Fiji WT/TPR/S/213 
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I. ECONOMIC ENVIRONMENT 
(1) INTRODUCTION  
1. The Fijian economy, the second largest in the Sout h Pacific, depends to a considerable extent 
on trade, with imports and exports, respectively, av eraging roughly one quarter and over half of GDP 
during the period 2003-08.  Economic growth has been  erratic, and generally sluggish, averaging less 
than 1% annually during the period.  Fiji's popula tion increased in 2008 by 4.3% to 863,800 following 
a fall of 2.5% in 2007.  Nominal GDP in 2008 is estimated at F$5,958.1 million (US$3,990.7 million), 
equivalent to around F$5,000 (US$3,300) at factor cost (per capita), some 13% higher than in 2003 
(Table I.1).  Fiji's global ranking on the UN Human Development Index slipped from 81st in 2003 to 
92nd in 2005 (the latest year available), and while  categorized as a developing country it is ranked 
behind Tonga (55th in 2005) and Samoa (77th).  Subsistence livelihoods are common, especially in 
rural areas, where some 50% of the population live.  Fiji was ranked 50th out of developing countries 
in 2005 on the UN Human Poverty Index.1  Some 35% of the overall population (40% in urban and 
29% in rural areas) were estimated to be living in poverty in 2002-03 (latest data available). 
Table I.1  
Basic economic and social indicators, 2003-08 
(F$ million, US$ million, and per cent)  
  2003 2004 2005a 2006a 2007b 2008b 
Real GDP at 1995 constant factor cost       
F$ million 2,800.1 2,953.2 2, 979.9 3,087.5 2, 871.0 2,906.3 
US$ million 1,626.0 1,795.3 1,710. 7 1,855.3 1, 850.9 1,946.7 
Current GDP at market prices       
F$ million 4,390.6 4,762.8 5, 069.4 5,483.3 5, 435.9 5,958.1 
US$ million 2,549.6 2,895.5 2,905. 2 3,294.9 3, 504.6 3,990.7 
GDP per capita at current factor cost        
F$ million 4,436.4 4,777.6 4, 296.7 4,647.7 4, 555.3 4,992.9 
US$ million 2,576.2 2,904.3 2,462. 4 2,792.8 2, 936.8 3,344.2 
GDP by activity (1995 constant factor cost) (Annual percentage change)  
Agriculture, forestry, fishing and subsistence -4.3 5.2 40.8 -0.5 -5.7 1.2 
Agriculture -2.5 2.2 0.0 0.8 -3.7 0.2 
Forestry 14.7 0.3 -4.5 -4.6 -1.6 7.4 
Fishing -20.2 24.4 7.3 -4.3 -15.9 2.9 
Mining and quarrying -5.6 14.7 -30.7 -49.8 -97.9 2,045.9c 
Manufacturing -1.0 12.8 -15.4 2.7 0.2 0.9 
Services 2.8 3.6 5.5 4.8 -7.2 .. 
Electricity and water 4.1 3.9 1.3 6.7 0.4 -0.5 
Construction 6.9 4.3 26.2 8.0 -20.6 0.2 
Wholesale and retail trade, hotels and 
restaurants 2.4 12.7 -1.0 4.6 -5.0 3.0 
Transport and communications 3.4 -1.7 7.1 -3.3 -4.0 3.2 
Finance, insurance, real estate and business 
services -11.9 4.0 10.0 15.7 -1.8 0.0 
Community, social and personal services 7.3 -0.7 6.3 8.1 -13.9 -3.3 
GDP by activity (factor cost at current prices)  (Per cent)                           
Agriculture, forestry, fishing and subsistence 14.8 14.5 14.5 13.2 .. .. 
   Agriculture 11.3 10.6 10.4 9.8 .. .. 
   Forestry 1.3 1.3 1.2 1.1 .. .. 
   Fishing 2.2 2.7 2.9 2.4 .. .. 
Table I.1 (cont'd) 
                                                      
 1 UNDP (2007). WT/TPR/S/213 Trade Policy Review 
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  2003 2004 2005a 2006a 2007b 2008b 
Mining and quarrying 1.0 1.2 0.8 0.5 .. .. 
Manufacturing 13.8 15.0 13.3 14.1 .. .. 
Services 70.4 69.3 71.4 72.1 .. .. 
Electricity and water 2.9 2.8 2.7 2.6 .. .. 
Construction 4.3 4.3 5.4 5.7 .. .. 
Wholesale and retail trade, hotels and 
restaurants 17.3 19.8 20.0 19.9 .. .. 
Transport and communications 17.3 15.7 17.5 15.7 .. .. 
Finance, insurance, real estate and business 
services 11.6 
11.1 10.9 14.4 .. .. 
Community, social and personal services 20.0 18.9 19.3 19.9 .. .. 
Paid employment by activity (as at year-end)d (Per cent)                        
Agriculture, forestry and fishing 1.5 1.5 1.5 1.5 1.5 .. 
Agriculture .. .. .. .. .. .. 
Forestry .. .. .. .. .. .. 
Fishing .. .. .. .. .. .. 
Mining and quarrying 1.6 1.6 1.6 1.6 1.6 .. 
Manufacturing 21.7 21.7 21.7 21.7 21.7 .. 
Services 75.2 75.2 75.2 75.1 75.2 .. 
Electricity, gas and water 2.0 2.0 2.0 2.0 2.0 .. 
Construction 5.9 5.9 5.9 5.9 5.9 .. 
Wholesale and retail trade, hotels and 
restaurants 20.4 20.4 20.4 20.4 20.4 .. 
Transport, storage and communications 8.5 8.4 8.4 8.3 8.5 .. 
Finance, insurance, real estate and business services 6.1 6.1 6.2 6.1 6.1 .. 
Community, social and personal services 32.4 32.4 32.4 32.3 32.3 .. 
Memorandum       
Population ('000) (mid-year) 833.3 835.0 842.5 849.5 827.9 863.8 
Annual rate of increase (%) 1.2 0.2 0.9 0.8 -2.5 4.3 
Life expectancy at birth (years)e 69.6 68.0 68.3 69.0 .. .. 
Infant mortality rate (per 1,000 live births) 17.8 16.0 16.0 16.0 .. .. 
Human Development Index rankinge 81st 90th 92nd  .. .. .. 
In medium-human development categorye 26st 27th 22nd  .. .. .. 
.. Not available. 
a Revised estimates. 
b Preliminary estimates. 
c Published figure but a "statistical result" because of the lack of production in 2007 due to the closure of the 
Vatukoula gold mine by Emperor Gold Mini ng Company Limited in December 2006.  
d Excludes cane cutters and household help. 
e Figures are for 2002;  figur es for 2003 are not available. 
Note: Figures may not add due to rounding. 
Source: Fiji Islands Bureau of  Statistics (2008),  Key Statistics:  June.  Viewed at:  http://www.st atsfiji.gov.fj/Key%20Stats/ 
National%20Income/3.2_GDP%20Current. pdf, and http://www.stat sfiji.gov.fj/Key%20Stats /National%20Income/ 
3.3_Constant.pdf];  Reserve Bank of Fiji (2008), Quarterly Review , June and September.  Viewed at:  
http://www.rbf.gov.fj/default.aspx?page =quarterlyReviews&wh ichType=8;  UNDP, Human Development Report , 
various years;  Ministry of Fi nance and National Planning (2008), Economic and Fiscal Update: Supplement to the 
2009 Budget Address , November.  Viewed at:  http://www.mfnp. gov.fj/Documents/2009_Budge t_Supplement.pdf;  
and the Fijian authorities. 
2. Fij's economy faces formidable macro/microec onomic and other challenges.  These include:  
political uncertainty after the coup in December 2006,  aggravated by the recent prospects that the 
return to parliamentary democracy is likely to be deferred beyond the first quarter of 2009; rising 
external imbalances and accompanying fo reign reserve pressures, reflecting, inter alia,  a widening Fiji WT/TPR/S/213 
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gap between gross national saving and gross domestic investment, a narrow export base with major 
industries (sugar, clothing, and tourism) faci ng increasing competition from abroad, and rising 
imports, especially of fuels, in line with higher worl d oil prices;  high debt levels;  low foreign and 
domestic investment;  and a weakening business environment.2 Meeting these and other challenges 
will require continued fiscal discipline and prudent mone tary policies together with structural reforms, 
of which trade and trade-related policies are integral parts. 
(2) RECENT ECONOMIC DEVELOPMENTS  
(i) Macroeconomic performance 
3. The economy has performed sluggishly, with growth in real GDP averaging 0.8% annually 
from 2003 to 2008 (Table I.1).  While economic growth peaked at 5.5% in 2004, it contracted sharply 
from 3.4% in 2006 to -6.6% in 2007 when all sectors contracted, except manufacturing, electricity, and water.  Contraction was especially marked in mining and quarrying (largely due to the closure of 
the Vatukoula gold mine in December 2006), construc tion, and fishing.  The economy's performance 
showed signs of substantial slowing before  the coup, which accentuated its contraction.
3  T o t a l  
external debt, although falling in 2007, was US$714.3 million, but since much debt is concessionary 
from bilateral and multilateral donors the debt/servi ce ratio remains under 2%.  The Government's 
total indebtedness was 54.8% of GDP in 2007 (down from 58.1% in 2006).  Inflation accelerated from 4.8% in 2007 to 8.5% in October 2008, albeit easing from 9.8% in September, mainly due to reversals 
in rising world oil and "second-round" domestic tran sportation costs, and food prices (Table I.2).  
Modest growth projections for 2008, downgraded in  April from 2.2% to 1.7%, were further lowered 
to 1.2% in the 2009 Budget (released in November 2008).  This primarily reflected lower than 
expected growth in "community, social and persona l services", with these sectors forecast to contract 
by 3.3% and 0.5%, respectively, and in suga r production, partly due to cyclone damage.
4  
Unemployment is estimated to have risen from 4.7% in 2005 to 5.2% in 2006 (latest available figure), and mixed partial indicators suggest the labour mark et has weakened further with low overall job 
creation.
5  Paid employees are a relatively small share (32% in 2006) of the workforce, and were 
estimated at 119,800 in 2007 (some 5% higher than in 2002). 
(ii) Macroeconomic policies and targets 
4. The Macroeconomic Policy Committee prepar es macroeconomic forecasts, advises the 
Minister of Finance, and largely c oordinates monetary and fiscal policies.6 
(a) Fiscal policy 
5. While budget deficits contributed  to macroeconomic instability during the review period, they 
have been reduced significantly, especially since th e "headline" fiscal deficit fell from 2.9% of GDP 
in 2006 to 1.8% in 2007 and an estimated 1.5% in 2008 (5.8% in 2003);  however, it is forecast to rise 
significantly in 2009 to 3.0% of GDP (Tables I.2 and 1.3).  Deficit reductions have been achieved 
                                                      
