Economic erosion leads to ratings downgrade

Erosion of Fiji’s economic and fi scal strengths in the wake of COVID-19 pandemic has resulted in Moody’s Investors Service to downgrade Government of Fiji’s long-term issuer and senior unsecured ratings to B1 from Ba3. Picture: SUPPLIED

THE erosion of Fiji’s economic and fiscal strengths in the wake of COVID-19 pandemic has resulted in Moody’s Investors Service to downgrade Government of Fiji’s long-term issuer and senior unsecured ratings to B1 from Ba3.

The overnight release by Moody’s maintains Fiji’s outlook as negative.

“Moody’s assesses that Fiji faces long-term economic scarring from a long delayed and likely only gradual restart of tourism, leading to a sharp decline in employment and tax revenue.

“The downgrade is driven by the erosion of Fiji’s economic and fiscal strengths in the wake of the pandemic-induced long-lasting tourism shock.”

Moody’s states Fiji’s drivers of the negative outlook are ongoing risks to the credit profile, including uncertainty surrounding the timing and pace of tourism reopening and increased risks to government liquidity.

“Further delays to the recovery of the tourism sector would result in a greater degree of output losses with increased risks to Fiji’s fundamental economic strength, and higher government borrowing needs for longer, which could raise liquidity risks.

“The B1 rating reflects very limited capital account and rising stock of external debt.”

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