exports subsequent to flood damage to sugar cane and other crops.
The Party said this was the complete opposite to six months ago when party leader Mahendra Chaudhry was interim Finance Minister.
It said foreign reserves stood at $910 million then, liquidity was flush, interest rates low, investment levels rising, exports upped 33 per cent compared to 2006 and debt level brought down to 45 per cent of GDP from a high of 53 per cent under the Laisenia Qarase-led government.
The party said the RBF had relaxed monetary controls too soon and triggered rapid outflow of local funds.
“It also relaxed exchange controls on importation of capital goods, permitting payment in Fiji dollars,” it added.
Narube has hinted that managing foreign reserves has been difficult.
“My hair is not only grey they have turned all white in the last six months,” he said.
He has also emphasized the need for stability before Fiji can solve its economic problems.
“We live in challenging times,” he said.
“The world economy is buckling from the fallouts from the financial crisis. Fiji will not be immune from this global recession. Our economy was already under some stress.
“Siwa (tibau) was a stickler for economic stability. I am sure that he would emphasise to us today that while we have a host of economic problems we must deal with the stability first before we can solve the others.
“This would be a wise counsel. We will do well to heed it. Without stability you do not have a foundation for growth.”