 2 Production (and exports) of clothing, for example, plummeted following the removal of global quotas 
from 2005 and closure of the only factory producing for the U.S. market, which was Fiji's largest factory and accounted for one-half of clothing export s;  sugar prices are expected to fall substantially due to EC sugar 
reforms affecting Fiji's preferential access (Chapter IV).   
 
3 The coup may reduce Fiji's long-run real GDP by some 8% (Narayen and Prasad, 2007). 
 4 Reserve Bank of Fiji, Press Release 07/2008, 21 April 2008;  and Ministry of Finance and National 
Planning (2008b). 
 5 Reserve Bank of Fiji (2008a). 
 6 It is chaired by the Reserve Bank Governor and incl udes officials from major ministries, e.g. finance. WT/TPR/S/213 Trade Policy Review 
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mainly by rationalizing expenditure:  government spending as a share of GDP fell from 30.8% in 
2003 to 27.4% in 2007;  total revenue, mainly fro m VAT and income tax (each about one third in 
2007) rose far less during the same period from 24.3%  to 25.6% of GDP.  Some 25% of government 
spending is on debt servicing. 
Table I.2 
Selected macroeconom ic indicators, 2003-08 
(Per cent and US$ billion)  
  2003 2004 2005a 2006a 2007b 2008b 
National accounts (Percentage change, unless otherwise indicated) 
Real GDP (at 1995 factor cost) 0.9 5.5 0.6 3.4 -6.6 1.2 
Consumption 67.9 64.7 62.2 ..  .. .. 
Private consumption 51.2 49.1 47.3 ..  .. .. 
Government consumption 16.7 15.6 15.2 ..  .. .. 
Gross fixed capital formation 21.9 -7.2 6.4 ..  .. .. 
Merchandise exportsc 12.1 -5.0 -1.1 0.8 0.7 18.9 
Merchandise imports 16.0 9.5 8.8 14.7 -7.5 21.4  
XGS/GDP (%) (at current market prices) 28.9 25.5 23.5 21.9 22.3 24.1  
MGS/GDP (%) (at current market prices) 52.0 52.9 53.7 57.0 53.2 58.9  
Unemployment rate (%) 8.1 .. 4.7 5.2  .. .. 
Prices and interest rates (Per cent) 
Inflation (CPI, annual average % change) 4.2 2.8 2.4 2.5 4.8 8.5d 
Time  deposit rate (end-of-period) 1.7 1.8 2.0 9.1 4.5 2.3e 
Savings deposit rate (end-of-period) 0.5 0.4 0.4 0.8 0.6 0.6e 
Prime lending rate (end-of- period) 7.4 7.0 6.6 7.9 8.5 8.2e 
Reserve Bank policy indicator rate (end-of-
period) 1.25 1.75 2.25 4.25 4.25 4.25 
Money and credit (end-of-period) (Percentage change) 
Broad money supply (M2) 25.2 10.4 15.0 19.8 10.4 -0.5f 
Narrow money supply (M1)g 26.4 13.1 17.6 -4.6 43.5 -3.1f 
Quasi moneyh 24.1 8.1 12.8 42.0 -9.8 2.1f 
Credit to private sector  16.8 18.0 24.5 23.7 2.8 6.9f 
Exchange rate       
F$/US$ (end-of-period) 0.5807 0.6079 0.5731 0.6009 0.6447 0.6302 
Real effective exchange rate (% change) 3.0 0.8 -0.1 5.5 2.0 -1.6e 
Nominal effective exchange rate (% change) 0.8 - -0.3 - - 1.4e 
Fiscal policy (calendar year) (Per cent of GDP) 
Gross budget deficit -6.6 -4.4 -5.2 -4.3 .. .. 
Net budget deficiti -3.7 -1.1 -1.3 -0.8 .. .. 
Headline budget deficitj -5.8 -3.1 -3.3 -2.9 -1.8 -1.5 
Primary budget deficitk .. .. .. -2.9 -1.8 -1.5 
Total revenuel 24.3 24.9 24.1 25.6 25.6 24.1 
Tax revenue 21.2 21.9 21.0 22.4 20.7  20.1 
Total expenditurem 30.8 29.3 29.4 29.8 27.4.  25.6 
   Operating expenditure  19.9 19.1 18.7 19.8 22.1  20.4 
   Capital expenditure 10.9  10.2 10.7 10.0 5.3.. 5.2 
Government total debt (end-of-p eriod) 55.4 54.5 47.8 52.2 50.3 47.9  
Domestic debt (end-of-period) 44.7 44.7 44.5 44.6 43.0 40.5  
Saving and investment  (Per cent of GDP) 
Gross national savings 13.7 2.5 1.5 ..  .. .. 
Gross domestic investment 21.4  18.5 18.3 .. .. .. 
Savings-investment gap -7.7  -15.8 -16.8 .. .. .. 
Table I.2 (cont'd) Fiji WT/TPR/S/213 
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  2003 2004 2005a 2006a 2007b 2008b 
External sector (Per cent of GDP, unless otherwise indicated) 
Current account balance  -4.1 -13.6 -13.2 -22.6 -17.3 -21.0  
Net merchandise trade  -16.6 -23.0 -25.5 -29.3 -25.9  -30.0 
Services balance 9.4 7.4 9.5 7.3 6.8  7.4 
Capital and financial acc ount 4.2 5.2 7.9 17.2 4.4  6.3 
Direct investment (net) 1.8 6.7 5.0 11.8 6.3n .. 
Portfolio investment 0.0 - - 4.6 -  .. 
Balance of payments -0.9 -2.2 4.4 -1.0 -1.7  0.2 
Service exports (% change) 5.9 2.4 14.8 -2.2 -5.9  9.1 
Service imports (% change) 18.7 11.9 5.5 5.8 -4.9  4.8 
Gross official reserves (US$ billion, end-of-
period)o 969.5 1,096.9 908.2 865.7 958.7 860.8e 
    In months of imports 5.8 5.9 4.4 3.7 4.4 3.2e 
Total government external debt (US$ billion, 
end-of-period)p 103.2 111.3 97.7 250.4 255.9 275.4  
Debt service ratio (%)q 1.6 1.5 1.9 1.7 0.7  2.7 
- Negligible. .. Not available. 
a Revised estimates. 
b Provisional estimates.  
c Includes re-exports.  
d Year-end rate.  2008 figure is for October. e As at end of October. f As at end of September. 
g Includes currency, demand de posits and bills payable. 
h Includes savings and time deposits. i Gross budget deficit (total expenditure le ss total revenue) excluding loan repayments. 
j Net budget deficit less receipts from government asset sales. 
k Net cash flow position, which indicates the amount of new bo rrowings needed to finance th e Government’s activities.  
l Includes non-tax revenue, capital revenue and grants. 
m Covers operating and capital spe nding excluding loan repayments. 
n As at end of September. o Includes foreign reserve holdings of  non-bank financial intermediaries. 
p Includes debt of statutory bodies. 
q External debt servicing paym ents as a share of exports. 
Source:  Reserve Bank of Fiji, Quarterly Review , June and September 2008.  Viewed  at: http://www.rbf.gov.fj/default. 
aspx?page=quarterlyReviews&whichT ype=8;  Reserve Bank of Fiji, Economic Review , Vol. 25, No. 10, 
October 2008.  Viewed at:  http://www.rbf.gov.fj/d ocs/Economic%20Review%20(Oct-08).pdf;  Ministry of 
Finance and National Planning, Economic and Fiscal Update: Supplement to the 2009 Budget Address , 
November 2008.  Viewed at: http://www.mfnp.gov.fj/Doc uments/2009_Budget_Supplement. pdf;  and the Fijian 
authorities.  
6. The Government's medium-term ta rget is to re-balance spendi ng towards capital investment 
by increasing its share from around 20% to 30%.  Du e to low investment levels the Government 
announced in its 2009 Budget the "fast tracking" of capital projects through its Public Sector 
Investment Programme (PSIP).7  Performance-based budgeting is being implemented in accordance 
with the Financial Management  Act, 2004 (replaced the Finance Act, 1981) to improve 
accountability, transparency, and expenditure controls , supported by Finance Instructions and Finance 
Manuals adopted in 2005.  Ministries and departme nts are being given greater control over funds and 
physical assets, aimed at minimizing wastage and eliminating mis-use of resources and corruption.  An integral part is the phased introduction of a Financial Management Information System (FMIS) 
designed to improve operational efficiency by  providing access to timely, accurate, financial 
information and greater budgetary expenditure cont rol.  All ministries and departments have been 
fully on-line since November 2007;  each of the four  agencies of the Ministry of Health, Roads, Water 
                                                     
