Watch those falling Foreign Reserves!

[posted 19 Dec 2008, 1400]

Fiji’s falling Foreign Reserves, now down to about 3 months of imports, is a matter of major concern, said Labour Leader Mahendra Chaudhry.

“This will eventually put a strain on the value of the Fiji dollar and adversely affect our credit rating and capital inflow,” Mr Chaudhry said.

“A depreciating Fiji dollar will add to inflation which is already high,” he said.

While falling exports may be one of the reasons for declining Reserves, there are other factors which also contribute to it. A significant factor is that receipts from exports and the tourism industry are not getting back into the country.

Tourism is often paraded as a billion dollar industry – but a substantial amount of our earnings from tourism do not come back to Fiji. Likewise, Fiji is being cheated of the true value of its exports through devious practices involving transfer pricing and other such means,” he said.

“It is of little use for the Reserve Bank to simply put out monthly statements expressing concern at falling reserves. The central bank must move urgently to put in place effective measures to monitor receipts from tourism and other key exports and ensure that these are remitted to Fiji,” Mr Chaudhry said