A former governor of the Reserve Bank in Fiji says it's time to reset the economy and focus on strengthening public financing.
Savenaca Narube (R) Photo: Facebook / Unity Fiji
This week, the government said it expects the economy to contract severely due to the decline in tourism and its effects on the rest of the economy.
The government is expected to announce the National Budget on Friday.
Savenaca Narube said this budget is going to be the "most important" the country has ever delivered.
Mr Narube said a big part of the economy - tourism - has been "destroyed" and the sector is expected to be a huge part of the backdrop of the 2020-2021 Budget.
"The other industries that we normally rely on - the resource-based industries - have all been declining. So our reliance on one industry - tourism - has been increasing. And if you look at the physical space that we have, it's very limited," Savenaca Narube said.
Fiji's hyper-tourism focus denies other industries
Savenaca Narube said prior to the Covid-19 pandemic, these industries were "going nowhere" and this has worsened the impact of the pandemic.
Mr Narube is also leader of the Unity Party and an economic consultant.
He said the government should not have ignored these other industries which the former treasurer said had more "potential than what is already on the ground".
Mr Narube said the agriculture sector used to be over 20 percent of the GDP.
"It's now only 8 percent," he said. "Forestry has been declining, so is gold and fisheries sectors - their potential is way above where they are now.
"In terms of strategies and policies, any government should look at a broader base of our economy. Unfortunately, that hasn't been done for Fiji."
In a statement, the Reserve Bank said on Tuesday the perfomances in many sectors of the economy remain weak with electricity, cement, gold and timber production dropping up to May.
In start contrast to this Savenaca Narube said tourism earnings rose last year, he says what this seems to indicate is that other sectors have been ignored.
He said it's time to start building on the potential of other industries and set the right strategies for them.
"It's not just a simple ploughing of more money into the forestry ministry, no it needs alot of groundwork to be prepared so whatever we stand on those sectors are effective," he said.
"We need to formulate a good financial plan. And that's what all Fijians want to see in this budget - a plan that will reimplement, to raise these industries.
"But first, the government must address the pandemic and its immediate impact on the lives and livelihoods of people. That has to be the front and centre of this budget."
Fiji's parliament buildings in Suva. Photo: RNZ / Jamie Tahana
Budget confidence
In March, the government unveiled a $US400 million response budget to address the pandemic.
Attorney-General and Minister for Economy, Aiyaz Sayed-Khaiyum, said Friday's Budget will bring confidence.
Mr Khaiyum said the government planned to further open the economy and ignite more domestic activity.
He said while it was critical to open up the economy, there was also a need to manage the health risks.
He said the tourism industry needed assistance to help sustain those affected in the sector.
"If the revenue is drying up," Mr Khaiyum said. "Obviously your expenditure needs to come down too.
"But at the same time, we need to provide a particular level of assistance because a lot of people are unemployed."
Fiji's attorney general, Aiyaz Sayed-Khaiyum. Photo: AFP/Dominika Zarzycka/NurPhoto
'Govt's excessive spending no help'
Savenaca Narube disagrees with Mr Khaiyum.
Mr Narube said the government's stimulus package released in March "didn't do anything to promote the welfare and livelihoods of people".
He said he hoped Friday's budget brings substantive thinking and reassures Fijians that the government is "looking after their interests in their time of need".
Mr Narube also said the government's "excessive spending" in the last 15 years has not helped the situation.
He said it has only been in the last two years that the government has "realised it needs to cut back on spending".
But by this time, he said, the economy was already declining.
"It declined by, I think, 1.6 percent in 2019. So here we are at this junction, at this very important crisis and our physical space is not there," he said.
"Debt to GDP is around 50 percent before the Covid-19 crisis, now it's over 80 percent. It has been poor economic and financial management.
"We have been growing on tourism and with complacency and the government failed to put into place any strategy whatsoever in the last 15 years towards those other primary industries."
Mr Narube said this is something he expects the government will take into account in formulating this "important budget".
He said the pandemic has impacted every sector of the economy - with 60 percent driven by micro, small and medium enterprises.
He said these businesses have lost their cashflow and will need support.