 
 7 Ministry of Finance and National Planning (2008), p. 37. WT/TPR/S/213 Trade Policy Review 
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and Government Supplies has its own FMIS.  A dditional work planned includes progressively 
reviewing and reinstating the financial authority of  ministerial and departmental secretaries removed 
in December 2006, particularly over procuremen t limits, and establishing a framework to adopt 
accrual accounting. 
Table I.3 
Fiscal balance, 2003-07 
(F$ million) 
 2003 2004 2005 2006a 2007a 
Revenue 1,079.1 1,167.7 1,218.3 1,363.3 1,390.2 
Customs duties 528.9 554.5 592.4 598.7 568.3 
of which      
Tariffs 191.8 206.6 215.4 209.9 207.5 
Excise duties on imports 67.9 78.6 76.3 81.8 84.3 
Export taxes 21.5 8.7 11.4 8.9 8.3 
Import VAT 245.1 257.8 285.7 294.3 263.3 
Income tax and estate and gi ft duties 286.7 334.6 352.5 412.8 537.6 
of which       
    Personal income tax (incl. PAYE) 173.8 201.5 209.4 249.8 253.9 
    Company tax  121.0 127.2 147.6 172.5 199.0 
VAT (excluding on imports) 124.8 153.4 130.9 175.5 200.9 
Fees, royalties, sales and reim bursements 46.2 49. 5 58.1 64.1 82.2 
All other income n.e.c. 83.7 83.0 84.1 104.9 78.0 
Expenditure 1,083.4 1,180.4 1,231.6 1,375.9 1,390.5 
Public debt charges  228.2 277.9 323.5 305.7 339.4 
Pensions and gratuitie s 36.1 34.9 37. 2 35.3 35.6 
Departmental expenditures, including 
wages and salaries 819.1 867.3 948.9 1,034.9 1,015.6 
Primary balance -4.2 -12.4 -13.2 -12.6 -0.3 
a Preliminary estimates. 
Source:  Fiji Islands Bureau of Statistics (2008), Key Statistics , June.  Viewed at:  http ://www.statsfiji. gov.fj/Economic/ 
gfs_summary.htm;  and Fijian authorities. 
7. A revised guarantee policy was adopted in Apr il 2004 to help control escalating contingent 
liabilities, which were accruing as a result of government guarantees for state-owned entities (government commercial companies and commercial statutory authorities);  they amounted to 
F$3,276.4 million or 60.3% of GDP at end 2007 (C hapter III).  Requirements were introduced for 
recipients to prepare on-going amortization schedules , to submit quarterly audited returns, and to pay 
up-front guarantee fees of up to 2% for the best performing entities.
8 
8. Fiji’s public sector is relatively large, and salaries account for some 50% (10% of GDP) of 
total government expenditure.  Civil servant wage s, which were cut across-the-board by 5% in 
March 2007, have been progressively restored with th e last 2 percentage point instalment rise to be 
implemented in December 2008.  The reduction in the retirement age from 60 to 55 years was 
reversed after a court decision ruled it illegal.  Wh ile the Government aimed to reduce public sector 
operating costs by 10% in 2008, they rose by 0.8%, and are projected to rise by 12.5% in 2009.  A Public Sector Reform Steering Committee is examining ways to improve public sector efficiency, including by reviewing all ministries.  The 2007 review of Performance Portfolio Statements (PPS), 
introduced in 2006 to summarize the outputs of each ag ency and the distribution of funds and staff as 
                                                     
