Apr 08, 2020 Last Updated 3:40 AM, Apr 8, 2020

Fiji is looking at a potential loss of F$1.4 billion (US$608 million) in tourism earnings as global travel grinds to a halt by the ongoing coronavirus pandemic.

This is according to a recent assessment by the ANZ Bank on the pandemic's impact on major tourist destinations in the Pacific - Fiji, Cook Islands, Samoa and Tonga, four economies that rely heavily on tourism.

"Fiji now stands to lose nearly 602k visitors by air this year (-67% y/y). This translates into a FJD1.4bn (US$566m) loss in tourism receipts which will subtract 12ppt from nominal GDP. Vanuatu’s economy is expected to decline (-13.5%), as are Samoa (-18.7%), Cook Islands (-60.4%) and Tonga (-7.9%)," ANZ's economists wrote in the bank's Pacific Perspective report dated March 25, 2020.

Based upon a likely scenario that zero tourists will come to their shores at least for the next three months, these countries are in for huge shocks.

"Fiji’s tourism earnings totalled FJD2bn (17.2% of GDP) in 2019, Samoa received SAT528m (23%), Vanuatu VUV21bn (19.3%), Cook Islands NZD384m (73.3%) and Tonga TOP135m (10.4%).

We now predict nearly 602k visitors won’t be coming to Fiji this year. For Vanuatu, Cook Islands, Samoa and Tonga, we estimate visitor arrivals could decline -84.2k, -141.1k, -146.9k and -34.3k, respectively, in 2020. Our analysis revealed that Fiji stands to lose FJD1.4bn in tourism exports and FJD3.8bn in gross output. This will subtract 12ppt from nominal GDP. Vanuatu’s economy is expected to decline (-13.5%), as will Samoa (-18.7%), Cook Islands (-60.4%) and Tonga (-7.9%)."

Huge job losses are also expected, with Fiji potentially looking at a casualty swathe of 75,000 jobless or 75% of total workforce.

Vanuatu and Samoa may lose 21,000 and 7,000 jobs respectively.

The report further advised that the economic fallout of the pandemic can be minimised via "decisive, targeted, right-sized and timely fiscal and monetary stimuli."

"Governments are likely to need a fiscal stimulus of at least 10% of GDP, although the Cook Islands will need something closer to 50%," it said.

"With the stimulus spend, GDP and employment contraction can be limited to the -2% to -3% range, as opposed to double-digit declines without the additional support. Monetary stimulus, in the form of cheap central bank loans to businesses willing to undertake capex, could also be explored."

As countries all over the world attempt to keep their economies afloat via mostly debt-funded relief packages, the four Pacific economies are advised to first tap locally for financing options before looking to multilateral donors.

"We believe governments have some headroom to borrow more from the domestic market. Superfunds could absorb some of the government security issuances, and shortfalls can be underwritten by the central bank," the report's authors wrote.

With thousands already out of work across the Pacific as a result of the pandemic, the bank has joined others is offering respite to affected customers.

Yesterday, it announced loan repayment deferral for up to six months for its Fiji customers after it received 1,100 requests for hardship assistance in one week alone.

"This is going to significantly help Fijian people and the broader economy to manage over the long term through the pandemic,” said ANZ Fiji Country Head Saud Minam.

"ANZ received more than 1100 requests for hardship assistance in the first week since the Fijian Government announcement. We’ve already contacted more than 270 of these applications and will increase our contact with customers this week.”

ANZ operates in 11 Pacific countries: Fiji, Samoa, Vanuatu, Tonga, Cook Islands, Kiribati, Solomon Islands, Timor Leste, Papua New Guinea, Guam and American Samoa.

Pacific Island Forum Leaders will establish a Pacific Humanitarian Pathway on COVID-19 which could see the expediting of medical assistance and customs clearance of medical supplies, and facilitating of diplomatic clearances for chartered flights and commercial shipping.

Forum Foreign Ministers met virtually yesterday and established a Pacific Humanitarian Pathway on COVID-19 to allow for faster and easier assistance and cooperation between member countries in response to the pandemic.

 “The COVID-19 pandemic is a global health emergency of unprecedented scale. It poses a real and extreme danger to the health and security of the Pacific peoples. Never before has the full Forum Membership simultaneously been in crisis,” said the Tuvalu Prime Minister and Pacific Islands Forum Chair, Kausea Natano.

The Chair of yesterday’s meeting, Simon Kofe of Tuvalu, said that responding to COVID-19 as a region reflected the Tuvaluan concept of te fale-pili, which literally means houses in close proximity to one another, and which implies a moral responsibility to protect neighbours.

