Analysis of Budget reveals harsh economic realities

[posted 15 Nov 2004, 1300]

Analysis of the 2005 budget reveals that it does not come close to putting in place the measures necessary to build a platform for economic growth in Fiji.

The 2004 GDP growth rate has been quietly revised by government to the lower figure of 3.8%.  That is not the worst of it, as SDL policies are now openly displayed as failures.  Growth rates for 2005 and 2006 have been pared back to 1.5% and 0.6%, respectively.

The growth rates required to add jobs to the economy are nowhere in sight under SDL leadership.  Still more graduates and school-leavers will face the grim prospect of unemployment.  How many of these individuals will Fiji lose to migration?

This reality can be avoided, yet the government is to slow to implement the reforms necessary.

The government has stated that 'it has designed a policy framework to encourage, facilitate, and support the development of the information communication technology industry.  

The $400,000 it has allocated to establish the e-Fiji agency is grossly inadequate, especially when government's unwillingness to lower the telecommunications tarrifs on telephone, internet, and mobile services.  This represents the key stumbling block in establishing an IT industry in Fiji, the nation's best opportunity to slow the crippling brain drain.

If the failure to stimulate economic growth is one shortcoming of the government, then the inability to control government spending is its other downfall.  The estimated $160 million dollar budget shortfall for 2004 was a different reality from the $220 million in overspending recorded in actuality.  Despite this, the government has predicted the overspending for next year to be $163 million.  We can only venture a guess as to how much they intend to miss the mark by next year.

Controlling costs in the public service, while improving services is yet another shortcoming.  Improvements in the public service, including reforms that need the collaboration of the public sector unions must be carried out urgently.  Compensation for senior officials must be brought under control.  

These few areas indicate just how badly the SDL is handling Fiji's economic future.  There is very little emphasis on increasing exports and creating new industries that will bring in jobs.  The tourism industry will not be enough, especially to keep the highly skilled graduates who will end up leaving Fiji's shores.