 
 8 Tier 1 entities (high performance) pay fees of 1.5- 2.0%, Tier 2 entities (medium) 0.5-1.0%, and Tier 3 
entities (low) 0-0.5% (Ministry of Finance, Nationa l planning and Sugar Industry, 2007, p. 82).  Fiji WT/TPR/S/213 
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well as associated performance targets,  revealed that agencies lacked  capacity to actively monitor and 
evaluate the performance measures and indicators.  The PPS system was simplified in 2008 by having 
agencies identify and closely monitor only a few outputs;  more improvements are planned in 2009.  Government procurement is also to be reformed  by returning Agency Tender Boards to improve 
efficiency and ensure "value for money" considerations are met (Chapter III(2)(vi)). 
(b) Monetary and exchange rate policies 
Monetary policy 
9. The Reserve Bank conducts monetary policy focu sing on the twin objectives of safeguarding 
foreign reserves and keeping inflation low.  It "tar gets" the nominal exchange rate and not inflation, 
and the primary monetary policy goal continues to  be preserving Fiji's "vulnerable balance of 
payments"
9;  foreign reserves of around four months of import cover are generally sought.  After the 
coup the Bank replaced its market-based approach of using open market operations in Bank securities 
to influence liquidity levels and short-term inte rest rates as the main policy instruments with a 
pragmatic approach based on credit controls.10  While it lacks legislative independence the Bank 
maintains a large degree of operational autonomy and,  according to the IMF, at least had "effective 
independence in the conduct of monetary policy".11  The Reserve Bank Board meets monthly to 
determine its policy stance based on recommendations  by the internal Monetary Policy Committee, 
and issues bi-annual monetary policy statements (latest in May 2008).12  Monetary policies are 
approved by Parliament on the recommendation of the Minister of Finance. 
10. Changes in monetary policy are guided mainly by developments in the outlook for foreign 
reserves and inflation.  Monetary policy has been unchanged since June 2006 when the policy 
indicator interest rate (the yield to maturity of the 91-day Bank note) last rose from 3.25% to 4.25%.13  
A similar rise from 2.25% occurred in February 2 006, and the statutory reserve deposit ratio set for 
commercial banks rose from 5% to 7% in May 2006.  This was reduced to 6% in March 2007, when exchange controls were further tightened to pr otect the balance of payments against speculative 
capital outflows, to ease upward pressure on interest rates so as to promote growth and investment.
14  
Nevertheless, continued ti ght monetary policy also reflected concerns following the December 2006 
coup over the widening trade deficit and to a lesser extent inflationary pressures, both fuelled by 
rising consumption (including imports) funded by priv ate sector credit growth. Both have deteriorated 
further, with the trade deficit rising to 30% of  GDP, and inflation accelerating during 2008 to a 
20-year high of 8.5% in September before easing in October.15  A credit ceiling also limited individual 
commercial bank loans to end-November 2006 leve ls (F$2,426 million), aimed at dampening credit 
                                                      
 9 Reserve Bank of Fiji (2007b), p. 5. 
 10 According to the authorities, on average a one percenta ge point rise in real short-term interest rates 
reduces short-term growth by about 0.3 of one percentage point, and a one percentage point increase in growth 
raises annual inflation by some 0.2 of one percentage poin t, both with a lag of around  one year (Reserve Bank of 
Fiji, 2008b, p. 29). 
 11 IMF (2004), p. 19.  The Reserve Bank is legislatively required to comply with written directives 
from the Minister of Finance (after consulting with the Board) "of a gene ral nature as may be necessary to give 
effect" to the Government's economic policies (Section 52, Reserve Bank Act, 1985).   
 12 Reserve Bank of Fiji (2008b). 
 13 The Reserve Bank also increased  the margin of the Minimum Lending Rate (the ceiling rate for 
inter-bank lending) above the official indicator rate from 50 to 100 basis points, thereby raising it from 3.75% to 
4.25%, in May 2006.  
14 Reserve Bank of Fiji, Press Release No. 04/2007, 30 March 2007. 
 15 Underlying inflation, measured by the trimmed mean (calculated by removing 15% of the lowest and 
highest price changes), fell marginally to 3.6% in October from 3.8% in September (Ministry of Finance and national Planning, 2008b, p. 12). WT/TPR/S/213 Trade Policy Review 
Page 8 
 
 
and consumption.16  Broad money supply growth contracted to 10.4% in 2007 (19.8% in 2006) while 
private sector credit growth fell sharply from 23 .7% to 2.8%;  latest estimates for 2008 (at 
end-September) indicate that broad money supply may contract (-0.5%) although private sector credit growth may rise (6.9%).  The Bank maintained its tight monetary policy stance in November 2008, 
stating that while pressures remained on Fiji's bala nce of payments and foreign reserves, they had 
withstood domestic and external challenges.  The Bank' s latest statement indicat ed that the balance of 
payments would remain under pressure due to wide trade deficits and, while investment and export 
measures announced in the 2009 Budget should help in the medium to long term, Fiji's external 
position needed to be actively protected in the short term.
17 
11. The Reserve Bank has also indicated that, given the already tight monetary stance, it can do 
little to curb inflation, which is underpinned by supply constraints especially abroad, and is thus 
continuing to focus on safeguarding foreign reserves.18  It retained the credit ceiling on commercial 
banks after comprehensively reviewing monetary policy in April 2008, and has allowed liquidity 
growth to ease interest rates;  commercial banks' we ighted average prime lending interest rate fell 
from 8.5% at end-2007 to 8.2% at end-September 2008.   Exchange controls were also introduced to 
curtail domestic borrowings by resident forei gn-owned companies and foreigners.  Monetary 
conditions remain challenging, even though the yea r-end inflation forecast for 2008 remains at 7.5%.  
This was raised from 5.0% in May 2008 due mainly  to rising oil, wheat, and dairy prices as well as 
higher price rises in Fiji’s major trading partners c ontributing to "imported in flation".  Inflation in 
import prices in the consumer price index rose from 2.7% at end 2006 and 8.1% at end 2007, to 
13.1% in October 2008. 
Exchange rate  
12. Fiji still has a conventional pegged exchange rate system linked to a basket of currencies from 
its five major trading partners (United States, Australia, New Zealand, Japan, and the EC).  The 
currency weights in the composite index are not public.19  During the review period, Fiji's nominal 
effective exchange rate remained reasonably stable until a mild appreci ation in 2008.  However, it has 
generally depreciated against the U.S. dollar and the Japanese yen, especially in  the past three years, 
and appreciated against the Australian dollar and the eu ro.  In real terms, Fiji's currency has generally 
appreciated since 2003, especially in 2006 (5.5%) a nd 2007 (2.0%), but appears to have depreciated in 
2008, falling by -1.6% as of end-October.  While the pegged exchange rate has seemingly been a 
useful monetary policy anchor it risks over-valuing  the real Fijian exchange rate unless sufficiently 
supported by sound monetary and fiscal policies.  Such  developments could worsen Fiji's international 
competitiveness abroad and at home against impor ts, placing added pressures on the balance of 
payments, foreign reserves, and domestic industries, with possible subsequent calls for greater import 
protection.  Some exchange rate flexibility may therefore be helpful. 
                                                      
 16 Commercial banks were to give priority lending, within the credit limits, to investment projects, 
exporters, and small businesses.  Such loans were remove d from the credit ceiling fr om end-March 2007.  Since 
the ceiling was introduced, the Reserve Bank has approved total loans to priority sectors of F$293.0 million 
(until end-October 2008), with 53% designated for building and construction.  The ceiling has never been met if 
these loans are included;  as at en d-April 2008 total loans exceeded the ceiling by some F$135 million.   
 17 Reserve Bank of Fiji, Press Release No. 30/2008, 28 November 2008. 
 18 Reserve Bank of Fiji (2008b). 
 19 The authorities indicate that the trade weights reflect  Fiji's total trading patterns (exports and imports 
of goods and services) and that the weights are reviewed annually, and se t around the middle of the year to 
apply for the subsequent 12 months. Fiji WT/TPR/S/213 
 Page 9 
 
