Tourism, personal remittances top Fiji’s foreign earnings
3 August, 2018, 6:30 am
FIJI’S top two foreign exchange earners – tourism and personal remittances – both recorded growth figures in the first quarter of this year.
The country’s central bank, in its Economic Review for the month ended July, 2018, noted a 4.7 per cent increase in tourism earnings on an annual basis to $358.2million in quarter 1, 2018.
This is compared with the same period in 2017.
According to the review, this outcome is mainly led by higher earnings from the US.
Fiji continues to dominate in tourism, recording the highest number of arrivals in the South Pacific region with a 36.9 per cent market share in the March Quarter of 2018.
Fiji recorded a total of 171,504 arrivals during the first quarter of this year, a 5.1 per cent growth when compared with the same quarterly period in 2017 which recorded 163,226 visitors.
Personal remittances, Fiji’s second largest foreign exchange earner, rose by 8.5 per cent cumulative to May, compared with a 4.6 per cent decline a year ago.
The growth in inward remittances was contributed largely by gifts and maintenance inflows in the review period.
Fiji’s inward personal remittances also rose by 3.7 per cent to $128.1m in the first quarter of 2018, similar to the same period last year.
Personal remittances have been the second largest foreign exchange earner for Fiji since 2004, next only to tourism.
Earnings from this outrank traditional foreign exchange earners such as sugar, timber, gold and garments.
Many Fijian households are reliant on personal remittances as a source of income, increasing the significance of remittances as a reliable source of foreign exchange for the Fijian economy.
These are mainly sent by early childhood teachers, peacekeepers, caregivers and sports personnel working abroad.
Personal remittances are mainly in the form of gifts and maintenance capture donations and other gifts sent to individuals in Fiji by friends and relatives living abroad.
This also includes personal receipts which capture salaries and allowances of expatriates on a work permit in Fiji and pension payments for retirees residing in Fiji.
Meanwhile, the high earning tourism and personal remittances was not enough to grow foreign reserves (RBF Holdings) as it fell over the month of June to $2,139.9m.
However, Fiji’s foreign reserves remain comfortable and are still sufficient to cover 4.9 months of retained imports of goods and non-factor services (MORI).
Foreign reserves as at July 31 were $2,164.6m, sufficient to cover 5.0 MORI and are expected to remain at comfortable levels for the remainder of the year.
Foreign reserves are predominantly maintained in the currencies of the Fiji dollar basket, namely the US, Australian and New Zealand dollars, the Japanese Yen and the Euro.
The RBF also holds IMF Special Drawing Rights and minimal portions of gold and the British Pound.
Foreign reserve assets are important to ensure flexibility and resilience to central banks. If a currency crashes or is devalued, central banks have other currencies to help them withstand such markets shocks.