Republic of Fiji: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Fiji


Republic of Fiji: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Fiji

Fund Relations

(As of November 30, 2015)

Membership Status: Joined: May 28, 1971; Article VIII

General Resources Account:

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SDR Department:

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Outstanding Purchases and Loans: None

Financial Arrangements: None

Projected Obligations to Fund:

(SDR Million; based on existing use of resources and present holdings of SDRs):

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Exchange Rate Arrangements: Fiji’s de facto exchange rate arrangement is a conventional peg.

Since April 1975, the exchange rate of the Fiji dollar has been linked to a basket of currencies of Fiji’s five major trading partners: the U.S., Australian, and New Zealand dollars; the pound sterling (replaced by the Euro at the beginning of 1999); and the Japanese yen. The weights used in the basket, based mainly on the value of trade and tourist transactions are reviewed annually. The exchange rate of the Fiji dollar against U.S. dollar, the intervention currency, is determined daily by the Reserve Bank of Fiji (RBF) in relation to the currency basket. The RBF’s buying and selling rates for transactions in U.S. dollars are communicated to commercial banks. The exchange rate was F$2.18 per U.S. dollar as of September, 2015.

Exchange and capital controls were tightened significantly in early 2009 following the devaluation of the currency. Some of the exchange restrictions have been eliminated and amended since then. Remaining exchange restrictions subject to Article VIII arise from the Fiji Revenue and Customs Authority tax certification requirements on the transfer abroad of profits and dividends, on the proceeds of airline ticket sales, and on the making of external debt and maintenance payments and from limits on large payments (e.g., oil imports and dividends repatriation of foreign banks).

Approval of most current payments was delegated to commercial banks and foreign exchange dealers in the late 1990s. However, the extent of delegation was tightened during periods of stress on foreign exchange reserves, most recently in April 2009. In December 2009, the RBF announced an increase in the delegated ceilings for commercial banks and foreign exchange dealers for most current payments, effective January 1, 2010, and further increases in delegated limits were announced to come into effect in January 2014. Banks have also been allowed to have net forward contracts of up to F$40 million, and the delegated limit on dividends and profits for companies per annum was raised from F$500,000 to F$1,000,000 per invoice. In November 2015, the RBF further announced further exchange control relaxations effective January 1, 2016, to include further increases to the delegated limits of certain payments and offshore investment by Fiji residents. Deposits into external accounts were raised from up to $500 per month to $2,000 per month. Also, ceilings on offshore investment by Fiji residents were raised from $15,000 per family per annum to $25,000.

Last Article IV Consultation: The 2014 Article IV consultation discussions were held in Suva during July 17–30, 2014. The consultation (Country Report No. 14/321) was completed by the Executive Board on October 31, 2014. Fiji is on a 12-month cycle.

Safeguards Assessment: The first-time safeguards assessment of the Reserve Bank of Fiji (RBF) was finalized in January 2011 and found key safeguards elements in place. The RBF publishes annual financial statements that are both prepared and audited in accordance with internationally recognized standards. The assessment confirmed, however, that the level of autonomy of the RBF is very low with the legislation supporting a wide scope of political interference. Proposed amendments would address some but not all of these weaknesses; alternative measures were recommended by the staff for others. An action plan has been put in place where there is capacity to prepare IFRS financial statements and commenced with the financial statements for the year ended 2010 during 2011.

Resident Representative: The Regional Resident Representative Office for Pacific Islands based in Suva, Fiji was opened on September 13, 2010 and the office covers Fiji, Kiribati, Marshall Islands, Micronesia, Nauru, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu. Mr. Tubagus Feridhanusetyawan is the resident representative.

World Bank-IMF Collaboration

(As of November 13, 2015)

The Fund and the Bank teams maintain close cooperation in various areas. During the current cycle, the Bank staff has joined the IMF missions, including the 2015 Article IV mission. The Fund and the Bank have also been engaged in provision of technical assistance and advice in public financial management and debt management policy. The two institutions extensively shared information and closely coordinated policy advice during the government’s preparation of the refinancing of the $250 million global bond in September.

During the current cycle, the Bank’s engagement with the Fiji government has deepened. On March 11, 2015, the World Bank Group’s Board endorsed a two year Country Engagement Note (CEN) and approved the US$50 million IBRD Transport Infrastructure Investment Project, the first World Bank project in Fiji in 23 years. The CEN is structured around two themes: (i) strengthen the foundations for inclusive, private sector led growth, and (ii) protect vulnerable population. Specific areas of support from the WBG in the near term include:

  • Strengthening public infrastructure—to help the government address the huge backlog in transport infrastructure repair that is urgently needed to support private sector investment and better service delivery;

  • Technical assistance in civil service reform—to help improve public accountability and transparency;

  • The IFC advisory services on regulatory and administrative reforms—to improve the business environment.

