Thursday, September 09, 2010

Economic Lunacy in Fiji

POSTED ON FIJI COUP 2006 - 9 September 2010

Much of what is being touted by the illegal regime in the economic sphere resembles economic desperation and lunacy by a regime led by economic illeterates. I say this having regard to the fact that the Finance Minister himself knows nothing or has no qualification whatsoever of economics or financial management.

Yes, you have a Reserve Bank chief who, having met him in NZ, appear economically shallow and yet delights in thinking of himself high and mighty. Definitely a far cry from the likes of Profs Biman Prasad and Wadan Narsey of USP, both of whom I've met over in NZ, or at the Fiji Golf Club in the case of Wadan.

What the illegal regime has yet to figure out is that in their thirst and hunger to satisfy all those who would like to cuddle up to them for funding etc.. as they're doing for various infrastructure projects, someone will eventually have to pay for it. In fact to fund all the projects that the illegal regime have been promising around Fiji, you need double digit economic growth in GDP. The best economic performance in the Qarase years was around 6% GDP growth which was admirable. This is nigh impossible under current economic and political climate. Worse even if we take into account the real level of unemployment and investment (or more likely disinvestment).

While the China Rescue Boat will suffice for the time being, future generations of Fiji citizens can expect to be saddled with monumental debt piled by the current illegal regime. Of course it is of minimal consequence to the current illegal regime as they could simply incur the debt by decree for others to pay.

When you look at the other side of the ledger as to the revenue coming in, well investment level is always going to be patchy and export receipts with the demise of sugar and unreliable tourism flow from "non traditional markets", a far cry from the heydays we all know.

So what then? Well in such desperate situation one tends to try to squeeze as much as is possible from existing revenue sources! That means local consumers and businesses will bear the brunt in both the short and long term. No wonder, public services such as health, police clearance fees and you name it what else, are being raised. In fact locals are subsidising offshore government liabilities such as loans from China Bank etc that are funding all sorts of infrastructure projects in Fiji at the moment to the glee of the regime. Sadly I am reminded of the proposed Taveuni $10m hydro project to be funded yes by the Chinese! My RKS junior boy, Lt Col Inia Seruiratu, the Commissioner Northern, would have no idea of the long term economic impact of the project in terms of its true cost-benefit return.

Such an indebted environment often play into the hands of debtors as they could often negotiate very favourable terms with the regime. As in similarly indebted nations, therein lie a very fertile ground for corruption as debtors could offer bribes and kickbacks to ministers and public servants. One could suspect such things already happening in Fiji. Even worse, when you have an economically illeterate Finance Minister, as currently in Fiji, the likelihood is even greatly enhanced.

The solution then lay in focusing attention on raising economic performance through export earnings from sugar and tourism. Yet both these sectors are being run down. Tourism through a misguided push for the Chinese and Indian market and sugar being down in the doldrums due to the suffocating impact of lack of funding, though readily available from the EU, only if the illegal regime has a credible roadmap to democratic rule.

The only option remains is the admission that the current path are both economically and politically unsustainable and that a return to democratic rule and governance is what Fiji needs to resurrect its economic fortunes. But tell that to the economic lunatics, running the nation like military camps, will be something else.

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