The International Monetary Fund is urging Fiji to take more decisive actions to restore macro-economic stability.
It revealed this in its Public Information Notice (PIN) released last month, which detailed the assessment of its executive board after last November’s economic consultation mission to Fiji.
“Faced with increasing budget pressures, the authorities have made commendable efforts to restrain current spending and limit the overall fiscal deficit in 2009, while the devaluation of the Fijian dollar has helped reverse the sharp decline in foreign exchange reserves,” the IMF PIN noted.
“The economic situation nevertheless remains challenging, and downside risks remain high. Directors therefore stressed the need for further decisive actions to restore macroeconomic stability and implement structural reforms needed to lift growth and ensure debt sustainability over the medium term.”
The assessment also raised concerns about the level of Fiji’s debt, saying it was important to reduce it in order to restore economic stability.
“While acknowledging the difficult economic situation, most directors recommend a faster pace of consolidation starting from 2010 than is currently envisaged. They considered that infrastructure rebuilding needs to be offset by expenditure measures, including civil service reform, while revenue could be strengthened by rationalizing tax incentives, improving tax administration and raising excise taxes. Directors encouraged the authorities to adhere to their earlier target of reducing central government debt to 45 percent of GDP by 2014.”
The IMF also supported the tight monetary policy stance taken by Fiji to safeguard immediate economic stability.
Fiji this month applied for a $1b loan from the IMF.