Fiji to learn first-hand about progress that has been achieved by North Korea?……who also has a crashing economy,lives on foreign aid and cannot feed its people…

Fiji foreign minister on first North Korea visit

Posted at 01:39 on 05 October, 2012 UTC

Fiji’s foreign minister Ratu Inoke Kubuabola is in Pyongyang on the first visit by a Fiji minister to North Korea.

Ratu Inoke has met North Korea’s foreign minister, Pak Ui Chun, during his two-day visit.

Fiji’s information ministry says Ratu Inoke has thanked North Korea for its support towards Fiji’s successful bid to chair the G77.

He says he is privileged to learn first-hand about progress that has been achieved by North Korea which Fiji could learn from.

Mr Chun says the visit demonstrates the mutual trust, understanding and the spirit of cooperation that exist between the two countries as independent sovereign states.

News Content © Radio New Zealand International           PO Box 123, Wellington, New Zealand

Frank now crying to rejoin “irrelevant” Pacific Forum.

Superpowers focus on tiny Rarotonga for the Pacific Forum


US Secretary of State Hilary Clinton … leading largest delegation expected to hit Rarotonga. Image: CSMonitor

Pacific Scoop: Report – By Rachel Reeves in Rarotonga

Some of the world’s most prominent superpowers could converge on the little Pacific island of Rarotonga next week.

The Pacific Islands Forum could be the impetus for the United States, China and Russia to be in the same place at the same time.

US Secretary of State Hillary Clinton is making global headlines this week, as the world wonders whether she is in fact hauling a cargo plane and a delegation of about 50 people to this South Pacific paradise.

2012 PIF logoWhile China is not officially an observer country, it will be sending a delegation to the Forum. Yesterday coordinators had yet to receive travel arrangement details for the Chinese.

Cook Islands News understands there is a possibility of a Russian delegation coming to the Forum, though Russia is neither an observer nor a post-Forum dialogue partner.

Media liaison officer Derek Fox says Russia is unlisted, but he understands “there may be some interest in someone from Russia coming”.

That, he noted, is unconfirmed. He took the opportunity to point out that Clinton’s attendance is also unconfirmed.

Notable politicians Other notable politicians attending include Britain’s Environment and Fisheries Minister Richard Benyon and Michelle Bachelet, former President of Chile and current executive of UN Women, who will be leading the United Nations delegation.

A total of 57 countries and organisations will be represented at the Forum.

The average size of a Pacific Island delegation is under 10. Should Clinton make the journey to Rarotonga, her delegation is likely to be the largest of them all.

In total there will be 15 Pacific Islands Forum member countries represented – they are Australia, the Federated States of Micronesia, Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, the Republic of the Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.

The secretary-general of the Pacific Islands Forum Secretariat will be bringing his own delegation of 11 people.

Fiji has been suspended over its military-backed regime.

French Polynesia and New Caledonia are attending as associate members, and the Cook Islands News has confirmation that French Polynesian president Oscar Temaru will be representing the former.

‘Observer’ delegations All up, 12 “observer” delegations are attending – representing American Samoa, Guam, Timor-Leste, Tokelau, Wallis and Futuna, ACP Group, Asian Development Bank, Commonwealth Secretariat, United Nations, Western and Central Pacific Fisheries Commission and the World Bank.

Some countries (or blocs) which are neither members nor observers will be sending delegations to Rarotonga – they are Canada, China, European Union, France, India, Indonesia, Italy, Japan, Korea, Malaysia, Philippines, Thailand, the United Kingdom and the United States.

Other accredited delegations include Cuba, Israel, Singapore and Taiwan.

Nine CROP (Council of Regional Organisations in the Pacific) agencies will be attending – Fiji School of Medicine, Pacific Aviation Safety Office, Pacific Islands Forum Fisheries Agency, Pacific Islands Development Program, Pacific Power Association, Secretariat of the Pacific Community, Secretariat of the Pacific Regional Environment Program, South Pacific Tourism Organization, and the University of the South Pacific.

Fox says the numbers of security personnel are unlisted, as technically the Cook Islands police – and the New Zealand police sworn in to assist them during the Forum – are responsible for maintaining law and order.

Rachel Reeves is political reporter with the Cook Islands News. CIN reports on the Pacific Islands Forum will be featured on Pacific Scoop, along with stories by AUT postgraduate communication studies journalists and students.

