13 Sep 2006

Fiji borrows overseas as foreign reserves drop

7:31 pm on 13 September 2006

For the first time ever Fiji is borrowing overseas to raise its dwindling foreign reserves.

Radio Fiji reports that Fiji has issued bonds worth 150 million US dollars on the international market.

The radio quotes economist Dr Mahendra Reddy as saying this is a giant leap for a small island country whose domestic economy is struggling with supply constraints.

Dr Reddy says while this sum of money can be raised within the country, the government has gone overseas in order to raise foreign reserves.

The reserves are now sufficient to pay for only 2.6 months of imports compared to about 5 to 6 months worth in the past.

Dr Reddy says this is a matter of concern and the overseas bonds are a measure to deal with a critical situation.

He says the matter that needs to be addressed is why Fiji is not able to raise its exports.