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Inflation is expected to hover at a high of 9.5 percent at year end, according to Fiji’s Prime Minister Voreqe Bainimarama.
Bainimarama mentioned this in his address when presenting government’s “Strategic Framework for Change” at the Tradewinds Convention Centre in Lami this morning.
While deliberating on a number of economic indicators, Bainimarama said there was a need to bring about changes that would foster long term prosperity for Fiji.
“In May inflation rate was 0.8 per cent. Following the devaluation, we should expect an increase in the inflation rate in the coming months, with the year-end inflation forecast at 9.5 percent,” Bainimarama said.
At 9.5 percent, this year’s inflation rate would be the highest in the last five years, with Reserve Bank of Fiji data stating a year on year all items inflation rate of 3.3 percent in 2004, 2.7 percent in 2005, 3.1 percent in 2006, 4.3 percent in 2007 and 6.6 percent in 2008.
This is expected to ease next year, said Bainimarama, who is also Fiji’s Minister for Finance and National Planning and Sugar, Public Service, People’s Charter for Change, Information, Foreign Affairs, International Cooperation and Civil Aviation, Provincial Development, Indigenous and Multi-Ethnic Affairs.
“Prices are expected to start easing after April next year, towards an inflation of around two per cent by the end of 2010,” he said.
Fiji’s economy has long been battling with a declining foreign exchange reserves, increasing import bill and a low export earning capacity.
“While imports have fallen in the first four months of this year over the same period last year, imports also fell by seven percent in the first four months of this year.
“This is a positive outcome for our balance of payments. It is however critical for us to lower our dependence on imports,” Bainimarama said.
He said foreign reserves was at around $660 million in April, up from around $440 million before the 20 percent devaluation of the Fiji dollar in mid-April.
“However, the foreign exchange position must be improved and meet the medium term target of raising reserves to 3-5 months of import cover,” he said.