Cook Islands News


and after an unproductive MSG meeting the bleating to rejoin a Forum he has often called useless and a waste of time.

I guess our Miss World contestant isn’t the only turkey in Fiji.


PM calls for re-entry into Pacific talks

Forum wrongly using its influence – PM

Fiji Government adds another $120 million loan to its overloaded debt guarantee portfolio……..

ANZ Fiji approves $120M loan to Fiji Sugar Corporation

ANZ Fiji has approved a $120 million loan to the Fiji Sugar Corporation.

Chief Executive Officer, Norman Wilson said this loan will be guaranteed by the Fijian government.

He said this is a landmark trade finance deal for the industry as about 200,000 people depend on the sugar industry.

ANZ completed a study focused on the industry last year which resulted in extensive research and dialogue between the government, FSC and ANZ to look at solutions to revitalise the industry.

Wilson said with the support of ANZ’s regional trade specialists, ANZ Fiji has been able to provide a local banking solution for FSC which has resulted in a reduction in borrowing costs.

The formal signing will take place after the completion of the 2012 Asia Pacific Sugar Conference held in Nadi this week.

Story by: Sneh Chaudhry

Fiji’s credit rating remains at Negative B1, which indicates that adverse business, financial, or economic conditions will likely impair Fiji’s ability to meet its financial commitments………..A major cyclone, earthquake or another coup and we cannot pay our debts……

Fiji’s credit rating remainds unchanged

Posted at 19:41 on 07 August, 2012 UTC

A recent update on Fiji’s credit rating shows its position is unchanged, largely due to the political situation and lack of economic growth.

Fiji’s credit rating remains at Negative B1, which indicates that adverse business, financial, or economic conditions will likely impair Fiji’s ability to meet its financial commitments.

However, one of the Moody’s Investors Service analyst, Christian de Guzman, says Australia’ and New Zealand’s announcement that high commissioners will again be exchanged with Fiji is positive.

“We believe that it is very important for the economy to receive foreign investments for one thing more tourists another and just generally more trade and we believe that the restoration of diplomatic relations between Australia and New Zealand and Fiji would actually help along those line.”

Christian de Guzman says that the successful reform of Fiji’s sugar industry could also help bring the country’s credit rating up.

News Content © Radio New Zealand International
PO Box 123, Wellington, New Zealand

A Rabobank view of the management of the Fiji economy.

Economic structure and growth

Fiji is a small island group in the South Pacific Ocean with nearly 900,000 inhabitants. Together,
they generate a nominal GDP of USD 3.18bn. Due to the many subsistence farmers in Fiji, its
agricultural sector, which employs 70% of the population but contributes only 9% to the country’s
GDP, is inefficient.

The sugar sector, once the main pillar of the economy, has been in decline since
the military coup in 2006.

On top of sharply falling sugar output, the sugar sector in Fiji is also adversely affected by the phasing out of preferential pricing arrangements with the EU, as demanded by the WTO. Whereas other sugar exporters have received aid from the EU to reduce the impact of the rule changes, Fiji has not, as a result of the military coup in 2006.

The services sector, which includes the important tourism sector, is now most important sector in Fiji with a
share of 77% in Fiji’s GDP.

Due to Fiji’s dependence on the export of cash crops, garments and tourism, GDP growth is historically volatile. Moreover, Fiji’s GDP growth has been constrained by low investment, political uncertainty, adverse government policies and poor quality of human and physical capital.

The Asian Development Bank therefore concluded that Fiji is “trapped on a low growth path”. GDP contracted by 2.5% in 2009 but the economy recovered somewhat in 2010 on the back of increased tourist arrivals. Real GDP growth is estimated at 1.4% in 2010, but this could prove overly optimistic, as the sugar sector performed worse than expected last year.
Political and social situation

Fiji’s political history is characterized by numerous coups and political turmoil. After a coup in
2000, democratic elections brought Prime Minister Qarase to power in 2001. He was re-elected in
2006, but subsequently ousted in a military coup led by Commodore Voreqe Bainimarama in
December that year.

Since, the country is ruled by the military regime and remains under a state of emergency, which implies that Bainimarama controls by decree. Although Bainimarama has promised to re-introduce democracy by 2014, the prospects for democratic strengthening remain bleak. Bainimarama seems more determined than ever to hold on to power, the regime does not tolerate any opposition and the domestic media is heavily censored. As a result of the political repression, Fiji is becoming more and more isolated internationally.