 
Exchange controls 
13. Comprehensive exchange controls support the pegged exchange rate (E xchange Control Act, 
1985), and these must comply with IMF Article VIII.  Fijian authorities are currently resolving with the IMF the long-standing issue of tax clearanc e certificates required by the Fiji Revenue and 
Customs Authority (FIRCA) from firms repatriating profits overseas in order to authorize the Reserve 
Bank to release the necessary funds.
20  All foreign currency or gold earnings must be surrendered 
unless the Reserve Bank approves retention.21  As with previous coups, exchange controls were 
tightened in December 2006 by reducing "delegated " limits and/or introducing Reserve Bank approval 
aimed at mainly controlling foreign exchange  transactions of Fijian residents and domestic 
borrowings of non-residents;  many have since been  relaxed or removed, including most recently in 
April, June, and September 2008 to assist investment in the light of stable foreign reserves (Table AI.1).
22  Exchange controls generally limit certa in transactions or require Reserve Bank 
approval outright or for transactions above certain lim its delegated to foreign exchange dealers.  As 
from 14 August 2008, former Fiji residents issued with permanent resident visas (a new category introduced by the Government) are considered Fiji re sidents and subject to exchange controls, subject 
to certain concessions designed to enco urage them to return (Table AI.1).
23   
14. Many exchange controls, including measures in troduced in December 2006, directly target 
imports (Table A1.1).  Prepayments of imports already cleared require Reserve Bank approval, as do 
advance payments prior to shipment above F$1 million per invoice since 8 September 2008 
(progressively re-liberalized from reduced limits  of F$15,000 and F$50,000, from December 2006) as 
well as all purchases of goods from and payments to third parties for goods received (previously 
approval only covered amounts over F$1 million per invoice).  Moreover, Bank approval had been 
needed since December 2006 to offset foreign exchange earnings against foreign currency bills 
payable on imported goods above F$ 100,000 per transaction;  this de legated limit was raised to 
F$1 million at end-August 2008.  Oil imports requ ire exchange approval from the Bank and the 
forward foreign exchange facility requires commerc ial banks to match forward sales with forward 
purchases (both measures were unchanged in December 2006).  The forward foreign exchange facility 
was relaxed in May 2008 aimed at lowering import pr ices by allowing commercial banks to enter into 
forward foreign exchange contracts with importers of rice, wheat, flour, edible oils, and milk/milk 
powder to hedge against future price rises.24 
(c) Macroeconomic targets 
15. Fiji's medium-term macroeconomic  targets are to achieve annual real economic growth of 
5%, reduce inflation to under 3% over five years,  boost foreign reserves to 4-5 months of import 
cover, implement a balanced budget by 2012, lowe r government debt to sustainable levels of a 
maximum of 45% of GDP by 2011, and to raise investment above 25% of GDP.25  Integral to 
achieving these targets is the Government’s Medium -Term Fiscal Framework, 2008-11.  It targets 
slight reductions in the GDP share of revenue and expenditure to 23.7% and 24.7% by 2011, 
respectively, with a corresponding fall in the fiscal de ficit to 1.0% and in g overnment debt to 45.0%. 
                                                      
 20 The IMF's concern, according to the Fijian authoritie s, is that the tax clearance certificates must only 
be specific to the firm's profits and not re lated to the business's tax obligation.   
 21 Reserve Bank of Fiji, Press Release No. 4/2008, 14 March 2008. 
 22 Reserve Bank of Fiji, Press Release No. 08/2008, 25 April 2008;  and Press Release No. 13/2008, 
23 June 2008. 
 23 Reserve Bank of Fiji, Press Release No. 19/2008. 
 24 Reserve Bank of Fiji, Press Release No. 09/2008, 14 May 2008. 
 25 Ministry of Finance and National Planning (2008b), p. 27. WT/TPR/S/213 Trade Policy Review 
Page 10 
 
 
(iii) Balance of payments 
16. Although Fiji’s gross official foreign reser ves were US$860.8 million at end-October 2008 
(equivalent to 3.2 months import c over), they generally deteriorated  during the review period, falling 
from US$958.7 million (4.4 months) at end 2007.  Fiji's weakening foreign reserve position, 
accentuated if allowance is made for Fiji's fi rst international bond raising of US$150 million in 
September 2006 (due to be repaid in late  2011), reflects rising external imbalances.26 
17. Fiji's current account deficit widened substantia lly in 2006 when it reached 22.6% of GDP, 
and remained at 17.3% and 21.0% in 2006 and 2007, respectively (Tables I.2 and I.4).  Underlying this has been a burgeoning trade deficit, rising continuously since 2003 (except in 2007 when it fell to 
25.9%) to an estimated 30.0% in 2008.  Exports had stagnated, falling in  2004 and 2005 and growing 
by under 1% in 2006 and 2007, but are estimated to have jumped by 18.9% in 2008.  Imports have 
grown substantially (except in 2007 when they co ntracted by 7.5% due to the economy's negative 
growth), including by an estimated 21.4% in 2008, in line with rising world oil and food prices as well as domestic consumption.  The widening current acc ount deficit has also been fuelled by falling 
tourism receipts (following political changes) and remittances, the two largest foreign exchange 
earners;  tourism earnings are estimated to have dropped to F$685.6 million and remittances by 19% 
to F$262.8 million in 2007, and both are expected to recover slowly.
27  The widening current account 
deficit reflects Fiji's increasing gap between inv estment over savings.  Capital account surpluses 
(including financial transactions), while rising shar ply in 2006 to 17.2% of GDP due mainly to a surge 
in net foreign inward direct and portfolio invest ment, are generally insufficient to offset current 
account deficits, and such surpluses have since d eclined sharply due to falling inward foreign 
investment, though they rose from 4.4% of GDP in 2007 to 6.3% in 2008.  Significant "net errors and omissions" exist in the balance of payments (estimated at F$703.7 million or well over 10% of GDP in 2007). 
Table I.4  
Balance of payments, 2003-08 
(F$ million)  
 2003 2004 2005 2006 2007a 2008b 
Current account -179.3 -641.9 -670. 3 -1,238.1 -941.3 -1,253.6  
Goods and services balance -317.8 -746.0 -810.7 1,2207.6 -1,041.1  -1,350.3  
Trade balance -729.6 -1,096.6 -1,291.8 -1,607.9 -1,408.7  -1,789.9  
Exports 1,287.9 2,017.5 1,180.0 1,231.5 1,214.8  1,407.2  
Imports 1,132.0 2,228.6 2,471.8 2,839.4 2,623.5  3,197.1  
Services balance 411.8 350.6 481.1 400.3 367.6  439.6 
Receipts 1,163.9 1,192.0 1,369.0 1,339. 5 1,261.1  1,376.4  
Payments 752.1 841.4 887.9 939.2 893.5  936.8 
Table I.4 (cont'd) 
                                                      
 26 Reserve Bank of Fiji, Press Release No. 28/2006,  15 December 2006.  Th e Government created a 
sinking fund in 2007 to cushion the repayment obligation (Ministry of Finance, National Planning and Sugar 
Industry, 2007, p. 34). 
 27 Reserve Bank (2008b), p. 27.  As visitor and immigration data were not available, the Fiji Islands 
Bureau of Statistics stopped releasing statistics on tourim earnings, international trade in services, and the 
balance of payments in April 2008 (Fiji Islands Bureau of  Statistics, Statistical News, No. 14, 4 April 2008);  the 
latest such figures are for the 3rd quarter 2007.  The statistics had b een based on estimated visitor and 
immigration arrivals since the 4th quarter of 2004 when the figures became unavailable. Fiji WT/TPR/S/213 
 Page 11 
 
