International Monetary Fund. Monetary and Capital Markets Department
At the request of the Central Bank of Solomon Islands (CBSI), a Monetary and Capital Markets Department (MCM) mission provided technical assistance on central bank risk management during the period August–September 2021. The mission comprised Mr. Paul Woods (Central Bank of Ireland) and Mr. Chris Aylmer (formerly with the Reserve Bank of Australia), under supervision of Mr. Ashraf Khan (MCM, Central Bank Operations Division) The purpose of the mission was to guide the CBSI on how to establish an Enterprise Risk Management (ERM) framework. The mission focused in particular on establishing a strengthened risk culture throughout the organization, and strengthening risk governance - including the role of the CBSI’s risk management unit.
We estimate a variety of exchange rate elasticities of international tourism. We show that, in addition to the bilateral exchange rate between the tourism origin and destination countries, the exchange rate vis-à-vis the US dollar is also an important driver of tourism flows and pricing. The effect of US dollar pricing is stronger for tourism destination countries with higher dollar borrowing, indicating a complementarity between dominant currency pricing and financing. Country-specific dominant currencies (CSDCs) play only a minor role for the average country, but are important for tourism-dependent countries and those with a high concentration of tourists. The importance of the dollar exchange rate represents a strong piece of evidence of dominant currency pricing (DCP) in the international trade of services and suggests that the benefits of exchange rate flexibility for tourism-dependent countries may be weaker than previously thought.
International Monetary Fund. Asia and Pacific Dept
Fiji has been among the hardest hit by the pandemic—with infection rates at one point among the highest in the world. Despite swift action by the government to close borders, protect the population, and mitigate the worst economic effects, the economic contraction was the worst in Fiji’s history. The crisis has come at a heavy social cost, including large-scale layoffs, surging unemployment, and high non-performing loans. Multilateral and bilateral support has been critical in helping Fiji weather the worst of the crisis and has facilitated a strong government response—including rapid acceleration of the government vaccination program underpinning Fiji’s reopening to international tourism.