Economic policy

Fiscal policies have been highly expansionary in the past years and will remain so in 2011.
Government expenditure growth (14% in 2011) will be mostly driven by higher capital spending,
which will increase by 37% this year. However, a recovery of economic activity, a VAT increase
from 12.5% to 15%, higher airport taxes and a new 10% capital gains tax will boost government
revenues by 16%. As a result, the budget deficit is expected to remain more or less equal at 3.5%
of GDP. Meanwhile, the government’s debt position is worrisome. Public debt to GDP amounts to
around 50% of GDP. However, this figure excludes government guaranteed debt, which, when
included, is estimated to push the public debt level up to around 90% of GDP. Of special concern is
a USD 150m international bond that will fall due in September 2011. With talks with the IMF halted
in November 2010, the government is likely to turn to Asian private markets to roll over the bond.
During 2010, inflation slowed sharply following the decision of the Commerce Commission to lower
the prices of numerous food items. In addition, food prices eased after Fiji recovered from the
damages inflicted by cyclone Thomas in March 2010. With utility prices hiked by the government,
inflation is set to rise in 2011. In order to reduce the rapid outflow of FX-reserves, capital controls
were imposed and the Fijian dollar (FJD) was devalued by 20% in early 2009. Early 2010, capital
controls were relaxed after IMF support was obtained.

Balance of Payments

Sugar exports, remittances and tourism are the main foreign exchange earners in Fiji. However, as
Fiji needs to import nearly all consumer goods, the trade balance shows a large deficit each year.
Although data availability is limited, the trade deficit seems to have increased to 26% of GDP in
2010, up from 22% of GDP in 2009.

Due to the large trade deficit, the current account deficit is normally in double digit territory. After an unusually low deficit of 8.9% of GDP in 2009, the current account deficit widened to 10% of GDP again in 2010. FDI and portfolio inflows covered less than half of the current account deficit in 2010.

As capital inflows will expectedly only cover 20% of the current account deficit in 2011, the balance of payments will remain in a precarious condition

External position

Fiji’s total external debt amounted to USD 576m in 2010, which is equal to 18% of GDP or 37% of
total export receipts.

However, in spite of these seemingly acceptable figures, Fiji’s external position is highly vulnerable due to the large deficit on the trade balance. Fiji’s low level of FXreserves is an indication of this vulnerability. These cover 4 months of imports, but only after IMF support was obtained.

Full Report at

Fiji is paying 9% for is borrowing where “Economists consider 6 per cent to be the absolute upper threshold of long term affordability”

Those fears again played out on fixed income markets, with Italian 10-year bond yields breaking above the 6 per cent mark, and yields on equivalent Spanish bonds hovering just shy of 7 per cent. Economists consider 6 per cent to be the absolute upper threshold of long term affordability.

ADB’s Outlook 2012 report describes Fiji’s economic growth as “weak… held back by policy uncertainty and structural constraints” resulting in low levels of private investment.

}Fiji has experienced low economic growth, rising emigration, and high poverty over the past decade, mainly because of low domestic investment.

Private investment is low, there has been little new domestic lending, and public investment has been constrained by poor implementation. Since 2005, gross domestic investment has averaged 13.1% of GDP a year, well below the government’s target of 25%.

The ratio of private investment to GDP declined from an average of 11.3% in 2000–2005 to 7.5% in 2006–2010; in 2011 it was around 2%.

The government recognizes that the economy operates below its growth potential because of an array of difficult macroeconomic, structural, and sector policy constraints.

State-owned enterprise reform is progressing, and the government is seeking to divest its holdings in several enterprises. Yet the pace of reform is constrained by fiscal limits, a lack of technical capacity, limited stakeholder buy-in and consultation, and inconsistencies in the way reform principles are applied.

The medium-term macroeconomic outlook is weak and foreshadows greater poverty challenges—unless structural reforms are carried out in a coherent and coordinated manner.

Business confidence is unlikely to be restored until progress is made on political reform. The drafting of a new constitution this year and the holding of national elections in 2014 will be crucial in this respect.

Fiji Government borrowing another $20 million?

Government introduces Viti Retail Bonds

The Fiji Government this week announced the issue of Viti Bonds with an initial allocation of $20 million.