 
 2003 2004 2005 2006 2007a 2008b 
Income balance -21.4 -19.1 -78.1 -209.3 -123.5  -150.2  
Credit 173.9 252.0 135.8 111.9 112.6  109.5 
Debit 195.3 271.1 213.9 321.2 235.9  259.7 
Current transfers (net) 159.9 123.2 218.5 178.8 223.1  246.9 
Credit 313.5 289.3 391.4 371.6 342.2  387.7 
   Remittances 248. 1 307.4 329.3 324.3 262.8 ..  
Debit 153.6 166.1 172.9 192.8 119.1  140.7 
Capital and financial account 181.4 242.7 402.9 941.3 237.6  373.9 
Capital account -10.8 -20.1 -30.1 -29.8 0.9  5.7 
Financial account 192.2 262.8 433.0 971.1 236.7  368.2 
Foreign direct investment (net) 78.3 318.7 253.0 645.9 ..  .. 
Portfolio investment (net) 0 1.7 1.5 252.0 ..  .. 
Other investment (net) 155.4 -44.5 -44.8 85.9 ..  .. 
Net errors and omissions -2.1 399.2 267.5 296.8 703.7  879.7 
Official reserve assets -41.5 -102.1 223.2 -57.5 -93.1  12.7 
.. Not available. 
a Estimate. 
b Estimate/projection. 
Note: On an accrual basis. 
Source : Reserve Bank of Fiji, Quarterly Review June 2008 , pp. A58-59.  Viewed at:  http://www.rbf.gov.fj/;  and Ministry 
of Finance and National Planning (2008), Economic and Fiscal Update:  Supple ment to the 2009 Budget Address , 
November.  Viewed at:  http://www.mfnp. gov.fj/Documents/2009_Budget_Supplement.pdf. 
(3) MAJOR STRUCTURAL POLICY DEVELOPMENTS  
18. Sustainable improvements in Fiji's economic performance require productivity gains to 
enhance the international competitiveness of its enterprises and thus its exports.28  Significant policy 
impediments to productivity growth  remain, and on-going structural  reforms are needed to increase 
growth and poverty alleviation.  In the 2008 Budget, to help achieve these, the Government embarked 
on a modified policy direction of Sustainable Economic Empowerment De velopment Strategies 
(SEEDS) for 2008-10 consisting of six policy platfo rms:  returning to democracy, strengthening 
governance, weeding out corruption and modernizing administration;  economic growth;  reforming 
the public sector to reduce its size and raise its e fficiency;  reforming public financial institutions, 
including further development of the capital mark et and rural banking, and to form a financial 
services ombudsman;  using land more effectively;   and developing social and community outcomes 
to promote national unity, health, education, rural development, poverty eradication, social equity, 
and environmental sustainability.29 
(i) Tax reforms 
19. The interim Government reversed the previous government’s decision to raise the VAT rate 
from 12.5% to 15%.  Its taxation policies are aime d at:  maintaining the integrity of the VAT;  
minimizing distortions;  ensuring a simple, transpar ent, and equitable tax system;  simplifying and 
streamlining tax administration;  strengthening comp liance;  improving collection, including of tax 
arrears (down from F$237.2 million in 2006 to F$172 .4 million in 2007, equivalent to 12% of 
operating revenue, mainly due to the tax amnesty);  and promoting the "user-pay" principle as regards 
                                                      
 28 Fiji's Productivity has increased by only 1% over the past ten years (Fiji Island's Trade and 
Investment Bureau, 2008, p. 6).  
29 Ministry of Finance, National Planning and Sugar Industry (2007). WT/TPR/S/213 Trade Policy Review 
Page 12 
 
 
public services.30  These principles are being implemented in order to facilitate investment and 
growth, optimize tax revenue, broaden the tax base,  boost exports and competitive import substitution, 
stabilize the balance of payments, support the poor, protect local and infant industries, and formulate appropriate fees and charges for public se rvices, including automatic indexation. 
20. A major medium-term tax policy goal is to formulate strategic performance-based measures 
to stimulate economic recovery that would include  supporting "quick winners" in sectors that could 
generate immediate investment and employment , increasing exports, promoting foreign exchange 
savings through import substitution,  boosting foreign exchange ear nings, rural development, and 
poverty alleviation (e.g. extending the ten-year ta x holiday to areas outside the Kalabu ICT Zone).
31  
The effectiveness of tax concessions is to be revi ewed and monitored conti nually, and their abuse 
minimized along with efforts to reduce tax evasion generally and improve tax administration and 
compliance.  FIRCA initiatives include eliminating l odgement of tax returns by PAYE wage earners, 
introduction of a Taxpayer Portal allowing taxpa yers to assess information online, finalizing a 
Taxpayer's Charter, and establishing a Transfer Pricing Unit.  An updated Revenue Administration 
Law will also simplify tax administration by harmonizing administrative provisions of the income tax, 
VAT, and tariff legislation.  Higher revenue collect ions in 2008 reflect higher receipts from indirect 
taxes (tariffs, excise duties, VAT, and the hotel turnover tax) and from non-tax items (fees, fines, 
charges and penalties, and dividends from government  investments).  The Government announced in 
the 2009 Budget that the company tax rate would be reduced from 31% to 29% in 2009 and to 28% in 2010 (Chapter III(4)(i)(b)).  While personal income tax rates remain unchanged, the tax-free threshold 
for personal income tax was raised from approxi mately F$9,000 to F$15,000 from June 2008, and 
will remain at this level in 2009  and 2010 (Chapter III(4)(i)(b)). 
(ii) Privatization and reform of state-owned enterprises 
21. State-owned enterprises (SOEs) conduct many busi ness activities, e.g. sugar production, ship 
building, shipping, forestry, banking, insurance and fi nance, power generation, sea ports, air transport, 
rice milling, cattle raising, crop production and aquaculture, telecommunications and newspapers 
(Chapter III(4)(viii)).  Despite reform efforts, SOEs  remain inefficient, and reforms have seemingly 
slowed.  Progress on SOE privatization has been  mixed, and does not seem to be a government 
priority;  it is driven mainly by revenue than by e fficiency concerns.  In 2006, the Ministry of Public 
Enterprises formulated a comprehensive programme of reorganizing, restructuring, corporatizing and privatizing SOEs to accelerate divestment.  Gove rnment support to SOEs via loans, standing debt 
guarantees, equity injections, and ad hoc explicit and timely guarantees on individual debt instruments 
entail substantial government contingent liabilities.   
(iii) Governance, and business environment 
22. Fiji continues to take important steps to improve governance and transparency, including 
reducing official corruption.
32  The Fiji Independent Commission Against Corruption (FICAC), 
established in April 2007, has widespread prosecutori al and investigative powers and reports directly 
to the President to ensure independence.  It al so enforces the Prevention of Bribery Promulgation, 
                                                      
 30 Ministry of Finance and National Planning (2008b), p. 33. 
 31 Ministry of Finance, National Planning and Sugar Industry (2007), p. 26. 
 32 Fiji's ranking on all six World Bank governance indicators deteriorated during the review period, 
especially since 2005, to within the 40-50th percentile for political stability, rule of law, and control of 
corruption, and to within the 30-40th percentile for voice and accountab ility, government effectiveness, and 
regulatory quality, in 2007 (World Bank, 2008b).  Sim ilarly, the Transparency International Global Corruption 
Barometer for 2006 suggested significant official corrupti on but a relatively low incide nce of bribery.  Viewed 
at:  http://www.transparency.org/polic y_research/surveys_indices/gcb/2006. Fiji WT/TPR/S/213 
 Page 13 
 
