From 'Boom' to 'Bust'
By Hon. Prof. Biman Prasad - Leader of the National Federation Party.
Opinion Piece was published in the Fiji Times on:-
Saturday 8th February 2020
Why does the Government think we are all so stupid as to believe the tales being spun by the Prime Minister about Fiji’s economic boom and vibrant state?
Early this week while opening an Irish Crossing on Koro Island, the PM attacked the Opposition for saying Government had no money. He claimed the opening of the crossing showed the economy was on a sound footing and that the Opposition were hypocrites. He described the opening of projects worth $4.4 million as “victories under his belt”.
He goes out of his way, in speeches written at our cost for him to read, to rubbish the achievements of past governments. They did nothing – his government did everything.
Anything that goes well in Government is a testament to his party’s leadership. Anything that goes wrong in Government is a previous Government’s fault. After 14 years in power, that excuse sounds even more desperate.
So, of course, when the economy starts to crash and the Opposition points this out – it’s all the Opposition’s fault. When we try to point out, even in Parliament, the Government’s hopeless economic policies and management, his Economy Minister calls it “economic sabotage”.
Not once has the Government told us what it will do to fix the mess. And we know why. It has no idea. It has never had any idea.
This Government only had an economic policy as long as it could spend money. Now that the cash pipeline has dried up, all it can do is talk about what it used to spend and lash out at its opponents.
What is really happening in the economy?
Why has the planned takeover of Ba and Lautoka Hospitals by the Aspen Group not happened? Why does the new Ba Hospital remain empty? Is it because the Government cannot afford to get the hospitals up to Aspen’s standards?
Why is the Government’s much-talked about new kidney centre in Nadera shut down, its doors padlocked, its rooms silent?
Why can’t the country’s largest hospital, CWMH, have sufficient stock of basic medication, bandages and blood bags all the time?
Why are suburban roads – and even roads in the centre of the capital city – so badly pot-holed and unrepaired?
Why do businesses complain that it takes the months – sometimes years – to be paid for the work they do for the Government?
Why does the Tertiary Loans and Scholarship Board pay scholarship students only $50 a week for food?
Ask yourself why the student bus fare fiasco occurred, with most school children left with no money in their e-ticketing cards on the first day of the term. If the Government had had the money, it would have loaded up the cards weeks before.
Instead, everything is last-minute, hand to mouth, as the Government desperately scrapes around for cash to keep its operations moving.
And the worst thing is that the Government will not share the truth with the people about its finances. So we are all left to speculate about how bad things are.
Civil service morale is at rock bottom. Public service is supposed to be about helping the ordinary people of Fiji. Instead, civil servants are expected to be supporting cast members of the Frank Bainimarama Feel Good Show.
Certainly the only time the PM seems to be feeling good is in a first class aircraft cabin. He cannot seem to stop. While he criss-crosses the planet talking about climate change, he might stop to think about his own carbon footprint.
THE TRUTH ABOUT THE ECONOMY
The PM claimed that other governments had taken loans to pay day to day operational expenses, but his government had strengthened the economy. Last November I had told Parliament about the tax-and-spend policies of the Government. I had said: -
“For the last 10 years the Fiji economy has been run like a really bad magic show. It has not even been entertaining. Because we can all see how the magic tricks are done. Borrow money. Spend money. Give out freebies under any name.
“It does not matter, as long as you spend. It does not matter if the spending is good or bad, as long as you spend. It does not matter if roads you fixed once have to be fixed again in three years, as long as you spend. It does not matter if the money is wasted, just spend”.
“That is Fiji First economics. That is the Bainimarama Boom. The “Bainimarama Boom” has now become a national joke. And all of this economics of illusion has worked to fool the people for 10 years. But now it is the end of the party”.
Last financial year, government’s budgeted revenue fell short by more than $1 billion. Government failed to collect one-quarter of the money it thought it would get.
Unfortunately, in an economy that is addicted to Government spending, that sends things into a downwards spiral. If the Government is not spending money on roadworks (wages for workers), education (money for bus companies, contractors who supply schools) or university buildings (building company wages) there is no money for people to spend.
If there is no money for people to spend, they cannot buy goods and services. That means that there is less VAT revenue, because that is where VAT comes from. It also means that businesses’ profits fall - and if those profits fall, so does the tax they pay on those profits.
So how does the Government think it will collect even its reduced revenue forecast of $3.49 billion in the 2019-2020 year?
At the end of December 2019, Fiji Revenue & Customs Service Chief Executive Officer stated that there was a 20% shortfall in FRCS’s revenue collection for the first five months of the current financial year from August 1 to December 31. This downward trend will not change.
So the Government has gone from “tax-and-spend” economics to “hope-andpray” economics.
BAINIMARAMA'S DEBT BOOM
What has the Fiji First Government’s leadership done to Fiji’s national debt?
In 2007 Fiji’s GDP stood at $5.447 billion. For the 2019 financial year, the value of GDP is $11.282 billion dollars. That is if you believe the numbers – because it is very clear that the Government will only let you see the statistics they want you to see.
In 2007 Fiji’s total debt level was $2.734 billion.
If Government borrows everything it said it would borrow under the 2019-20 budget, and pays back the loans it is supposed to repay, its total debt as of July 2020 is projected to be around $6.18 billion.
So the economy has increased in size by 108% in 13 years. Remember, this is before inflation. So real economic growth is much lower.
And how you measure economic growth – Gross Domestic Product - is guesswork. You assume certain things, you count certain things and discount certain things.
But debt levels are very real. No guesswork there – every dollar of debt is real money we owe. Government debt levels have increased by 120% in 13 years.
This means we borrowed $3.5 billion in 13 years to increase GDP by $5.8 billion. Our economic growth has not come from Fiji’s businesses producing more and exporting more. It has come from the Government borrowing more, spending more and counting all of this as economic activity.
Welcome to the Bainimarama Boom!
WE CAN HELP
Managing the economy is about creating economic confidence, supporting private investment, creating jobs, creating new industries and adapting to change.
And this is the tragedy of the Fiji economy today. Fiji’s economy now depends on tourism and remittances. In 10 years we have not created one new major export sector, not even a minor one. The so-called sugar industry reforms are a joke. Our agricultural and manufacturing industries are struggling.
The International Monetary Fund in its Report released in February 2019 following its consultations in December 2018 concluded that the resilience of the economy in future depended on many factors like boosting growth of local sectors, fiscal consolidation by reducing debt, enhancing fiscal transparency and strengthening the rule of law.
This hasn’t happened. The economy remains in a perilous position.
So we say again to the PM: Stop attacking the Opposition and engage in some serious dialogue. Let’s collectively find solutions to resuscitate the economy by amongst other things, generating confidence.
We are ready to help. The ball is in the PM’s court.
Because the alternative will be Bainimarama continuing to lead the zombie government I earlier described – half-dead, half alive, wandering aimlessly around the political landscape.