The Viti Bond is a specially designed fixed income security tailor-made to suit small or retail investors. Investors that are interested in the Viti Bonds can invest up to $100,000 for the following maturities and interest rates:

Maturity Interest Rate
5 years maturing on 30 June 2017 4.00% p.a.
7 years maturing on 30 June 2019 4.50% p.a.
10 years maturing on 30 June 2022 5.00% p.a.

In making the announcement, the Ministry of Finance permanent secretary, Mr Filimone Waqabaca said that “the Viti Bond is another initiative by Government to boost the limited number of investment options available in the domestic market by giving retail investors, including individuals opting out of FNPF’s pension scheme, more choices for investment. It is also Government’s effort to continue to develop the capital market”.

He added that the key benefit of the Viti Bonds is that the interest will be paid on a quarterly basis and is exempted from income tax. In addition, in the event investors wish to cash or liquidate their investment before the maturity date, they could do so by selling the bonds to the RBF.

The Fijian Government has allocated $20 million for the issue of Viti Bonds, which are available for investors between 2 April 2012 and 28 September 2012. It is important to emphasise that this $20 million is not additional to the $195 million that the Government will raise through the Fiji Infrastructure Bond announced earlier. Rather, the $20 million is part of the total of $195 million that is to be raised by Government in the domestic market.

The bonds can be purchased by filling in the tender form available from the Reserve Bank of Fiji.

Further information on investing in Viti Bonds is available in the Viti Bond Prospectus. A copy of the prospectus and tender forms can also be obtained from the Reserve Bank of Fiji office and website ( and Ministry of Finance website

AUS/NZ aid of $1.8 million towards voter registration rejected?

Fiji rejects Australia, NZ election aid

Canadians have picked up the registration work in Fiij. [AFP]

Canadians have picked up the registration work in Fiij. [AFP]

Sean Dorney

Last Updated: -2 hours -31 minutes ago

Fiji has rejected an offer from Australia and New Zealand to help fund voter registration for the proposed 2014 election.
In January, Fiji’s Attorney-General, Aiyaz Sayed-Khaiyum, wrote to Australia and New Zealand officially requesting help for the funding of voter registration in Fiji.
The contract for the work has gone to a Canadian company.
After discussions, Australia and New Zealand agreed to contribute $900,000 dollars each and the funding package was offered.
However both countries have now been told by Mr Sayed-Khaiyum their assistance has not been accepted.

Potential for another sugar loan fiasco… Who is liable for the $180m loan? Will the co generators work on Fijis bagasse to the standard required. Why not sell the electricity to FEA to replace expensive diesel? Saving money for a private gold company is now one of the aims of FSC?

FSC to sell electrcity to Vatukoula gold mine

08:14 Today

The Fiji Sugar Corporation is partnering with the Vatukoula Goldmine Limited for a co-generation project that would see massive savings for VGL’s electricity costs.

FSC Executive Chair Abdul Khan says FSC will sell electricity to VGL at a much lower price, which in turn, will reduce the total costs of gold production for the company.

The main reason that Vatukoula is coming in with us, is their cost of electricity is roughly around fifty cents a unit. We will be selling it to them at twenty three cents a unit which reduces the electricity cost by fifty per cent, and their overall cost of production of gold by twenty five per cent because fifty percent of their cost is actually electricity.

The $180m project will be funded by London investors through arrangements with VGL.

Khan says the project will provide the FSC up to $45m in revenue per year.

No money for flood damage. All ministries have been told to work within their provisions in the 2012 National Budget. $30.6 million in damage to be fixed on the cheap?

$30.6m DAMAGE

February 16, 2012 | Filed under: Fiji News | Posted by:


Government has confirmed that damage by the recent floods in the North and West cost $30.6 million. It also confirmed that it is not setting aside any special budget for rehabilitation work. Instead, the Ministry of Finance told the Fiji Sun that all ministries had been told to work within their provisions in the 2012 National Budget. Permanent Secretary for Finance Filimoni Waqabaca said this was their intention and that of the Prime Minister, Commodore Voreqe Bainimarama, also. “We will work within our 2012 budget allocation and we wait until the assessment is completed. “This is the intention of the Prime Minister that we have to live within our means,” Mr Waqabaca said. Permanent Secretary for Provincial Development and National Disaster Management, Lieutenant-Colonel Inia Seruiratu confirmed yesterday that the total cost of damage stood at $30.6m. While the final assessment report is expected to be released today, Lieutenant-Colonel Seruiratu said the cost of damage was less than their initial estimate. “We are waiting for the Ministry of Education to submit their assessment report. I can assure you that the total cost of damage is $30.6 million,” he said. It is understood that more damage was sustained by the agricultural sector.

