28 Jul 2017

Fiji's credit rating holds

1:53 pm on 28 July 2017

The credit ratings agency, Standard and Poors, has affirmed its 'B-plus' long term, and 'B' short-term rating for Fiji.

It has reported that it expects Fiji's economic growth to pick up after the temporary effect of Cyclone Winston, which has put pressure on the government's fiscal position.

A bird's eye view of Nasau Village Koro Island Fiji, seven months after Cyclone Winston

A bird's eye view of Nasau Village Koro Island Fiji, seven months after Cyclone Winston Photo: RNZ / Alex Perrottet

The country's falling interest costs, sound external performance, and medium-term economic prospects also supported the ratings.

However, the agency says the rating is held back by the country's weak institutions, limited monetary policy flexibility, income levels and weakening fiscal metrics.

It forecasts economic growth to rise to 3.8 percent this year as the economy recovers from Cyclone Winston, which will drive the country's GDP per capita to US$5,400 by the year's end.

However, the government's fiscal position is forecast to weaken next year, with a deficit of more than 6 percent of GDP - partly driven by large spending initiatives in this year's budget.

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