 
passed in 2007, which created new offences for briber y and white collar crime.  A special unit formed 
in the finance ministry investigates alleged abu se of public funds identified by the FICAC.  Fiji 
acceded to the United Nations Convention Against Corruption (UNCAC) in May 2008, is a member 
of the International Association of Anti-Corrup tion Authorities (IAACA), and has endorsed the anti-
corruption initiatives of the ADB/OECD for Asia and th e Pacific.  Fiji is also a member of the Asia 
Pacific Group on Money Laundering and the Financia l Transactions Reporting Act, administered by 
the Financial Intelligence Unit of the Reserve Bank, which entered into force in January 2006 and has 
been fully implemented since 2008 (Chapter IV(6(3)). 
23. Fiji's weak legal business framework, based on increasingly outdated legislation and 
regulatory arrangements, is being improved (Chapter III(4)(xi)).33  Business registration is generally 
slow and cumbersome, with manual processing of applications widely used among agencies.  A project is under way to simplify company registrati ons and to reduce the processing time to one to 
three days.  Requirements for setting up companie s (e.g. on the number of directors) are overly 
restrictive.  The business registration system, ad ministered by the Office of the Registrar of 
Companies, under the Ministry of Justice, lack s transparency in deci sion-making, processes 
applications slowly (up to 20 da ys and longer in some cases), has poor data security, and is user-
unfriendly.
34  Some 70 laws empower different government agencies to administ er business licensing, 
and requirements seem duplicative and largely for ra ising revenue;  administration among government 
agencies is poorly coordinated, and significant bureau cratic discretion facilitates corruption.  Arbitral 
awards taken to courts for dete rmination and enforcement get ca ught up in the judicial system, 
reducing the effectiveness of arbitration in settling disputes. 
24. Despite some improvements, the business cl imate still seems somewhat unfriendly to 
private-sector development, including investment, with high costs of doing business.35  Bankruptcy 
arrangements, a major factor determining the ease of  closing businesses, are deficient, and under the 
outdated legislation the procedural system is costly (both financially and in time taken).36  It takes on 
average 1.8 years to close a business,  and costs some 38% of the estate in fees;  creditor recovery rates 
are low (20.2% of debt).37  Fiji has no legislation on electronic transactions.   
(iv) Capital market 
25. Fiji's banking and insurance sector is open a nd fully private since January 2006:  all 
commercial banks are foreign and overseas firms dominate insurance, especially life (Chapter IV(6)(iii)).  The Reserve Bank continues to improve financial s upervision and regulation 
along world standards.  It introduced a real-tim e gross settlement system, known as FIJICLEAR, in 
2007, enabling payments to be settled immediately.  F iji, the first South Pacific country to participate 
voluntarily in the IMF/World Bank Financial S ector Assessment Program, is implementing its 
recommendations;  the review, made public by the G overnment, concluded that Fiji's financial system 
was sound and stable.  The Government intends to fu rther modernize the financial sector.  It wants 
rural banking to be expanded and is to create  a Financial Services Ombudsman in 2009 to monitor 
bank fees.  The necessary legislation is being fo rmulated in close consultation with financial 
institutions. 
                                                     
 
 33 Much of this paragraph is based on ADB (2005), p. 59. 
 34 FIAS (2005). 
 35 World Bank data for 2007 indicate that the costs of doing business were relatively high especially in 
"starting a business" (ranked 69th internationally), registering property (77th), paying taxes (52nd), trading across 
borders (111th), enforcing contracts (62nd), and closing a business (114th) (World Bank,  2008a). 
 36 ADB (2005), pp. 69-70. 
 37 World Bank (2008a). WT/TPR/S/213 Trade Policy Review 
Page 14 
 
 
26. The Government is keen to broaden and deepen  the thin capital market, including developing 
a secondary bond market, and to strengthen supe rvision by the Capital Markets Development 
Authority. It is considering deregulating the s uperannuation industry to promote competition, widen 
choice, and improve investment returns.  In preparation for this, supervision of the sole 
superannuation supplier, the state-owned Fiji National Provident Fund, was enhanced by transferring 
it to the Reserve Bank in 2004.  A detailed study  on furthering the industry's deregulation is 
anticipated. 
27. Several laws (e.g. Public Enterprise Act of 1996 and the Companies Act of 1985) and the 
2001 Public Enterprises Reform Policy Framewor k cover corporate governance of state-owned 
entities.  A Corporate Governance Policy Framewor k for these entities was issued in December 2003. 
(v) Labour market 
28. Labour market rigidity, including excessive disr uptions, continues to hamper productivity.  
Various labour laws and regulations  govern employment.  However, the Government is attempting to 
introduce more flexibility by moving from an adversaria l to a more consultative approach in industrial 
relations.  The Employment Relati ons Promulgation, October 2007, entered into force in April 2008, 
and a number of subsidiary legislation has been promulgated.  Mediation bodies, the Employment 
Relations Tribunal and the Employ ment Relations Court, are being established to resolve labour 
disputes efficiently.  A Code of Good Faith in Collective Bargaining has b een introduced to guide 
parties on how to resolve employment problems ami cably at the enterprise level.  The Government 
labour force is expected to be downsized via civil service reforms. 
(vi) Land reforms 
29. The lack of land reforms is widely seen as a major impediment to agricultural and other 
development, and the Government is keen to a ddress the issue to ensure better land access and more 
efficient use for the mutual benefit of landowners and tenants.  Significant sugar land, for example, 
remains idle after the leases expired.  A key area is  to reform native title to improve leasing and rental 
arrangements, which will enhance land security and fac ilitate land transfers.  With this in mind, the 
Government is reviewing the Agricultural Landlord a nd Tenant Act, administered by the Native Land 
Trust Board, which handles some 30,000 native land leases (50% cover agricultural land).  The 
Committee on Better Utilization of Land was formed as a consultative and advisory forum aimed at 
reducing the amount of idle agricultural la nd and to improve landowners' well-being. 
(4) DEVELOPMENTS IN TRADE  
30. The share of Fiji's merchandise exports in GDP fell from 28.9% in 2003 to 21.7% in 2007, 
while the share of imports rose from 52.0% to 51.9% (down sharply from 57.0% in 2006) (Table I.2).  
(i) Merchandise trade 
(a) Composition of trade 
31. Since 2003, exports have become more con centrated on primary products, which accounted 
for 74.1% of total exports in 2007, up from 52.8% (Chart I.1).  Agricultural products, predominantly 
food, rose from 37.6% in 2003 to 50.2% in 2007.  Within food, the major changes have been the falling share of sugar exports to 15.3% in 2007 (17.5% in 2003) and rising shares of non-alcoholic beverages (mainly bottled drinking water) to 10. 1% (from 3.6%) and "br ead and baked goods" to 
2.4% (from 0.4%).  Fuel re-exports to visiting sh ips, aircraft, and other South Pacific islands 
accounted for 23.9% of exports in 2007 (up from 15.2%), while the share of manufacturing declined Fiji WT/TPR/S/213 
 Page 15 
 
 
substantially, from 37.7% to 16.6% in 2007.  The ma in change in manufacturi ng exports was the large 
fall in clothing exports (by almost 50%) in 2005;  these continued to decline and were 8.0% of exports 
in 2007 (19.2% in 2003).  The export share of ma chinery and transport equipment fell from 4.8% in 
2003 to 2.4% in 2007;  gold exports fell from 6.0% to  0.2%.  In 2007, sugar, non-alcoholic beverages, 
fuels, and clothing accounted for 32.0% of total exports (including re-exports) (46.8% excluding re-
exports).  The other major export is fish produc ts, which accounted for 8.4% of total exports 
(including re-exports). 
32. The main change in import patterns has been the increased share of primary imports, from 
31.7% in 2003 to 50.0% in 2007, owing mainly to the rise in fuel imports, from 12.2% to 33.2% (a 
substantial share of which are re-exported to South Pacific islands).  Accompanying this change was a 
substantial fall in the share of manufactured impor ts, from 67.9% in 2003 to 47.7% in 2007.  This 
reflects mainly falling shares for imports of tran sport equipment (from 13.5% to 5.9%), electrical 
machinery (7.3% to 5.3%), and textiles and clothing (11.5% to 5.2%).  The share of food imports fell 
from 18.2% to 15.5%. 
(b) Direction of trade 
33. Exports have become more diversified geogr aphically since 2003, when the major three 
markets, Australia (34.5% of total exports), the Unite d States (22.9%), and the EC (16.6%), especially 
the United Kingdom, accounted for almost three quarters of total exports (Chart I.2).  In 2007, these 
markets accounted for 43.5% of the total (13.3%, 14.7%, and 15.5%, respectively), and Singapore had 
displaced them as Fiji's major export destination, re presenting 18.6% of exports (0.1% in 2003).  Fiji's 
share of exports to South Pacific island economies increased from 10.5% in 2003 to 13.1% in 2007, 
due mainly to substantial and increasi ng re-exports of petroleum products.  
34. Imports are sourced almost entirely from Asia  and Pacific economies, which accounted for 
some 95.0% in 2007.  The United States' share fell substantially, from 9.2% in 2003 to 3.2% in 2007.  Singapore, the main source in 2007, accounting fo r 34.2% (6.4% in 2003), displaced Australia and 
New Zealand during the period, their shares falling from 37.5% to 22.8% and from 18.8% and 17.7%, 
respectively.    
(ii) Trade in services 
35. Fiji traditionally runs a surplus on services tr ade, mainly due to significant surpluses on 
tourism (Table AI.2).  However, the net services surplus as a share of GDP declined from 9.4% in 
2003 to 6.8% in 2007 before rising to 7.4% in 2008.  In 2007, the surplus on tourism of 
F$530.2 million exceeded the overall surplus on services in that year of F$367.6 million (Tables AI.2 
and I.4).  In 2007, services exports totalled F$95 5.0 million (down almost 30% from 2006), of which 
56% was tourism and 35% transportati on (predominantly air).  Fiji's main  imported services in 2007, 
totalling F$634.7 million (down 32%),  were transportation, both sea and air (58%), tourism (17%), 
"other business services" (9%), and government services (6%). WT/TPR/S/213 Trade Policy Review 
Page 16 
 