Lack of investment leads to Government ordering banks to lend $16.6m to agriculture and renewable energy sector. RBF appears to believe sugar is doomed.

Full Story

THE Reserve Bank of Fiji has given commercial banks a tall order ù they must give 6 per cent of their deposits as loans to the agriculture and renewable energy sector.

Mr Whiteside added that with the uncertainty surrounding the sugar industry, there was great potential for growth in non-cane agriculture as well as large commercial agricultural ventures.

And the governor has also suggested ways in which the commercial banks could find viable projects in these sectors- through collaboration between local authorities such as Investment Fiji, local business councils, government agencies and foreign trade missions.

More money to be borrowed, five complexes will be built by the Chinese government, while people starve………

Plans to build five sports complexes

17:34 Sat Feb 11, 2012

Plans are underway between the government and China for the construction of five intergrated sports complexes in Fiji.

Prime Minister Commodore Voreqe Bainimarama says the five complexes will be built by the Chinese government.

Bainimarama told the Lautoka Chamber of Commerce on Thursday night – discussions on the issue is ongoing.

He says if talks turn out positive – the complexes will be built in areas that do not have proper sports grounds and facilities.

Bainimarama says – this is aimed at developing youth and sports in the country.

Government bodies donating to a government relief fund?………The 200% tax refund for donations means Fiji is funding this money from future tax take at 100% interest. It would have been cheaper to simply take $1million out of the government coffers.

Donations for PM’s Flood Fund pour in

Wednesday, February 01, 2012

The Prime Minister’s Flood Relief Fund has now collected over a million dollars.

Funds were committed to the Fund from various countries and local NGO’s to help in the relief, recovery and rehabilitation works.

Yesterday – $40,000 was donated to the Fund by the Fiji National Provident Fund, $10,000 by the Housing Authority of Fiji and $4,000 by the Public Rental Board.

The Fiji Times Limited and Namosi Joint Venture each donated $10,000.

The Permanent Secretary for Information Sharon Smith-Johns has acknowleged the the volume of support towards the relief fund and calls on the general public to donate generously.

Report by : Elenoa Osborne

Moody’s holds B1 (junk bond) status of Fiji debt with negative outlook. The Reserve Bank’s independence has recently been compromised.


Moody’s Disclosures on Credit Ratings of Fiji, Government of

Global Credit Research – 19 Jan 2012

Singapore, January 19, 2012 —

The following release represents Moody’s Investors Service’s summary  credit opinion on Fiji, Government of and includes certain regulatory  disclosures regarding its ratings. This release does not constitute  any change in Moody’s ratings or rating rationale for Fiji.


Moody’s current ratings on Fiji, Government of are:


Long Term Issuer (domestic and foreign currency) ratings of B1

Senior Unsecured (domestic and foreign currency) ratings of B1




Fiji’s B1 government bond ratings reflect a low level of economic resiliency,  low government financial strength, and a high susceptibility to  event risk. Some of Fiji’s statistical indicators–notably  external debt ratios–compare favorably with countries in  the same rating range. However, the ratings are constrained  by these other factors. Low economic resiliency is indicated by  very low GDP per capita and the small size of the economy. Low  institutional strength reflects weak scores in the World Bank’s indices  of governance and rule of law. The Reserve Bank’s independence  has recently been compromised.


The government’s financial strength is assessed as low because of the  high ratios of government debt and interest payments to government revenue.  These are partially mitigated by two factors: (1) most government  debt is held by the Fiji National Provident Fund, which will continue  to invest in government securities over the medium term; (2) the  proportion of debt denominated in foreign currency is relatively small,  meaning that the government is not subject to exchange-rate risk  or to adverse conditions in global financial markets.


Fiji is subject to political event risk. After the overthrow of  the government in 2000, government finances deteriorated as did  the level of investment in the economy. Real GDP growth and investment  activity has similarly declined and subsequently stagnated following the  December 2006 coup.