Forum members to already report diagnosed cases of COVID-19 are: Australia, Fiji, French Polynesia, New Caledonia, New Zealand and Papua New Guinea.

The Lord Mayor of Luganville town in Vanuatu, Peter Patty says his biggest fear now is how they can rebuild as Cyclone Harold is already causing devastating damage in the northern town.

The Category 5 Tropical Cyclone couldn’t come at a worst time for Vanuatu, as it braces for the COVID-19 pandemic.

More people in the northern parts of Vanuatu and Santo in particular are moving to evacuation centres as TC Harold has increased in intensity,  with sustained winds close to its centre of 215km/h according to the Vanuatu Meteorology Service.

Speaking to Island Business this morning, Lord Mayor Patty says people living around the Pepsi area have lost their homes to flooding and two evacuation centres are already full, with plans to open more.

“My biggest fear now is how can we rebuild and revive businesses back to normal.

“This is one of the worst crises— to experience a cyclone in the middle of a pandemic that we have yet to recover from.”

While Vanuatu has no confirmed cases of COVID-19, precautionary measures have closed its ports and businesses.

Mayor Patty says all businesses in the town has been shut since Friday, after advice and warnings from the Vanuatu Meteorology and Geohazards Department (VMGD).

While the national State of Emergency conditions due to COVID-19 pandemic remain in place, the unpredictable intensity of TC Harold has forced the Government to remove the limit on social gatherings to five or less people,  as many people will be expected to assemble together in evacuation centers.

Abraham Nasak director of the National Disaster Management Office (NDMO) in Vanuatu announced yesterday that the rule on social gatherings has been removed and advised people to move to safer shelters, given that the rule of 5 in social gatherings has been lifted.

The Pacifica Weather & Tropical cyclone updates reported this morning that the eye of the Category 5 severe Tropical Cyclone Harold is just offshore to the West of Espiritu Santo.

Reports from a family at Nakere Village on South Santo revealed that the whole village has moved to an evacuation centre in a nearby school.

Kensly Micah from the NDMO on Santo says they all they can do is stay indoors and try to stay safe.

“We could not contact officers from different area councils around Sanma Province at this point of time.

“This is unpredicted and I must say there was less preparations as to how we can prepare for a tropical cyclone because much focus was on COVID-19,” Micah said.

The VMGD continues to release early warnings and red alert remains for Sanma Province, Penama, and Malampa.

Reflecting the growing concern over the Coronavirus pandemic, the Chair of the Pacific Islands Forum  and Tuvalu Prime Minister, Kausea Natano, invoked a few days ago the Biketawa Declaration, a security arrangement enabling members to meet on security matters.  An urgent virtual meeting of Forum Foreign Ministers will be held this coming Tuesday, April 7,  to discuss a regional response to the situation.  This is a welcome development, enabling a regional discussion of collective concerns, needs, and potential responses, including exploration of a coordinated way forward working with development partners.  It will be likely Ministers will be focused on a broad range of priority matters.  But one, if not already on the agenda, will certainly be worthy of some attention: the creation of a humanitarian corridor or pipeline for nations in the Pacific.

Discussion of this corridor is an important issue given the unique characteristics of Pacific nations and current conditions involving a major disruption of transportation networks and limited fallback options over a huge geographical expanse.  At the best of times, logistical air and sealift is a challenge in the Pacific.  In current trying circumstances, these challenges will loom ever larger.

Currently, the majority of nations in the Pacific are under some form of emergency lockdown and self-imposed isolation.  Enacted with little forewarning and preparation, there was often little opportunity to stockpile essential supplies, equipment and other requirements.  Now isolated from the rest of the world, these nations will have to rely on a limited stock of resources.  While mitigation measures now in place will hopefully avert a deterioration in conditions and facilitate a speedy return to normalcy, there is a need to be prepared for any eventuality.  In the event of a deterioration, we may expect a prolongation of the period in lockdown and isolation.  The limited resources available in many nations will need urgent replenishment, while desperate life-saving evacuations and the provision of critical medical supplies and equipment may be needed to address an escalating crisis.  Given the geographical distances involved in the Pacific, a timely response may not be forthcoming.

