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The Fiji Government will have to announce a revised 2009 Budget that will include strategies to counter the recent floods, says economist Professor Biman Prasad.
“This is a huge disaster for the country and it would require urgent and effective measures to deal with,” he said.
“We had the coup in 2006 which caused a massive decline in the economy in 2007 and on top of that we had two bad years of economic policies. In addition we are passing through a terrible global economic crisis which will have adverse impact on our economy. The disaster from the flood is certainly going to make matters worse.”
Prof Prasad, who heads the School of Economics at the University of the South Pacific, expects sugar production, once the backbone of the local economy, to be hit hard by the floods.
“In 2007 we produced 237,000 tonnes of sugar which declined to 207,000 tonnes in 2008. With the destruction in the Western side of Fiji, it is almost certain that the production for 2009 will be lower than 2008. This is going to cause a huge impact on the overall economic growth in the country.”
Prof Prasad has called on government to look at urgent measures to rehabilitate the sugar farms with support to the farmers.
“It should set up an urgent task force including stakeholders and some independent people so that a clear and effective rehabilitation package could be put immediately,” he said.
Prof Prasad added that damage to the infrastructure has been significant and requires immediate attention too.
To do this end, he suggests that the interim Government consider a revised 2009 Budget.
“When you have a crisis of this nature on hand, the only tool available is to look at increasing the spending on productive sectors such as agriculture and with it, fixing the infrastructure,” he said.
“The government should go for at least a 5 per cent deficit and use this extra two per cent of GDP for fixing the infrastructure. It should also tighten its belt with the allocation already made and redirect and refocus some of those to rehabilitating the economy.”
