FIJI GOVERNMENT OWES PENSION FUND $950 MILLION

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WELLINGTON, New Zealand (Radio New Zealand International, Nov. 8) – There is increasing concern in Fiji that more than half of the pensions savings of the country’s workers is being used to pay for the government’s growing budget deficit.

The Fiji Times reports that by the end of June the government owed the Fiji National Provident Fund more than US$950 million.

Statistics released by the ministry of finance show that over the past four years of the Qarase government, public debt levels have increased by more than 70 percent.

In the 2005 budget tabled last Friday, the government plans to borrow an additional US$220 million, more than 90 percent of it from the pension fund whose total assets now stand at US$1.8 billion.

The Reserve Bank has banned further offshore investments by the Fiji National Provident Fund, leaving many hundreds of millions of dollars of pension money earning little or no interest.

Interest paid on members’ funds has declined from 9 percent to 6 percent over the past 10 years and pensions have been falling while the age at which workers become eligible for a pension keeps rising.

In an editorial, The Fiji Times has raised concern about what would happen to the retirement funds if the government is unable to pay its debt or if there is another internal conflict.

The newspaper says given Fiji’s governance record and political history, anything is possible and should be considered.

It says the government should ensure the safety of the pension funds and part of this responsibility should be to place a limit on how much it borrows from the National Provident Fund.

November 9, 2004

Radio New Zealand International: www.rnzi.com

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