Compounding matters, there will be questions about how such lift may be generated, as nearly all commercial transportation networks will have been suspended.  In all likelihood, it will be the militaries of development partners that will be called upon to assist.  Coordination for this will be assisted by some prior discussion and agreement between nations and development partners.  An agreed outline of a pre-approved humanitarian corridor, for example, may help ease a smoother and more efficient deployment of lift capabilities delivering assistance.  These prior coordinating arrangements are all the more important in a context where extreme caution has to be maintained over the arrival and clearance of aircraft, ships and their cargoes.  Risks of any further transmission must be managed and minimized in any emergency assistance mission.

Beyond current emergency conditions, we should also keep in mind the medium and longer term needs of Pacific nations as they emerge out of the pandemic and embark upon recovery programs and a return to normalcy.  What might be the needs of these nations in that longer journey, and what lift requirements may be involved?  Considering that much of the rest of the world will be going through similar transitions, can we count on a speedy resumption of transportation connections in the Pacific to expeditiously facilitate such needs?  Or, as is more likely to be the case, will there remain significant gaps and deficiencies, requiring supplementary capabilities in the shape of development partner militaries?  Yet again, in this circumstance, some modality such as a pre-agreed humanitarian corridor may serve a helpful purpose in this medium term setting.

The present pandemic is unprecedented in many different ways.  In past disasters in the Pacific, affected nations could almost always count on the assistance of development partners.  Now, despite comforting reassurances, the prospect of an uncertain response, needs to be seriously contemplated.  These development partners themselves are gripped by the same pandemic, and grappling with its many serious consequences, and their own emergency lockdowns and isolation measures.  With capacities stretched just meeting national needs and priorities, it will be challenging balancing these against an enduring commitment to regionalism and regional assistance.  Successfully managing such a dilemma implies an ever greater need to be anticipatory in identifying needs and coordinating among diverse partners a sharing of roles and capabilities – in advance – that might be brought to bear at the right time and place.  In light the vast distances in the Pacific, and the limited reach of sea and airlift capabilities of traditional partners such as Australia, France and New Zealand combined, a proactive coordinated approach anchored around a humanitarian corridor construct, may be sensible.  Indeed, the expansion of the dialogue around this issue to include additional partners in geographical proximity with significant lift capabilities, such as the United States and Japan, should be a priority.

Dr. Alfred Oehlers is a Professor at the Daniel K. Inouye Asia-Pacific Center for Security Studies in Honolulu, Hawaii

*The views in this article are the personal opinions of the author and are not representative of the United States Government, Department of Defense, or the Daniel K. Inouye Asia-Pacific Center for Security Studies.

Fiji's loan request of US$200million (F$460m) from the Asian Development Bank (ADB) "will be considered by ADB’s Board of Directors in the coming months," according to a statement from the ADB this week.

As detailed in the Fiji government's revised 2019/2020 Budget last month, half of the requested loan is to go towards the refinancing of Fiji's global bond, due for settlement in October this year, while the other half is earmarked for our response to the coronavirus pandemic.

Of the ADB's 14 member countries in the Pacific region, Fiji is expected to experience the "steepest decline" from the pandemic's economic fallout, according the ADB's Outlook 2020, released this week.

 ADB President Masatsugu Asakawa and Fiji's Attorney-General and Minister for Economy Aiyaz Sayed-Khaiyum recently discussed how the Bank may be able to assist Fiji.

“Developing economies will be hardest hit by the coronavirus-driven collapse of the world economy. This crisis demands an unprecedented multilateral response–and we’re encouraged by ADB’s willingness to support Fiji in responding to and recovering from this pandemic,” Sayed-Khaiyum said.

Fiji's economy, he said, was already feeling the shocks of the pandemic's impact on major international source markets for trade, manufacturing, tourism, and the aviation industry.

The ADB said Fiji's US$200m policy-based loan was part of subprogram 3 of the ongoing ADB-supported Sustained Private Sector-Led Growth Reform Program and that the request would be considered by its board over the coming months.

"ADB is committed to helping Fiji combat the impact of this damaging pandemic,” Asakawa said. “We will consider all options, including policy-based lending, that can be approved and disbursed in a timely manner.”

The Fiji government had revealed in last month's COVID-19 Response Budget how the money would be used.

"Government is refinancing the US$200 million global bond in October 2020 with policy based loans from the Asian Development Bank (ADB) and the World Bank. Government has completed a series of sub-programmes as part of the entire policy-based reform programme and has secured US$65 million from ADB and US$35 million from World Bank.
Government is currently in the advanced stages of the final sub-programme which will result in an additional loan financing of US$200 million by ADB towards global bond refinancing (US$100 million) and budget support for COVID-19 (US$100 million). The implementation of reforms under the sub-programmes have been further supported by Australia and New Zealand in the form of grants and technical assistance," it said.

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