The program anticipates that IBRD lending envelope of US$100–125million, including the US$50 million Transport Infrastructure Investment Project that was presented to the Board together with the CEM. A second IBRD operation is under preparation based on further consultations and analytical work. On the analytical front, the Bank will collaborate with the government to undertake poverty assessment based on the 2013/14 household survey data, public expenditure review, and the country growth diagnostics, all of which will inform a country partnership framework that will outline a 4–6 year program following this CEN cycle.

The Fund and the Bank teams continue to agree that Fiji’s main macroeconomic challenges are to safeguard fiscal and external stability and raise potential growth through structural reforms. The authorities have accelerated reforms in recent years, but the key policy challenge remains to raise the potential growth, reduce unemployment and increase resilience to shocks. While the latest information is from 2009, poverty remains widespread at just over one third of the population according to the basic needs $3.10 a day threshold, though extreme poverty is relatively rare. Despite the above-trend growth in recent years, continued structural reform is needed to unlock Fiji’s potential and sustain growth. In addition to improving infrastructure, the government needs to improve the investment climate (Fiji’s Doing Business ranking has slipped from 60 in 2013 to 81 in 2015) to take full advantage of potential increases in domestic and foreign investment Key structural reforms needs as seen by the Fund and the Bank as critical include:

  • Increased efficiency of land use, which is critical for Fiji’s growth prospects and economic diversification.

  • Price decontrol, to re-establish price signals and encourage investment

  • Public enterprise reform. The pace of implementation of reforms of other public enterprises aimed at improving services and reducing fiscal costs needs to be accelerated. These reforms will help reduce direct and contingent liabilities of the government, help ensure fiscal sustainability, and promote growth.

  • Tax policy and administration reform. Efforts to broaden the tax base should continue, including review of the tax incentive regime. Fiji continues to benefit greatly from TA in this area provided by the Pacific Financial Technical Assistance Center (PFTAC) located in Suva.

  • Strengthening statistical capacity and statistics. Fiji should ensure that it continues to develop personnel with the capacity to produce accurate and timely economic statistics. Good statistics are important both for macro policy formulation and good public financial management (e.g. establishment payroll and wage bill control). Fiji continues to benefit from a broad range of statistical advice from PFTAC.

Fiji: Bank and Fund Planned Activities in Macro-Critical Structural Reform Areas, November 2014–November 2015

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Relations with the Pacific Financial Technical Assistance Centre1

(As of September 30, 2015)


Fiji has been PFTAC’s largest user of TA in recent years. The revenue sector has been the main area of focus. PFTAC has supported FRCA in a comprehensive modernization process including the development of enhanced corporate planning, simplified income tax legislation and streamlined personal income taxation policies and procedures. There has also been significant progress made in the statistics area with improved national accounts, balance of payments and price statistics. In the Public Financial Management (PFM) area, support has been focused on improving the quality of budget documents, developing a PFM Reform Roadmap, revising the Financial Management Act, and building accounting and financial reporting capacity. In macroeconomics the focus has been on building modeling skills, including for potential natural resource revenues.

In the PFM area, the main focus will be assisting in remedying weaknesses identified in the 2012 PEFA assessment and prioritized in the Ministry of Finance’s 2015 draft PFM Reform Roadmap. This may include assistance in looking at the roles, responsibilities and structure of the Ministry of Finance. Areas of specific follow-up assistance could include strengthening accounting and financial reporting consistent with IPSAS, revision of financial instructions, review of non-tax revenues, further improvements to budget documentation, including adding more information on medium-term expenditure forecasts, and continued training of budget officers in methods for budget preparation/analysis. Assistance in cash and debt management may also be provided, if resources are available. PFTAC will coordinate closely with the AsDB’s PEM TA project. In the next PFTAC program period (2017–22), additional areas of TA could include improving budget execution controls and internal audit, as well as developing an asset management framework.

In the revenue area Fiji requested an assessment of the tax administration system using the Tax Administration Diagnostic Assessment Tool (TADAT) which provides an assessment baseline of tax administration performance. FRCA, upon reviewing the diagnostic, appointed a reform project team to address identified areas of weakness. With PFTAC support, the selection of a new customized off-the-shelf IT system has progressed with the selection of a vendor currently taking place. Other areas of PFTAC assistance include: (a) the restructuring of the audit department; (b) improving the collection of tax arrears; (c) setting new processes in place to improve on-time filing and collection of outstanding tax returns; and (d) assisting in the design of a Compliance Improvement Strategy targeted for implementation from 1 January, 2016. Legal drafting assistance to finalize the Income Tax Bill was also recently provided.