 
Chart I.1
Product composition of merchandise trade, 2003 and 2007
2003 2007
(a)    Exports (f.o.b.)
Other 
manufactures
13.0Re-exports
24.5
Total:   US$737.0 millionaTotal:  US$745.7 millionb  
Electrical machines
7.3Chemicals
8.1Transport 
equipment 
13.5Manufactures
67.9Other 
manufactures  
8.8
Non-electrical 
machinery
7.0Other mining
0.9Textiles & clothing
11.5Other
2.3
Agric. raw
materials
0.3Other agriculutre
6.2
Other 
semi-manuf.   
7.8Transport 
equipment  
6.9
Chemicals
7.7Manufactures
47.7Non-electrical
machinery
6.1
Total:   US$1,087.1 million Total:   US$1,779.7 million Per cent
Domestic exports
68.5Petroleum 
products
23.9
Other 
manufactures 
6.6Other
0.3Clothing
8.0Food, beverages, & 
tobacco
44.0
a             Re-exports of US$180.5 million (F$310.9 million) and domestic exports of US$556.5 million (F$958.3 million). 
b             Re-exports of US$245.6 million (F$381.0 mi llion) and domestic exports of US$500.1 m illion (F$775.7 million).
Source :  UNSD, Comtrade database (SITC Rev.3);  and Fiji Island Bureau of Statistics.Mining
34.2Other re-exports
7.6
Petroleum 
products
15.2
Other semi-
manufactures
9.0Food, beverages, & 
tobacco
15.5
Iron & steel
2.7Mining
13.1
Iron & steel
2.1Other re-exports
9.3
Other mining
1.1Fuels
33.2Food, beverages, 
& tobacco
34.1
Clothing
19.2
Food, beverages & 
tobacco
18.2 Textiles & clothing
5.2
Electrical machines
5.3Fuels
12.2Machinery & transport
equip.  2.4Other 
manufactures
6.2Other agriculture   3.5Domestic exports
75.5Re-exports
31.5
Agriculture
15.8Agriculture
18.6Agric.
raw materials
0.3(b)    Imports (c.i.f.)Machinery & transport
equipment  4.8
 Fiji WT/TPR/S/213 
 Page 17 
 
 
Chart I.2
Direction of merchandise trade, 2003 and 2007
2003 2007
(a)    Exports (f.o.b.)
Other Asia  
4.0
Total:  US$737.0 millionaTotal:  US$745.7 millionb
(b)    Imports (c.i.f.)
Other Asia  
12.9
EC25
2.6
China
  3.3
Singapore
34.2Other  2.4
United States
3.2
Total:  US$1,087.1 million Total:  US$1,779.7 millionPer cent
Singapore
18.6Other
3.4
United States
22.9
Other Asia  
10.4United  States
14.7
Japan
  2.9EC25
15.5
Japan
5.4EC25  2.2EC25
16.6Other
7.0
Australia
22.8South Pacific islands
13.1
Other Asia
6.1
Australia  
37.5Australia
13.3New Zealand
6.9
New Zealand
18.8New Zealand
17.7
China
3.1Australia
34.5South Pacific islands
10.5
Singapore
6.4United States
9.2Other
4.3New Zealand
4.5
Japan
4.7Japan
3.4
a             Re-exports of US$180.5 million (F$310.9 million) and domestic exports of US$556.5 million (F$958.3 million). 
b             Re-exports of US$245.6 million (F$3 81.0 million) and domestic exports of  US$500.1 million (F$775.7 million).
Source :  UNSD, Comtrade database (SITC Rev.3);  and Fiji Island Bureau of Statistics.South Pacific islands
0.4 South Pacific islands
0.4
 WT/TPR/S/213 Trade Policy Review 
Page 18 
 
 
(5) DEVELOPMENTS IN FOREIGN DIRECT INVESTMENT  
36. Statistics are generally non-exis tent on actual foreign direct investment (FDI) in Fiji, 
including on source and inflows by sector.  The only inward FDI figures on this basis are registered 
levels, which are usually a poor indicator of actual levels.  FDI registrations  fell substantially from 
2005 to 2007, from F$1,047 million to F$495.1 million (by 51% in 2007);  and applications fell from 
515 to 414 (by 10% in 2007).38  Employment generation, expected to be created through the approved 
projects, rose from some 8,000 to 10,000 in 2006 be fore declining to 7,000.  These approved figures 
are well above surveyed actual levels.39   
37. Balance-of-payments figures indicate that inward FDI rose by 140% in 2006 to 
F$645.9 million (11.8% of GDP) and inward portfolio investment from F$1.5 million to 
F$252.2 million. Fiji's FDI stock was estimated at US$430 million in 2006.40  Fiji invests minor 
amounts abroad (F$1.2 million, including portfolio investment of F$0.2 million, in 2006).   
(6) OUTLOOK  
38. The Fijian economy faces numerous macro economic and structural challenges.  
Macroeconomic stability revolves around continued fi scal discipline and prudent monetary policy to 
curb inflation and address external imbalances, the source of foreign reserve pressures. Attracting 
greater FDI will also be important for economic pros perity.  The speed at which the economy recovers 
hinges on the Government's ability to meet these ec onomic challenges, including re-structuring of the 
economy to improve productivity and thus intern ational competitiveness, especially given the 
pressures confronting clothing, tourism, and sugar exports following domestic and external 
developments.  Turning these sectors and the economy around will require boosting overseas 
confidence that the Government is committed to economic reforms, including those pertaining to 
trade and foreign investment, as well as the return to parliamentary democracy in order to stem 
political uncertainty.  Fiji's economic recovery is likely to be slow, and will also depend on 
international developments, adversely affected by  the recent deteriorating world growth prospects 
following the financial crisis.  The Government 's 2009 Budget projections are for seemingly 
ambitious higher growth, especially in 2009 (of 2.4%), 2010 (1.9%), and 2011 (1.5%).41  These 
growth projections may prove to be extremely optim istic given the current world economic situation.  
Year-end inflation is forecast at 4.5% for 2009 and 2010, and the current account deficit at 21.3% and 
18.4% of GDP, respectively, falling to 15.3% in  2011.  WTO Members can help Fiji by further 
liberalizing their markets without discrimination, including alleviating unduly restrictive non-tariff 
barriers, such as sanitary and phytosanitary measu res, which impede Fijian exports, and minimizing 
the adverse effects on its trade patte rns of the more generous prefer ential access for exports from least 
developed countries, which have (o r potentially) diverted trade and investment away from Fiji in 
important industries, such as clothing and sugar. 
                                                      
 38 Ministry of Finance and National Planning (2008b), p. 100. 
 39 Survey results indicate that actual inward FDI fell from F$258.7 million in 2005 to F$110.8 million 
in 2007, after rising to F$288.5 million in 2006.  The number of applications also fell sharply in 2007 to 121 after rising in 2006 to 250 from 201 in 2005.  Employment generation was a low 1,240 in 2007, compared 
with 4,744 in 2006 and 3,458 in 2005 (Ministry of Finance and National Planning, 2008b, p. 101). 
 
40 UNCTAD (2007). 
 41 Ministry of Finance and National Planning (2008b), p. 11.