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STANDARD & POOR’S UPS FIJI ECONOMIC OUTLOOK Reserve bank welcomes ‘stable’ rating

SUVA, Fiji (Fijilive, Dec. 19, 2009) – Reserve Bank of Fiji Governor Sada Reddy says the revision of the outlook for Fiji from negative to stable by (S&P) Standard and Poor’s Rating Services augurs well for Fiji’s international credit ratings.

Reddy said the rating would help in the event that Fiji wants to borrow in the international money markets.

He said it also reflected well on the stability of Fiji’s financial conditions.

Melbourne-based Standard and Poor’s this week revised Fiji’s outlook from negative to stable based on its expectation that Fiji’s reserves would continue to stabilize.

"The improvement in reserves partly reflects the raising of capital controls and devaluation the Fiji dollar by 20 percent to stem the pressures on reserve," said S&P’s senior credit analyst Kyran Curry.

"The ratings on Fiji reflect political instability, a weak external position, sizeable deficiencies in available data that complicate external analysis, and poor external relations that hamper investment and harm the outlook for the tourism sector and broader growth prospects," said Curry.

"These factors are offset, in part, by the sound economic potential in tourism and allied industries when political frictions subside," he said.

Reddy said the improved rating came in the wake of the International Monetary Fund (IMF) commending Fiji authorities for "decisive and timely action on monetary policy front and for keeping fiscal discipline despite the very adverse global and domestic economic conditions" following an IMF review of the economy.

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