In statistics, the focus of support will be further development of the national accounts. The ultimate aim is to have quarterly national accounts estimates being produced by 2016. PFTAC assisted with the finalization of rebased estimates using base year 2011 supported by the compilation of supply-use tables for 2011. PFTAC also supported the development of GDP estimates by expenditures which were expected to be published in December 2015. The Australian Bureau of Statistics has provided assistance to develop a producer price index. IMF HQ has provided support for enhancing balance of payment statistics and government finance statistics.

In financial sector supervision, the PFTAC advisor will continue to be available for consultations with RBF staff and will work on regional issues with the RBF’s head of bank supervision who is executive director of AFSPC. RBF is increasing its involvement with TA programs provided by PFTAC, especially pertaining to Risk Based Banking Supervision training with the staging of a consolidated supervision of conglomerates workshop. It is further receiving technical assistance with the drafting of a new Credit Union Act, the deployment of a capacity building program for credit unions and the establishment of an oversight program for that sector.

In the macroeconomic area, work will focus on building macroeconomic modeling and analysis capacity with the aim of having better forecasts to feed into policy making. Key projects include assessing the monetary transmission mechanism, further development of the Fiji financial programming framework and toolkit for external and debt sustainability analysis, and improving government expenditure and revenue forecasting methodology and processes.

Relations with the Asian Development Bank

(As of November 12, 2015)

The Asian Development Bank (ADB) has been working with the Government of Fiji since 1970. As of 31 December 2014, $417.26 million in loans and $30.72 million in technical assistance has been provided to the country, largely supporting infrastructure development in the transport (roads) and urban water and sanitation sectors. In December 2014, ADB and the government formulated a new country partnership strategy (CPS), 2014–2018. The CPS provides the foundation for higher, more inclusive growth, and will assist Fiji to achieve its Millennium Development Goals.

Consistent with the priorities of successive governments, ADB engagement in Fiji has focused on promoting inclusive economic growth and poverty reduction. Strides have been made toward these goals through direct investments in transport and urban water and sanitation infrastructure, and improved public sector management. Road transport investments in Fiji over a 20-year period have helped disadvantaged groups participate in the cash economy by reducing transport costs and traveling times. This has increased access to employment opportunities and social services. An improved transport system in Fiji has helped to bolster market efficiencies, and to broaden access to education, health, and business services.

In December 2014, ADB built on its commitment to ongoing infrastructure development through receiving Board approval for a new $100 investment in the transport sector. This project, which has received additional cofinancing from the World Bank, will upgrade and rehabilitate roads, wharfs and jetties in line with priorities identified in the Government’s 20-year National Transport Plan. In December 2016 ADB will seek Board Approval for an Urban Water and Sanitation Project with cofinancing from the Green Climate Fund and the European Investment Bank. The project will ensure that residents of some of Fiji’s most densely populated areas have improved access to safe piped water and an environmentally friendly sewerage system.

ADB also provided emergency assistance in 2009 and 2012 to help meet humanitarian and relief expenses following devastating floods in the Western Division. This allowed the retroactive financing of unforeseen government spending, and improved the government’s fiscal position.

Fiji also continues to participate in ADB technical assistance projects in the region, covering areas such as climate change, public sector management, information and communication technology, and trade facilitation.

ADB’s presence in Fiji has been enhanced by the location of its Pacific Subregional Office in Suva, strong coordination and harmonization with other development partners, and significant analytical work—including an ongoing country diagnostic study and a private sector assessment—on behalf of the country. However, Fiji faces similar operational and implementation challenges to other Pacific island countries, with limited public sector capacity and frequent staffing changes in key public and private sector positions. These constraints are reflected in the design of ADB projects, and accompanying technical assistance is an important component of the overall support package.

ADB maintains ongoing dialogue on country operations with the Government of Fiji and its key development partners. This ensures that external support is coordinated and reflects the comparative advantages of individual partners. ADB has a strong track record of cooperative programming in Fiji and will continue to seek opportunities to support poverty reduction and development. ADB cooperates with the private sector and civil society organizations in the implementation of national and regional operations involving Fiji.

Statistical Issues

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Fiji—Table of Common Indicators Required for Surveillance

(As of January 7, 2016)

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially determined, including discount rates, money market rates, and rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and stat and local governments. For Fiji, General Government is the same as Central Government.

Lack of capacity prevented the authorities from providing the data.

Daily (D), monthly (M), quarterly (Q), and annually (A).


The Pacific Financial Technical Assistance Centre (PFTAC) in Suva, Fiji, is a regional technical assistance institution operated by the IMF with financial support of the AsDB, Australia, New Zealand, Govt. of Korea and the EU. The Centre’s aim is to build skills and institutional capacity for effective economic and financial management that can be sustained at the national level. Member countries are: Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste, Tokelau, Tonga, Tuvalu, and Vanuatu.