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International Monetary Fund. Asia and Pacific Dept
This 2019 Article IV Consultation with the Republic of Fiji highlights that economic activity slowed sharply in 2019 due to lower government spending, tighter domestic financial conditions, weak sentiment, and the global deceleration. The slowdown followed several years of relatively strong growth, boosted by reconstruction spending after a major cyclone in 2016, which resulted in rising external and fiscal imbalances. Fiscal space is now at risk and external vulnerabilities remain significant. Fiji has large investment needs to strengthen resilience to natural disasters and climate change. A key priority should be to rebuild fiscal buffers in a growth-friendly way to create space to respond to future natural disasters and to ensure public debt sustainability. Fiscal consolidation should focus on reining in current spending given limited scope for further revenue mobilization and the need for capital spending to improve resilience to climate change. Improvements in the business environment and in governance are essential to raise potential growth and boost private investment, and to enhance productivity and competitiveness.
International Monetary Fund. Asia and Pacific Dept

WASHINGTON, DC February 24, 2020 the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation 1 with Fiji. The Fijian economy experienced relatively high growth during 2017–18 amid rising external and fiscal imbalances. Fiscal space is now at risk and external vulnerabilities remain significant. Economic activity slowed sharply in 2019 due to lower government spending, tighter domestic financial conditions, weak sentiment, and the synchronized global downswing. Growth is estimated to have reached about 1 percent in 2019

International Monetary Fund. Asia and Pacific Dept

hazards. 2. The Fijian economy had a few years of high growth amid rising external and fiscal imbalances . Real GDP growth averaged 4.5 percent in 2017–18, higher than the estimated potential growth of 3 percent, benefitting from expansionary fiscal policy, strong tourism, and loose financial conditions. The current account deficit was 8.5 percent of GDP in 2018, the largest since 2013, driven by a record-high election-year fiscal deficit of 5.5 percent of GDP, soaring imports of transportation equipment and oil, and a modestly appreciating real exchange rate ( Figure

International Monetary Fund. Asia and Pacific Dept

will carefully consider the relevant recommendations. Recent Economic Development and Outlook After recording strong economic growth from 2013 to 2018, Fiji experienced a sharp slowdown in 2019 . The Fijian economy is estimated to have grown by 1.0 percent in 2019 compared to 3.5 percent in 2018, owing to lower capital spending by the Government, the global economic downswing and subdued domestic demand. Growth for the year was driven mainly by resilient tourism earnings and remittances, with the former growing by 3.7 percent (Jan-Sep 2019) and the latter by 4

International Monetary Fund

June 2001, but a formal consultation was held off pending new elections that were held in September 2001. Following the elections, Fiji’s international relations were normalized and international sanctions were lifted. The Fijian economy suffered a recession after the coup, but is now recovering in response to a pick-up in tourism, the lifting of sanctions, and fiscal stimulus. Inflation remains low and the current account deficit has narrowed. The mission recommended that the focus of macroeconomic policies shift from kick-starting the recovery to implementing a

International Monetary Fund. Asia and Pacific Dept

On behalf of our Fiji authorities, we thank staff for the detailed report and their constructive engagement and work. Our authorities broadly concur with the staffs assessment and will carefully consider the relevant recommendations. Latest Economic Developments and Outlook Fiji’s economic fundamentals are firm . In 2017, the Fijian economy is estimated to have grown by 4.2 percent, above its potential of 3-3.5 percent. This is the country’s eighth consecutive year of growth, a feat not achieved since independence in 1970. The Fijian economy has grown

International Monetary Fund. Asia and Pacific Dept

pandemic and another year of contraction is likely in 2021 . The Fijian economy was estimated to have contracted by 15.7 percent in 2020 and is projected to contract by a further 4 percent in 2021. The Delta variant outbreak in April 2021 resulted in lockdowns, restrictions in movement and business operations, prolonged border closure, and subdued domestic demand. The tourism industry, a large contributor to Fiji’s GDP, was heavily affected and this has led to a sharp drop in the services balance of the current account due to the loss in tourism. As a result, the current