Signs of bleak reality; Opposition questions economic forecast
8 March, 2019, 11:55 am
NATIONAL Federation Party leader Professor Biman Prasad rejects the claims of Economy Minister and Attorney-General Aiyaz Sayed-Khaiyum that Fiji’s economy today “is the strongest it has ever been”.
Prof Prasad attacked Mr Sayed-Khaiyum’s answer to a Year 13 student during his live Facebook budget consultation on Tuesday when the student asked about free government services and government debt.
“The Reserve Bank of Fiji’s Economic Review for February, which has been just released, shows that on 27th February liquidity (available cash in the banking system) stood at $286.6 million,” Prof Prasad said.
“RBF statistics show that a year ago in February 2018, liquidity was $562.9m. This is a reduction of $276.3m or 49.08 per cent when compared to the same period last year.”
Prof Prasad said Mr Sayed-Khaiyum told Parliament on February 15 that February liquidity was $342.3m on February 13.
“So in exactly 14 days or 2 weeks, liquidity fell by $55.7m or 16.27 per cent.
“This should be a matter of concern to the minister, but despite this bleak reality, he continues to mislead the people of Fiji.
“We know that some commercial banks are trying to attract term deposits by offering higher interest rates to boost their liquidity level.
“The Reserve Bank of Fiji, especially its governor, must also be put under the spotlight.
“Despite saying key economic sectors that generate real growth have declined, both the RBF and Government forecast a positive economic outlook. This raises questions yet again about RBF’s independence and impartiality.
“In its latest outlook, RBF says export commodities like gold and sugar have declined significantly for this period.
“Gold has declined by 23.3 per cent and we believe in recent months production at the Vatukoula mines average over 400 ounces per week, well below the weekly target of 800 ounces.
“There has been a decline in construction and real estate, as well as pine and woodchip production. At the same time the import bill has increased significantly.
“This has resulted in widening merchandise trade deficit by 20.4 per cent or $3.053 billion, excluding aircraft purchasing, which if included would further widen deficit.
“This latest RBF economic outlook gives credibility to warning bells sounded by the International Momentary Fund that Fiji has a consumption-driven economy fuelled by public sector spending funded by increased borrowing.”
Prof Prasad said this meant Fiji was not generating real economic growth.
“Given the IMF’s warning bells, especially, Fiji’s inability to recover from a shock of a natural disaster if it happens, and RBF’s latest economic outlook, we reiterate our call for a national economic summit.
“Government must realise that it alone doesn’t have the solutions to the current and forecasted future problems that will affect the economy.
“The Opposition stands ready to help Government and we can collectively tackle and overcome the challenges that lie ahead.”
Meanwhile, Opposition Whip Lynda Tabuya also claims there is a growing liquidity problem that could lead to an economic crisis in Fiji.
In a statement this week, Ms Tabuya said there was growing evidence that the liquidity problem was worsening with major banks slowing or even halting new loan applications.
She said the latest Reserve Bank of Fiji Economic Review for the month ended February was a strong indicator.
“Before the Minister for Economy goes on a roadshow around the country and on livestream touting the budget for the 2019-2020 period, he and the Reserve Bank must give an honest answer on the liquidity crisis and what actions they will take to solve it.
“There are important questions that must be answered, for example, what is being done to resolve this cash crisis?
“Why has the Government and Reserve Bank of Fiji been so tight-lipped about this liquidity problem?
“The people of Fiji deserve the truth and some real solutions put on the table; this is about transparency and accountability,” she added.
- The statements released by Prof Prasad and Ms Tabuya were sent via electronic mail (e-mail) to Mr Sayed-Khaiyum on Wednesday for a response. No response was received when this story went to press last night.
(This story was also contributed by Aqela Susu)