The negative outlook was maintained following the downgrade of the sovereign  rating to B1 in April 2009 due to expectations of a continued deterioration  in the balance of payments. Following a large devaluation of the  Fijian dollar and the imposition of strict exchange controls, foreign  exchange reserves rebounded as tourist arrivals and export shipments recovered.  However, growth remains lackluster and has had an adverse effect  on the trajectory of government debt, justifying the maintenance  of the negative outlook.


The principal methodology used in this rating was Sovereign Bond Ratings  published in September 2008. Please see the Credit Policy page  on for a copy of this methodology.




Although this credit rating has been issued in a non-EU country  which has not been recognized as endorsable at this date, this credit  rating is deemed “EU qualified by extension” and may still  be used by financial institutions for regulatory purposes until 30 April  2012. Further information on the EU endorsement status and on the  Moody’s office that has issued a particular Credit Rating is available  on


For ratings issued on a program, series or category/class of debt,  this announcement provides relevant regulatory disclosures in relation  to each rating of a subsequently issued bond or note of the same series  or category/class of debt or pursuant to a program for which the ratings  are derived exclusively from existing ratings in accordance with Moody’s  rating practices. For ratings issued on a support provider,  this announcement provides relevant regulatory disclosures in relation  to the rating action on the support provider and in relation to each particular  rating action for securities that derive their credit ratings from the  support provider’s credit rating. For provisional ratings,  this announcement provides relevant regulatory disclosures in relation  to the provisional rating assigned, and in relation to a definitive  rating that may be assigned subsequent to the final issuance of the debt,  in each case where the transaction structure and terms have not changed  prior to the assignment of the definitive rating in a manner that would  have affected the rating. For further information please see the  ratings tab on the issuer/entity page for the respective issuer on

FNPF continues to be the government’s leading local creditor holding 76% of total government bonds. The total outstanding domestic debt at the end of September this year stood at $2.7 billion.

Govt focuses on reducing deficits

The government is now focusing on reducing deficits and maintaining an efficient market for government securities and prepaying expensive loans.

Government bonds have been mostly taken up by FNPF and insurance companies.

The total government debt stood at $3.5 billion as at September 2011 compared to $3.4 billion in 2010 and $3.1 billion in 2009.

FNPF continues to be the government’s leading local creditor holding 76% of total government bonds.

The total outstanding domestic debt at the end of September this year stood at $2.7 billion.

According to the 2012 National Budget documents released, government’s external debt level continued to increase over the years with the disbursed outstanding balance totaling $548.5 million at the end of 2010.

This is an increase of 4% when compared to 2009 levels and is mainly attributed to disbursements for on-going projects funded by the ADB and the EXIM bank of China.

As at September this year, external debt stood at $806.7 million, representing an increase of $258.2 million.

The major increase was attributed to the Global Bond of US$250 million issued in March this year.

Story by: Vijay Narayan

The IMF delegation says the FNPF still needs to reform its pension scheme and get retirees to opt for annual payouts instead of lump sum withdrawals.

IMF backs FNPF Govt. Loans

Saturday, November 05, 2011

The International Monetary Fund has backed government loans being funded by the FNPF.

Following a two week visit, the IMF says for a small country like Fiji, it is encouraged that the super-annuation fund take advantage of government bonds.

Group leader Koshy Mathai says in the long term, the IMF expects the FNPF to continue this practice.

” It’s a practice that you see in many countries. There’s a large pool of savings and there are llimited investment opportunities. So naturally the government borrowing would attract financing from the provident fund.

FNPF has the strategy of diversifying their investment offshore, we encourage that also. Its good diversify.”

The IMF delegation says the FNPF still needs to reform its pension scheme and get retirees to opt for annual payouts instead of lump sum withdrawals.

Report by : Edwin Nand


Aid from emerging economies has primarily come in loan rather than grant form, and left Fiji indebted by a US$50.4 million line of credit from India, and a total of US$253.4 million in Chinese loans (the latter accounted for 8.35% of GDP in 2009).

Bainimarama’s shadow darkens Fiji’s economy

by Danielle Romanes – 27 October 2011 1:04p.m.

Danielle Romanes is an intern with the Lowy Institute’s Myer Foundation Melanesia Program.

Since taking power in 2006 Commodore Frank Bainimarama has made much of his plan to eschew ‘neo-colonial’ development partners and to adopt a Look North foreign policy premised on engaging emerging economies in the region. While the new relationships are undoubtedly good for Fiji, it’s clear that emerging interest in Fiji is too limited to fully rescue its flailing economy.

