The New Zealand foreign minister Murray McCully says it is still in the balance if Fiji's election promised for next year will be free and fair.
Mr McCully says the recently passed political parties decree has caused concern not only in Fiji but also among those watching on the outside.
The Fiji regime has further tightened its decree, which threatens jail terms for media referring to now defunct political parties and bans parties using acronyms.
Mr McCully says Wellington will now observe the next steps such as the formation of a Constituent Assembly.
"We'll be watching those steps carefully, watching to see whether there is room for positive movement on the issue of political parties and hopefully have a ministerial contact group meeting to report to Forum leaders. Let's hope we'll see some more positive trends than we've seen in recent times."
The New Zealand foreign minister Murray McCully says has likened the Fiji situation to a saga with some step forwards and some step backwards.