THE Governor of the Reserve Bank of Fiji, Savenaca Narube says the country needs a sound and efficient financial system along with political stability to bridge the investment gap.
Mr Narube said with the 2008 Budget to be announced in two weeks, they were looking forward for better economic policies that would take the nation forward.
Mr Narube said a policy framework that would push the private sector as the "growth locomotion" had to be put in place.
He said if the private sector was to play its role, it needed certainty and predictability.
Speaking at the opening of the Rooster's Poultry Farm in Navau, Ba on Thursday evening, Mr Narube said the country's balance of payment was still an issue of concern.
Mr Narube said Fiji was losing a lot of money as the country's traditional exports had not performed well over the year.
"Collectively, exports of sugar, garment and gold are lower by $400million from their peak year and that is a lot of money to loose."
"This has been made worse by the rise in oil price which broke over $US90 per barrel recently.
"Our major policy challenge is clearly to address our widening trade deficit.
"Our policies of dampening import demand seem to be taking effect.
"However, the key is not so much to discourage imports but rather to grow our exports and we should continue to work hard at achieving this," he said.
He said an encouraging trend was the reduction in inflation.
He said they expected inflation to drop to at least 3.5 per cent by the end of the year. He said Government debt had increased to more than 54 per cent of the gross domestic product (GDP) and he would like to wish government well in their commitment to bring it below 50 per cent.
He also said while they were working very hard to improve investment as a catalyst of economic growth, they were expecting a drop by the end of the year.
Mr Narube said even though they had thrown in the figure of 25 per cent of GDP as a possible target, they were estimating it to fall back to about 15 per cent of GDP by the end of the year.
He said there was a lot of ground to cover and there were a host of factors such as political stability and economic fundamentals that had to be implemented in order to achieve it.