The Governor of the Reserve Bank, Sada Reddy said the biggest challenge facing the government of the day is how they can raise investment and exports in the country.
Speaking to the members of the Fiji Institute of Accountants, Reddy said Fiji needs to raise investment to over 25 percent from its current level of 13 percent.
He also pointed out that there is a need to improve infrastructure to facilitate economic growth as we live in a world of competition where many countries have a low cost structures and high productivity.
Reddy also revealed that the total contingent liabilities of the government stood at $1.7 billion in 2009 and the government must stop guaranteeing loans for institutions which becomes a liability to the State.
Reddy said this trend must stop because what it does is that without government really knowing what is going on in the institutions whose debt government has guaranteed, and suddenly the government is faced with those contingent liabilities coming on to the governments books and seriously compromising government finances.
He said there are numerous instances in the past where government had to step in to bail out the institutions, because of the guarantee.
Highlighting the National Bank of Fiji saga which cost taxpayers $372 million in total, Reddy said there are signs that few other institutions whose debt government has guaranteed may not be in a position to meet their obligations.
Reddy said this situation must not be allowed to continue.
Meanwhile, Reddy also said that a number of people have been commenting on the US$150 million bond issued in September 2006 and is due for repayment in September 2011.
Reddy said the concerns are rightly so as to whether Fiji has the capability to repay the loan.
However, he assures that the government and the RBF are actively exploring all possibilities to meet this repayment and Fiji as usual will meet all its foreign obligations whatever it takes.
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