Thursday, December 06, 2007

Disastrous Year for Fiji

It’s been a disastrous 12 months: Qarase - 05 DEC 2007

Deposed Fiji Prime Minister Laisenia Qarase says the impact of the military coup 12 months ago has been disastrous for the economy.

Today is one year to the day when the Fiji Military Forces commander, Commodore Voreqe Bainimarama removed the Qarase Government saying it was corrupt and racially biased.

In a press statement, Qarase said that under the interim government, the economy is forecast to decline by 3.9 per cent (negative) of GDP this year.

But the SDL (Soqosoqo Vakavulewa ni Taukei) multi party Government’s projection for 2007 was for positive growth of 2 per cent.

“The contraction would therefore represent a total decline of -5.9 per cent of GDP.”

Qarase says that he recently read a comment from an international economic journalist who placed Fiji at the bottom of a list of economic performers.

“He bracketed Fiji with North Korea, Zimbabwe and Somalia as countries that would this year experience a contraction in their economies.

“The coup has placed us among these basket cases.”

According to him, the decline has manifested itself in all areas.

“The tourism industry, our largest foreign exchange earner, has revised downwards its forecast earnings from $1000 million to $600m, a reduction of $400m.”

He says the mining industry is down with the closure of the Vatukoula mine for most of this year; and that the fishing and garment industries as well as the construction and building industries are struggling.

In addition, he said the sugar industry, which has been the mainstay of the economy for a long time, is now at a critical state, adding that sugar production in 2007 is said to be among the worst on record.

“Output will be down significantly and earnings well below that achieved last season.”

“Another serious problem is the considerable delay in the industry restructures which is necessary for its survival.

“It is now well behind schedule, particularly in the farm improvement programme which aimed to assist the farmers.

“The delay is due to the non availability of a $350m grant from the European Union, attributed directly to the illegal takeover of Government in December last year,” Qarase stated.

He claims that thousands of jobs have been lost, and that new employment opportunities have evaporated. “Hours of work have been reduced, wages and salaries cut and unemployment has increased,” he added.

More people are now living below the poverty line and in squatter settlements and more violent crimes are being committed, he proclaimed.

On the other hand, he says that before the coup, Fiji had sound economic growth.

“The Ministry of Finance recently estimated that it had expanded by 3.6 per cent in 2006. It registered an average of 2.8 per cent of GDP from 2002 to 2006, he added.

“Our economic fundamentals were satisfactory with foreign reserves at an equivalent of three to four months of imports and inflation at around 3 per cent.”

He says that the 2007 budget deficit was expected to be 2 per cent of GDP; public debt was 52 per cent of GDP which was categorized in the higher end of the medium range and that Government’s cash flow was sound.

Qarase says that under his administration, more jobs were being created, wages were rising, tourism was enjoying an unprecedented boom, as was the construction industry (a critical indicator of economic performance), that business confidence was high, resulting in more private sector investment which in turn was driving growth and job creation.

The two areas of concern were Fiji’s balance of payments position and slow growth of exports but these were addressed in the 2007 budget of the SDL/Labour multi-party government, he added.

These were also dealt with in the Government’s five year strategic plan for the five years to 2011, he said.

However, Finance Minister Mahendra Chaudhry is adamant the economy is on a firm footing.

At a press conference soon after the announcement of the 2008 National Budget, Chaudhry said that six years of ravaging of Fiji’s economy can't be fixed in six months or nine months. "It will take time."

"We had to impose measures to arrest the decline before we crashed and the measures that we have taken have produced dividends," he declared.

Chaudhry pointed out that foreign reserves are up; exports have shown a slight increase after many years, inflation is under control, interest rates have come down considerably, liquidity is there, credit ceilings that were imposed are being gradually lifted.

"So it is not getting any worse, it is getting better. As to the rate of decline that is a debatable point. At this juncture it is a provisional figure.

"The Reserve Bank estimates that we have a decline of 3.9 but the years is not over yet, so let's wait and see what happens.

"But definitely you cannot deny the fact that in the last six months there has been tremendous improvement in terms of foreign reserves, in terms of exports, in terms of declining interest rates, in terms of inflation, what more do you want."

He said the economy is projected to grow 2.2 percent in 2008, adding the revival in growth would be driven by the vital tourist industry, as well as agriculture, forestry and fisheries.

PM, Qarase got it wrong: analyst
05 DEC 2007

A political scientist says ousted Fiji Prime Minister Laisenia Qarase is taking the wrong approach in engaging Commodore Voreqe Bainimarama.

University of the South Pacific-based Dr Steven Ratuva said Qarase is putting forward his demands in his request to meet with Bainimarama who has responded by angrily cutting off communication.

“Anger and vindictiveness started to re-emerge. This is hardly how we should deal with this delicate matter,” said Dr Ratuva on the attempt to have the two leaders talking and plotting the way forward for Fiji, since the coup 12 months ago.

Bainimarama has since snubbed Qarase and his party that won 80 per cent of indigenous Fijian votes in the 2006 election.

“The life of the entire country is in their hands and they should be more mature and tactically systematic in their approach. Anger, vindictiveness and vengeance does not get us anywhere,” said Dr Ratuva.

Dr Ratuva said there is “no other way out of this” but for the two men to engage in dialogue.

“I'm not sure who provides political advice for the two gentlemen-both have not been following the right approach.

“What they should do is remove political conditions and demands, leave their political baggage aside and start talking as individuals and Fijians at a very personalized level around a kava bowl.

“They need to build up a sense of trust, goodwill and understanding as a first step. Second, they should agree on what to discuss next time-preferably how they can work together to move the country forward.

“Once a political link is forged, the third session should start exploring their own difficulties and their own demands can be thrown in bit by bit…and so forth. It should be a systematic, step by step process from socio-psychological engagement to full scale political dialogue.”

Qarase has said that he hopes Bainimarama will have a change of heart and agree to meet him

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