Sep 21, 2019 Last Updated 3:13 AM, Sep 21, 2019


A major bank in the Pacific region has recommended that Fiji put the brakes on civil servants wage increases as a major step towards bringing the national budget back to balance in the medium to long term.

In its Pacific Economic Outlook for Fiji released today, the ANZ Bank offers an independent analysis on the Fijian economy, highlighting some weak areas that the Fijian government could look into.

Fiji’s total national debt and the need to bring the national budget back to balance were among the areas that needed attention.

“Since 1992, the government of the day has run a budget deficit in all but two years (1998 and 2008). As a result, the nominal outstanding debt level has climbed. Although this is not the time for austerity, we would advocate that the budget be brought back towards balance over the medium to long term, especially as the interest cost is likely to increase when the interest rates rise,” the report said.

“History suggests that expenditure close to 30 per cent of GDP generally yield the smallest budget deficit. With payments as a proportion of GDP estimated at 39 per cent for the 2017/18 financial year, our view is that expenditure needs to be cut by around 1.5 per cent a year, in order to wind it back to around 30 per cent of GDP over the next five years. This includes showing restraint on public sector wage increases. Public sector employees have received large double digit wage increases in recent years. We understand that budgets have to balance commitments, deficit implications for credit ratings along with political consequences. However, even allowing for some catch ups in wage increases, the hefty wage increases recently awarded appear excessive. The public sector wages bill now accounts for nearly a third of total expenditure from just over 23 per cent in 2011,” the report said.

In the last few years, civil servants have called for what they believed was a long overdue rise in salaries and in response, government undertook a pay review exercise last year followed by pay increases in various ministries.

Now with the civil service wage bill accounting for almost a third of government expenses, the ANZ is cautioning the policy makers to go slow with the pay rises.

“We’re not saying that the wages should be cut back. We’re saying that there should be some restraint in wages growth because wages growth has escalated over the last two, three years,” ANZ International’s Pacific Economist and author of the report Kishti Sen told Islands Business.

“I agree that there should be some catch up payment to the public servants because they actually haven’t had enough increases to compensate for cost of living. But going forward, we’re not saying this is something they need to do over the next two years; austerity is not something that the economy needs at the moment, the government has to continue to do some of the capex projects in order to keep people in employment. What we’re saying is over the medium to long term, it’s necessary for any government, or even a household, to not continue to spend more money than they bring in. You have to have a plan to bring your budget back towards balance. And we think that expenses at around 30 per cent of GDP gives you some sort of a balance of your budget so over the long term, that’s something that government could think about,” Sen said.

On Fiji’s debt level, the ANZ Bank noted that total public debt stood at F$4.85 billion (US$2.32billion) in 2017 - a new high but its serviceability was still manageable, considering that the debt to GDP ratio of the current debt cycle was still lower than Fiji’s debt peak in the mid-1990s.

Solomon Islands now boasts two branches

SIX months after successfully expanding its business to Solomon Islands, the European bank-BRED Bank- will open a second branch in Honiara by the end of the year and a third branch in the provinces in the next 24 months. BRED Bank CEO in Solomon Islands, Owen Thomson, told Islands Business they would now focused on improving the quality of their services by implementing mobile banking through Mobile Application and USSD – banking through text messaging “This is very important for us to deliver banking service to everyone as most of the population live in remote rural areas with no banking access,” Owen said.

He said they would work with NGOs and government agencies to promote saving groups and financial knowledge for the people in Solomons. With the successful establishment of operations throughout the Pacific (Vanuatu, Fiji, New Caledonia and French Polynesia), the BRED Group began operation in Solomon Islands in August last year with one staff member. By opening day, it has installed eight ATMs and opened over 830 accounts. read more buy your personal copy at

Masitabua the central banker

By Mereseini Marau-Totoka

Growing up in a settlement just on the outskirts of Fiji’s capital Suva, the newly appointed Deputy Governor of the Reserve Bank of Fiji Esala Masitabua saw the 18-storey building located on Pratt Street in the city being built.

Little did he know that the same magnificent building he witnessed starting to take shape from its foundation to the roof- the Reserve Bank of Fiji- would be his work place for most part of his career life.

