IMF Staff Completes 2018 Article IV Visit to Fiji

December 17, 2018

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

• The economy is recovering well from natural disasters and is expected to grow at about 3.2 percent in 2018, its ninth consecutive year of expansion.
• External conditions are becoming less favorable, underscoring the need to increase the economy’s resilience.
• Sustaining strong growth will depend on rebuilding fiscal policy buffers and boosting private sector development.

An International Monetary Fund (IMF) team led by Mr. Pablo Lopez Murphy visited Fiji from December 3 to December 18, 2018, to conduct the discussions for the 2018 Article IV consultation. At the conclusion of the visit, Mr. Lopez Murphy issued the following statement:

“The economy is recovering well from several natural disasters and is expected to record its ninth consecutive year of expansion in 2018. The fiscal stance has eased substantially in fiscal year 2017/18 and external conditions are becoming less favorable due to lower sugar prices, higher oil prices, and slowing growth in main trading partners. Growth is expected to pick up to about 3.2 percent in 2018, underpinned by consumption and public investment. The growth momentum is projected to continue in the coming years. Headline inflation increased to 5.2 percent in November reflecting higher taxes on tobacco and alcohol as well as higher prices for yaqona caused by floods in April. Inflation is projected to decline to 3 percent in 2019-20 as supply conditions normalize.

“Risks to the economic outlook are tilted to the downside. Downside risks stem from natural disasters, higher oil prices, slower growth in main trading partners, and delays in implementing structural reforms to mobilize private investment. On the upside, the new air routes and code share arrangements with Japan and United Kingdom may boost the tourism sector.

“Policies should aim to increase Fiji’s resilience to shocks and strengthen growth performance. Faster fiscal consolidation is needed to rebuild fiscal space and support external stability. Improving the business environment and governance will raise potential growth by mobilizing private investment, enhancing productivity, and diversifying the economy.

“The team had fruitful discussions with the Attorney General and Minister of Economy, the Governor of the Reserve Bank of Fiji (RBF), other senior public officials, several government agencies, development partners, and private sector representatives. Staff from the World Bank also joined some of the discussions. The team would like to thank the Fijian authorities for their hospitality and excellent cooperation.“