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Financial discipline by government is necessary to complement measures put in place by the Reserve Bank of Fiji (RBF) to stabilize our struggling economy.
RBF governor Sada Reddy said in a statement last week that closer policy coordination between the government and RBF was critical.
This he said, is to ensure that both fiscal and monetary policies were aligned to meet the economic management challenges as Fiji moves forward.
“The recent policy measures announced by the Bank, including exchange controls, are an attempt to stabilise Fiji’s external position.
“This should be complemented by Government maintaining a tight rein on expenditures through fiscal discipline,” Reddy said.
“Reducing operational costs and the prioritisation of expenditure is essential in this regard. Improving revenue collections in tandem with expenditure restraint should allow greater scope for more capital expenditure and more funds to support vulnerable groups in society.”
He said the recent announcement by the government to scale back non-essential expenditure and to keep a tight rein on expenditure was a good sign.
“However, it is critically important that capital works as per the budget is carried out in a timely manner to add impetus to the economy,” he said.
RBF is expecting the economic situation to worsen with the unfolding global crisis and recession, and the slow recovery of global economy would weaken prospects for Fiji’s economy.
The latest economic data from Fiji’s Islands Bureau of Statistics, for the March quarter this year, showed that exports fell by 12 percent with lower earnings particularly from mineral water and garments exports.
“Lower demand for our exports due to the global fall off in demand, and lower remittance receipts will continue to pose risks to our foreign earnings. In this regard there is a need to reduce the level of our imports through various measures and change in sourcing for cheaper imports,” Reddy said.
To this end, there is an urgent need to streamline Fiji’s trade and investment policies to suit the current environment, Reddy added, and government intervention was also needed to help lessen Fiji’s dependence on oil imports.
