Finance Minister To Critics On The Fiji Economy
Finance Minister responds to critics on state of economy
6 August 2008 - Fiji's currency is stable, exports are up, inflation is controlled and employment is up which indicates the recovery of the economy, says Minister for Finance Mahendra Chaudhry in response to his critiques on the state of the economy.
"I think Dr. Biman Prasad challenged the employment figures which I quoted from the Fiji National Provident Fund (FNPF). Let me point out to him that the difference was 17,000 at the end of 2007 which is a huge increase compared to 2006 figures," he said.
Mr Chaudhry reminded his critiques to admit the fact that employment figures went up , highlighting that 2006 figures on active accounts of FNPF were below 2005 figures, indicating that employment had fallen in 2005 by 3,000 compared to 2006 to 2005. There was an increase of 17,000 employments between 2006 and 2007.
"Dr. Biman Prasad kept on saying that when the economy is receding, we should borrow more, we should have bigger deficits and use the money to build infrastructure. It is fine in that sort of situation provided your reserves are healthy but we didn't have a healthy reserves when we took over," said Chaudhry.
He said that the reserves were at a very critical level and policies were put in place to cut back on budget deficit from a high 3.54 per cent of Gross Domestic Product to 2 per cent.
"We had to reduce our debts down, carefully monitor our capital outflow and there was no question on having a ballooning deficit when your reserves were at critical level. You were already well above the accepted norm of debt level because this would have put pressure in the Fiji dollar and it suddenly would have meant devaluation of the dollar. We can borrow but if the dollar is devalued, you end up in a big mess because that will inflame inflation."
Mr Chaudhry said what was done was the right policy at the support of the Reserve Bank and support from multi-lateral development partners such as International Monetary fund and the Asian Development Bank.
Mr Chaudhry highlighted that the policy that was followed were sound in terms of the situation the country was experiencing.