At present Fiji is benefiting from a moderate level of emerging economy investment into its infrastructure and across a wide range of its industries. Russian mining giant Rusal is looking to explore its bauxite reserves, and this year China has opened a hotel and financed a $4 million fishing vessel, a $20 million government data facility, and a number of roads and ports.

India is present in Fiji as both a creditor and an investor, with Bollywood set to film three productions in Fiji this year, and India’s EXIM Bank in talks with the government to revive the Fijian copra industry. Georgia recently held a series of bilateral talks with the Fiji Government about enhanced cooperation, and Indonesia has made noises about doing the same.

While foreign investment is more important to the Fijian economy than official development assistance, it’s worth noting that Bainimarama’s preference for non-traditional donors is selling the Fiji people short. Aid from emerging economies has primarily come in loan rather than grant form, and left Fiji indebted by a US$50.4 million line of credit from India, and a total of US$253.4 million in Chinese loans (the latter accounted for 8.35% of GDP in 2009).

Development loans are valuable if they actually yield development, but Bainimarama is no Lee Kuan Yew. GDP growth over the last few years has been marginal if not negative. The Asian Development Bank has warned that Fiji’s government debt is dangerously high. Rather than diversifying the economy, Bainimarama’s leadership has led it to become increasingly reliant on tourism, a sector vulnerable to exogenous volatility.

Bainimarama’s intransigence on democracy and human rights has led the Fiji people to miss out on multi-million dollar post-sugar protocol aid from the European Union, and on ongoing financing from the Asian Development Bank, which hasn’t approved any new projects there since 2006. Even China is reportedly wary of engaging too extensively in Fiji lest it upset Australia and New Zealand — though this wariness speaks far more to the relatively low marginal gains to be had from engagement in Fiji than it does to China’s fear of Antipodean wrath.

Beyond relatively limited mineral resources, its vote in diplomatic wrangles, and a booming but low-profit tourism industry, Fiji just doesn’t have that much to offer in its present state. The Commodore’s heavy hand isn’t helping, with a recent World Bank report showing increased difficulty in every evaluated aspect of doing business in Fiji. That the regime felt the need to falsify its ranking in the report is unlikely to inspire much further investment interest.

Bainimarama’s ‘Look North’ foreign policy offensive is driven by a lack of options in the region and a need to justify authoritarianism at home, but the regime has failed to sell Fiji’s people on the relative value of the new emerging economy relationships over the old ones.

Bainimarama may find this task increasingly difficult if his administration doesn’t yield tangible development gains soon, because there are clearly limits on emerging economy interest in his regime. For all the rhetoric about South-South cooperation, developing economy donors have their own poverty problems to address and any development assistance they shell out internationally is going to be strongly premised on mutual gains.

Fiji has geo-strategic and infrastructure advantages it should be leveraging in this ‘Asian century’ to stimulate record economic growth and opportunity for its people. That it is failing to do so is an indictment of Bainimarama’s leadership.

Fiji National Provident Fund lends $200 Million to Air Pacific. A non government secured loan to a loss making company……..

Air Pac loans from FNPF for new aircrafts

Tuesday, October 25, 2011

Air Pacific will borrow close to $200 Million from the Fiji National Provident Fund to buy three Airbus aeroplanes.

The national airline will purchase the three brand new Airbus A330-200 aircrafts estimated at US$600 Million.

Air Pacific CEO Dave Pflieger says they will pay a healthy interest rate to FNPF for the loan.

“With respect to FNPF’s involvement they have helped with some of the initial down payments on the aeroplanes majority of the financing over 80 – 85% will come from offshore. We are still in the process of putting those funds together as we speak. We are in discussions with the European credit agencies and then other banks in Europe to provide that financing.”

Minister for Civil Aviation Aiyaz Sayed- Khaiyum says Superannuation funds abroad have played a major part in developing their countries.

“For example in Singapore, the Singapore Superannuation Fund over there in the early stages of the development of Singapore participated in many of the infrastructure development that Singapore embarked on and today it’s a world class place and world class city to visit. I can also tell you FNPF is making a very handsome return on the funds that it has lent to Air Pacific.”

This is the first time Air Pacific will buy wide body aircrafts in its 60 year existence.

Report by : Christopher Chand