Taking up his new post as Deputy Government of Fiji’s central bank in the New Year, Masitabua was reflective and humbled as he looked back in his life journey and how he had fared thus far.

He also shared his plans for the central bank.


Life in that Nauluvatu Settlement along Suva’s Reservoir Road was not easy for him and three siblings of two sisters and a younger brother.

He attributed his achievements to the extreme hard work of his police constable dad originally from Wailevu in Ravitaki, Kadavu and his mum a seamstress from Vava’u in Tonga.

“Life was tough and living conditions initially squalid but my parents worked extremely hard to improve our quality of life. They also instilled in us children the value of hard work, being honest and knowing the Lord. We are so grateful for their sacrifices. My dad was a special constable and security officer at Burns Philp and mum was seamstress at Tiki Togs.”

They both earned near minimum wages. He reminisced that when business got tough, his parents would work reduced hours forcing them to struggle to make ends meet. The struggles included going to bed hungry, walking in the rain to go to school, patching school bags and sandals until his parents could afford to buy new ones.

After he completed his secondary education at Marist Brothers High School in 1988, he wanted to work and earn his own money because he wanted to “have the autonomy to buy and enjoy the things I could not have growing up.” His dream of becoming a pilot was put on hold indefinitely.

“Working for Fiji’s own commercial bank appealed to me, I applied successfully and worked there until I decided to further my education in 1991.”

In 1994, Masitabua returned to the National Bank of Fiji and three years later the bank collapsed. Following the bank restructure, where he was part of the asset management team, he resigned and became part of the unemployment statistics for a while. In 1997 he came across a vacancy advertisement in the newspaper for a Clerical Officer Ledgers in the Reserve Bank of Fiji. He joined in July 1997 as a ledgers officer just when the Bank celebrated its 25th Anniversary. That was the birth of his career as a central banker.

Central banking

“I may not have initially aspired to be a central banker but when I joined the Reserve Bank in Fiji in 1997 I truly felt that I had found my calling in life.”

Masitabua worked his way up the ladder in Reserve Bank before becoming the Chief Manager Financial Markets in 2013. Like in any other career, Masitabua said there were challenges and obstacles along the way but he have been blessed with a loving wife Omeri Ravula and family to support him, as well as friends and workmates.

“I have enjoyed the past two decades immensely benefitting from specialised training and exposure and I look forward to the new chapter. The accumulation of development and experience I have had in the Bank will be put to good use in this new role.”

 His plan as second- in- charge at RBF is simple.

“I need to continue to build on the legacies of my capable predecessors which include the current Governor. Like any other leader I will bring my own personal style of leadership and I look forward to continuing to grow and develop as I hope I will be able to contribute to the development of others I come into contact with.”

He shares that the central bank has a strategic plan in place that provides a guide for all facets of their annual work plans linking up to the mission and vision of leading Fiji to economic success. Acknowledging that the exciting and challenging part of working at the bank is that while the mandate of the Reserve Bank of Fiji is constant, the environment and circumstances change constantly. In his new role Masitabua will play a supportive role to the Governor with key areas of defined responsibilities.

“We will be grappling with similar but nuanced challenges compared to my predecessors.”

An example he offered is what he labels the ‘period of recent unprecedented economic growth’ the country is experiencing.

“This is extremely positive but does introduce a whole new set of challenges compared to the period when the challenge was to stimulate or kick start the economy like that faced in the early then late 2000s. “

He said past Governors would have dealt with changing technologies and demographics of the labour force, those broad challenges remain but are slightly different now.

“With the increasingly younger and relatively more transient workforce, there are adjustments that need to be made to policies, processes and in my view, leadership styles. Likewise technological innovation is presenting opportunities as well as challenges for all including central banks.”

Up to the Challenge

 “I can assure the people of the country that I am excited, keen to embrace the challenges of the new role and ready to give it my absolute all.”

Masitabua reminisced on one of his favourite memories back in the early 2000s where he and a team from the bank led by the then Deputy Governor who later became Governor Sada Reddy went to donate computers to Wainiyavu Village School in the upper reaches of Namosi on Fiji’s main island.

He recalled boarding the punt from just past Navua Town up the Navua River to Namuamua Village where they had to get off and walk the rest of the way to Wainiyavu, traversing difficult terrain. After zig zagging and crossing a tributary 23 times over two and half hours, they finally reached their destination.

