THREE YEARS AFTER COUP, FIJI ECONOMY IN DUMPS
Struggling to pay bills, regime seeks IMF loan

MELBOURNE, Australia (Radio Australia, ,May 27, 2010) – It's now nearly three and a half years since Fiji's fourth coup in December 2006, close to two years since the start of the Global Financial Crisis, and just over one year since the country's constitution was scrapped. And it was announced the military backed government of coup leader and interim Prime Minister Commodore, Frank Bainimarama would hold onto power till 2014. But there's growing concerns in Fiiji that the country's economy is not healthy.

Presenter: Pacific Correspondent Campbell Cooney

Speakers: Biman Prasad, University of the South Pacific; Bob Lowres, Managing Director, Naisoso Island Development; Joseph Filitoga, Chief, Villa Maria Squatter Settlement; Rev Aquila Yabaki, CEO, Fiji Citizen's Constitutional Forum

Cooney: Since the coup I've travelled to Fiji five times for the ABC, and when I arrived in the capital Suva at the start of this visit I when to the centre of the city to get an impression of how life is going there.

Well, I am standing in central Suva on Terry Walk, which is the main walkway which runs alongside the main canal through the middle of town, plenty of vehicles on the road as you can here, late model ones as well, I even saw a Range Rover go past. Plenty of pedestrians, going up and down into shops, buying stuff. If you're thinking of the capital of the country, where the economy is in reverse mode and it is being run by a military-backed government after a coup less than four years ago, then Suva will defy what you think, it's all business. But if you look a little bit closer and just about every corner, you will see a beggar. They are from all of Fiji's ethnic groups and there is more of them now than there has been in previous years. It's a pretty clear sign that not everybody here is enjoying what looks like a good time.

Professor Biman Prasad is the Dean of the School of Economics at the University of the South Pacific.

Prasad: The situation is pretty dire at the moment, because if you look at all of the sectors of the economy since the 2006 coup, tourism numbers continued to decline, although there has been some improvement in the numbers, but the actual yield the actual earning from tourism is still very, very low. If you look at the sugar industry, the sugar production was 2.4 million in 2007, declined 2.3 million in 2008. It went down to 2.2 million in 2009 and given the situation in the sugar industry this year, the expectation is that it will decline further. If you look at the construction industry, that has declined significantly in the last three years, then you look at the decline in the exports, decline in the remittances and when you have a situation where the expectation of what is going to happen in the future politically, when there is uncertainty, what people do today is actually determined by that and so what you've seen over the last three years is a declining level in investment, both domestic and foreign investment. Governments own data in fact, government's own statistics shows that the economy is in poor shape. I mean all the indicators very, very recent indicators in terms of employment shows that the number of taxpayers being registered has declined. In fact between 2008 and 2009, in the first quarter of 2009, the decline was about 60 per cent compared to the same period in 2008, which shows very, very clearly that the unemployment rate is also rising.

Cooney: That shrinking of the job market is hitting Fiji's poorest the hardest, and the interim government has put in place a number of measures limiting public transport and utility charges to try and reduce the impact.

The Villa Maria Squatter settlement is situated in the hills above the city, with panoramic views across the harbour.

The Chief of the Settlement, one of Fiji's oldest, Joseph Filitoga says most of his people are unskilled with low levels of education.

Filitoga: Well for us at Villa Maria, we highly unemployed people since the took over the government, a lot of people went out of jobs

COONEY: And while foreign investment and development in Fiji is scarce, it is not non- existent.

The Naisoso Island development outside Nadi on Fiji's west coast, is a blend of gated residential community, resort accommodation, shopping and Marina berths, and it is on track to defy the national investment trend.

Bob Lowres is Naisoso's Managing Director

Lowres: Business is good, we currently have 82 million dollars in committed pre-sales for our development, we are three months ahead of schedule and we are well on the budget, something I believe people tell me it's the first for Fiji, but it can be done.

Cooney: But Mr Lowres' says Naisoso's success comes despite it's establishment at a time when the world is tightening its financial belt, and when Fiji's politics and government are unpopular in his two biggest prospective buyer markets.

