RACHNA LAL
SUVA
One of the leading providers of credit ratings, research and analytics, has revised Fiji’s rating outlook from stable to positive.
Standards and Poor’s Ratings Services said this reflected their expectation that Fiji can sustain its growth momentum.
“We believe Fiji’s transition to democratic rule, if successful, and continued economic reforms should support a sound growth trajectory,” a Standards and Poor’s report released yesterday said.
“Fiji’s external indicators continue to stabilise, underpinning the government’s creditworthiness.
“The ratings on Fiji reflect our view of the country’s stabilised external position, including its moderate level of foreign exchange reserves.”
The revision also comes at the backdrop of the Reserve Bank of Fiji revising our economic growth forecast from 3.6 per cent to 3.8 per cent.
But, the agency said weak institutional settings continue to constrain the sovereign ratings.
At the same time, Standards and Poor’s Ratings Services affirmed their foreign and local currency credit ratings on Fiji at ‘B/B’.
Economic growth
Standards and Poor’s said Fiji’s recent economic growth was somewhat stronger than they previously thought, owing to significant recent data revisions.
“Fiji’s GDP per capita growth averaged 1.7 per cent over 2010-2013. This is still fairly low growth given the country’s modest income level,” the report said.
Standards and Poor’s said sugar production has risen on the back of recent reforms and business investment appears to have improved, reflecting stronger domestic confidence.
Outlook
The agency said the positive outlook reflects their more favourable assessment of the recent trend in Fiji’s economic growth and the potential that growth will remain at similar, more robust, rates in the medium term.
“We may raise the ratings next year should the expected political transition in late 2014 occur smoothly, economic reform momentum continues, and prospects for economic growth remain sound or improve,” it said.
“Conversely, we may revise the outlook back to stable if a more difficult political transition causes the economy to revert to below-average growth.
“We may also revise the outlook back to stable if Fiji’s external liquidity position deteriorates significantly.”
Feedback: rachnal@fijisun.com.fj