Marvelled at the natural surroundings and waterfalls, they never thought working for a central bank would take them to such a place. It was the joy on the faces of the students, teachers and parents that was the consolation for that difficult trip.

“I could not help thinking that one of those little children would perhaps be a future Governor, or Minister or Prime Minister.” 

Masitabua said his work at the Reserve Bank has taken him to countries abroad as well as over Viti Levu, Vanua Levu, his home island of Kadavu, Taveuni and other maritime islands. From his humble beginning, Masitabua knew there was no substitute for honesty and hard work.

His advise to youth is to listen to their parents and elders.

“Whatever task you are called to do, do it to the best of your ability, and take no short cuts. We cannot all be executives, general managers, doctors or pilots but we can all be successful and be an inspiration to others in whatever we do.”


A challenging situation

The level of Marshall Islands’ offshore loan debt is impressive—over US$120 million— for a country that had revenue of only US$107 million for the fiscal year 2011. The 13 loans the country obtained from the Asian Development Bank have left it owing over US$73 million, while state-owned enterprises (SOE) owed another US$50 million, mostly to a U.S. government lending agency. The annual loan payment due to ADB is increasing each year and will peak at US$3,548,289 in FY2016. Coupled with the SOE debt, the government is shelling out around US$7.5 million annually for debt servicing on top of subsidizing nearly all of its SOEs.

Barring any new loans, ADB debt is due to be cleared by FY2037. Soaring fuel prices in the late 2000s pushed the government’s power utility company into near bankruptcy, forcing it to secure a high-interest loan to pay for fuel. The loan nearly crippled the SOE. The power utility gained support of the ADB as the company launched a recovery plan in 2010. ADB lent funds to the government to pay off the higher interest commercial bank loan to give the Marshalls Energy Company financial breathing room.

While some of the country’s long-term debts to ADB are from loans that were poorly planned or should not have been issued in the first place, the power utility loan has been a key factor in the company’s resurrection as a functioning entity. In part because the utility company is pursuing an aggressive improvement plan, it was able to negotiate a two-year loan payment deferment with the U.S. Rural Utilities Services, relieving it of having to pay US$2.2 million and gained a US$2.3 million grant from the same U.S. agency to rebuild one of its large power plant engines, which will, when completed, reduce costs by cutting the amount of diesel consumed and further stabilize power service. read more buy your personal copy at

Tax haven tsunami

US$32 trillion hidden in havens, offshore banks

Two months ago, sitting over a bottle of toddy, an offshore source sums up industry insider forecasts: “They know the writing is on the wall.” Overhead, coconut tree fronds rustle above us in brief summer breezes. One month ago, that breeze turned into a global gale force wind, history’s biggest expose sweeping like a hurricane through tax havens around the planet. That expose triggered off rule changes of earthquake proportions for tax havens. “Seismic”, reported the Guardian, an English daily. “Gigantesque” exclaimed La Libre, a French weekly. “A game changer”, commented the Tax Justice Network. “...a virtual [Mount] Everest of data ...” said Die Spiegel, a German daily These were just a few of the tsunami of headlines from the news media around the world, delving into 2.5 million leaked files uncovering the hidden world of more than 100,000 people and companies.

Files came in the form of a hard drive posted to an Irish journalist working long-term in Australia, Gerard Ryle, who a few weeks later went on to head the ICIJ, the International Consortium of Investigative Journalists. Immediate comparisons were made with Wikileaks, famed for publishing a quarter of a million diplomatic cables leaked from the US State Department. More recently, Wikileaks published thousands more files in what it called the Kissinger files. Wikileaks’ cables show government secrets, including behind-the-scenes deals. ICIJ offshore files exposed people and companies behind corruption of those governments.

Those named as using the havens include powerful politicians, US dentists, Wall Street traders, Russian executives and international arms dealers. Estimates of offshore wealth hidden in tax havens and offshore banks go as high as US$32 trillion.

Many news headlines featured coconut tree logos, a visual signpost pointing towards what the French media describe as “fiscal paradises”. Focus fell heavily on the role of the Cook Islands’ offshore finance centre as the origins of a global network, Portcullis Trustnet. read more buy your personal copy at

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