The Reserve Bank of Fiji reports that for the first nine months of the current fiscal year, Fiji’s government recorded a net deficit of F$905.0 million (-9.7% of GDP). Government expenditure ($2,256 million) almost doubled revenue ($1,351m) over the same period. Revenue contracted by 39.1% over the period.
“If the pandemic is not contained, it will exacerbate the downturn in many sectoral outputs, further dampen consumption activity and weaken the already fragile finances of many businesses,” says the Bank in its May economic update.
The Bank says the second wave of COVID-19 infections—there are 267 active cases in Fiji today—and continued border closures means economic contraction is likely to continue this year.
Key points from the update (pre-lockdown statistics) in the first four months of 2021:
- Visitor arrivals fell by 96.4%
- Electricity production fell by 8.3%
- Gold production was buoyant, up 17.4% due to processing plant upgrades and better-quality ore mined
- There were increases in mahogany log production (37%) and sawn timber (70%) due to increased availability of raw materials
- Woodchip production increased by 96.6% due to increased demand from China.
In the year to April 2021:
- Value Added Tax (VAT) collections dropped by 21.5%
- New consumption lending was down 20.6%
- New vehicle registrations was down 2.65 although there was strong growth in second-hand vehicle registrations, up 152% due to lower fiscal duties and easing of regulations on second-hand vehicle imports.
The Reserve Bank says investment activity indicators also reflected bleak outcomes. New investment lending fell by 3% in the year to April. The number of building permits issued dropped by 11.3% in 2020. The number of job vacancies advertised plunged by 66.2% in the year to April.
“The recent pandemic shock will further impair fiscal revenue collections and increase expenditure commitments of the Government,” the update states.
Private sector credit has contracted for the tenth consecutive month and net domestic credit slowed to 0.7%, weighed down by a 3.7% reduction in lending to the private sector. Commercial banks’ new loan lending has also dropped by 1.5%.
The Bank says exports declined by 13.2% in the year to February, and total imports declined by 21.2%, which means the trade deficit narrowed. The annual inflation rate in April dropped further to -2.4 percent, from -1.2 percent in the previous month and -1.3 percent recorded in April 2020 due to lower prices for kava, beer, spirits and garments and shoes.