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Fiji's overall Doing Business ranking declined to 97 this year from 84 in 2016 and its “distance to frontier” score deteriorated to 60.7 from 62.5, says a World Bank report launched this month.
The East Asia and Pacific Economic Update stated that encouraging private sector growth in Fiji would require a more supportive business environment.
It said Fiji's worsening performance was because of the deterioration in getting credit (because of closure of the credit bureau in 2016) and lack of progress in those areas where Fiji had already ranked low, including starting a business, getting permits, paying taxes, and registering property. According to the report, Fiji scores particularly poorly in starting a business — 159th of 190 countries — with 40 days required to start one.
The World Bank highlighted that downside risks to the global outlook had increased compared with October.
It said risks included heightened policy uncertainty in major advanced economies, financial market disruptions, growth disappointments in major developed and emerging markets, and rising protectionist sentiments.
“Closer to home, Fiji remains vulnerable to extreme weather, and another major cyclone could undermine Fiji's ability to implement its recovery program effectively and risk delaying the timing of the needed fiscal consolidation,” the report stated.
To reduce the impact of external shocks to the economy and protect the vulnerable, the World Bank recommends that the government builds fiscal space.
It said although the annual budget estimates included three-year forecasts, the medium-term fiscal framework was not well developed and lacked credibility.
According to the report, the medium-term implications of the short-term policy initiatives of government are often not worked out.
“For example, the impact of the rapidly rising capital investment on operational expenditure has not been recognised, and the full impact of increases in subsidies (e.g., school fees, housing) and possible increases in civil service wages on the outer year forecasts have not been incorporated.”
Similar to the Reserve Bank of Fiji's forecast, the World Bank has also stated that growth was expected to reach 3.7 per cent this year as reconstruction activities gathered pace, and remain above-trend over the forecasting period, supported by continued strength in consumption and public investment in infrastructure.
With improved connectivity with Asian markets, especially the launch of direct flights to China and Singapore in 2017, tourism sector is expected to be well supported.
SOURCE: FIJI TIMES/PACNEWS
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