Lowres: The negative press that Fiji has in New Zealand and Australia really meant that from my point of view, I did not promote in New Zealand or Australia to any great extent. My view was that half-a-million people a year come to Fiji on holidays, so they did not need convincing to come here, so we concentrated our efforts on people that were already in the planes. We did our advertising in flight, we had very good signage and we made a point of getting to the people who were here on the ground and I think we got a very big bite of a fairly small cake at the moment in terms of people looking to invest in Fiji.

Cooney: But a home on Naisoso Island is now beyond the hopes and expectations of most Fijians, and as Biman Prasad from the USP points out, it is moving even further away.

Prasad: A recent seminar on poverty organised by the government, the figure that I was quoted there is that 40 per cent of the households in the country are living below the poverty line.

Cooney: Joseph Filitoga from the Villa Maria Squatter Settlement thinks 40 percent is a conservative estimate.

Filitoga: It could be more, yes. it could be more. Right now, I am saying just for my family, before we could have chicken twice a week, sometimes it would be three times a week and now we have chicken only on Sundays now. It is very, very difficult.

Cooney: What are you living on apart from that then?

Filitoga: Well, we live more on vegetables now, we cannot afford to buy chicken, we can't afford to buy beef. Before the coup amends ?? meet, it used to be this lamb neck and now we can't afford it. We are lucky here in the community that we have plantations that we live on.

Cooney: With low investment, and less of taxpayers to meet its costs, Fiji's military backed government is looking at a range of measures to pay its bills.

In April a team from the International Monetary Fund visited as part of its assessment, in response to Fiji's request for a loan of nearly 500 million dollars US, to fund its activities and help recover from the global financial crisis.

Since the Constitution was scrapped the interim government has put in place its own austerity measures, enforcing an age 55 mandatory retirement on the public service, and a wage freeze.

But for nations, the IMF is often referred to as a lender of last resort, and Professor Prasad believes they will want even more commitments of spending cuts, before parting with their money.

Prasad: I think what we can expect as a result of the IMF loan if it comes through, that it will be accompanied by extreme and perhaps no drastic strategy measures, that would mean further cuts in public expenditure, further cuts in the delivery of essential services and it would see a rise in prices of utilities, such as electricity, water.

Cooney: Already Fiji's Electricity Authority has applied to have a six and a half cent fuel surcharge per unit of electricity reinstated, after it was ordered removed last March by the government.

The devaluation of the dollar last year by 20 percent, intended to increase investment and tourist numbers, has also meant all imported goods have gone up in price.

And with a large percentage of Fiji's energy coming from diesel powered generators, the authority says it's starting to run at a loss.

The Chief Executive of Fiji's Citizen's Constitutional Forum Reverend Aquila Yabaki sees a link between this requested increase and the IMF loan bid.

Yabaki: And that's going to hit peoples pockets. I think that is more money to go to government in order to run the economy. There is evidence that people are finding it hard.

Cooney: If Fiji's Interim Government holds to its stated timetable their won't be elections until 2014, and it says until 2012 it will be focussing on economic recovery.

Professor Biman Prasad says to do that they need to regain the confidence of both investors, at home and overseas, and he has some suggestions on how to achieve this, including an end to the severe restrictions on the country's media currently enforced by emergency rules, but which likely to continue in a new media decree.

Prasad: If the media is not allowed to report on the bad news, the media will also hold on some of the good news and I think it's important we have the balance and I would say that that step if taken by the government can bring a lot of confidence.

Cooney: But confidence also means the support of Fiji's people.

Reverend Yabaki says Commodore Bainimarama is busy selling his message across the country, with some success, but at some stage the promises being made will have to be backed up.

Yabaki: Bainimarama's he is quite make an impact in making himself accessible to ordinary people in the villages and anybody can approach him and ask questions and he goes out there, rather than sitting back in a glass office waiting for people to come, so he does that well, but with that goes the volume of promises if you like and the takings and that delivery factor has to come in, how do you deliver?

This is Campbell in Suva, for Pacific Beat.

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