RBF distorts data to paint a favourable picture

[posted 22 July 2010, 14.30]

It has become glaringly obvious for sometime now that the monthly economic reviews of the Reserve Bank misrepresent economic data to paint a favourable picture of our ailing economy.

In its June review, the RBF points to a pick up in consumption activity for the 12-month period cumulative to April. This, it says, is supported by Net VAT collections registering an annual increase of 9.5%, cumulative to April. “Moreover, commercial lending by Banks for consumption purposes rose by 3.9%,” says the RBF.

And to top it all up, it makes the ludicrous statement that “consumption is being supported by rising incomes, as indicated by a marginal 0.3% rise in PAYE collections and inward remittances which rose by 32.5% cumulative to April”.

Let us be honest. We all remember April 2009 as the month when the Fiji dollar was debased or devalued by 20% officially but the actual or real extent of the devaluation exceeded 30% as was evident from the post devaluation exchange rates applicable to the major international currencies.

Statistically speaking, any annual comparison cumulative to April this year should be appropriately adjusted so as to reflect the significant erosion in the value of the Fiji dollar post devaluation. But this basic rule is obviously not to be followed by the RBF because the results would not favour its positive comments about a “pick up” in consumption activity.

VAT collections would have gone up because of the higher cost of imported goods and services and as a consequence of locally generated inflation – all of which are directly related to the devaluation of the dollar.

Quite contrary to any pick up in consumption activity as claimed by the RBF, the rise in VAT revenue, commercial lending by Banks for consumption purposes and the value of inward remittances, are all a direct consequence of the devaluation.

Most businesses admit to a flagging business environment and complain about the rising costs of doing business – hikes in electricity charges, introduction of VAT on general insurance and the inflationary effects of devaluation.

Our problems remain: high inflation, ballooning debt and Budget deficit levels, under-performing exports and a depressed investment environment.

There can be little in the way of relief from these negatives unless Fiji returns to democratic and constitutional rule.

Even then, it will be sometime before adequate levels of confidence will return in the future of our nation as a safe and secure investment destination.