NFP pounces

Biman Prasad hasn’t waste any time showing us why it’s good to have the NFP led by an economist.  He’s pounced on the fact that the “price of food items has increased by 60 per cent since the (2006) coup”.  We all know that prices have increased but the good economist has put a number on our feelings – and it’s a high one.  Sixty percent is lot and we don’t need an economist to tell us wages haven’t risen by sixty percent over this period.  Khaiyum has his price control machine running and it has worked well to increase prices.  All his big business friends need to do to get a price increase approved is produce paper-work showing what they are paying for their imported goods.

Fijilive May 11, 2014 ‘Prices up 60% since coup’, NFP for 10% vat

27 Responses to “NFP pounces”

  1. Aunty Nur Says:

    Well look at the bright side of things! Khaiyum’s income has increased by 950% since 2006, so a price inflation for rice,oil and sugar does not really matter to him. And he eats very little of these items anyway. Its more like foie gras and caviar on his menu.

  2. momo Says:

    It is important that credible elections are being held in Fiji and that election results are accepted by the stakeholders. Minor leaguers such as Beddoes and Chaudhry made all the noises you’d expect from desperate opponents trying to dislodge a power-drunk giant. The opposition claims that Bainimrama has consistently lied about all sorts of things including election dates, the role of the military after the coup and the exclusion of members of his interim regime from standing in elections. But it is not a matter of what is true that counts, but what is perceived to be true. Bainimarama held a very firm grip on the media and controlled the narrative about his rule very effectively, using international advise from professional spin doctors such as Qorvis. It is safe to assume that the perception of the public about the truth is in his favor.

    But it will be the economy stupid that matters at the end. And however hard he tries to shrug off Western opprobrium, Mr. Bainimarama is not immune to the damage being done to his reputation and more importantly to the Fijian economy. Even modest unrest after dubious election results will be provoking capital flight, choking foreign investment and slowing an economy that has flat lined between 2007 and 2012 and just begins to see some sign of growth. Laden with considerable debt service, Fiji would struggle to stay afloat if the modest growth reported for the last year cannot be sustained. To count only on the Chinese to step into the breach is very risky indeed. As many African nations have learned, the Chinese are not the benign development partner who seeks a fair deal with a developing nation. They are pernicious predators trying to get heir hands on natural resources and geopolitical leverage. My advise for Bainimarama would be to try an accommodating and conciliatory approach, stop barking orders and start to act as a good politician, something that he may despise. But the fact is he has become one a couple of years ago, albeit not a good one.

  3. anita Says:

    I read with great interest Biman’s assessment on inflation.

    As a keen follower of politics but with some basic understanding of economics, I find his comments amusing.

    On one hand, Bimans wants to remove the commerce commission (CC)and on the other hand complains about high inmflation. Isn’t CC regulating prices and keeping it down to stop businesses making exhorbitant profits.

    As a known academic, Biman knows that the rise in prices is largely due to 2 factors beyound the control of the regime. That is rise in global commodity prices which reached record levels post 2006 which food and oil prices sky roketing. Secondly, the devalution of the F$ as a direct consequence of high import bill and reduction in foreign reserves.

    What Biman does not provide is what policy measures he will introduce to reduce. In fact, his only soluton of removing CC will increase inflation rather than reduce inflation.

  4. tualeita Says:

    The 60% rise in the cost of food is way too much when compared to the increase in the global commodity prices.

  5. james Says:


    Just check the price of oil which rose almost 300%, the Food index, dairy prices and almost 50% strengthening of the NZ$ and Aussie and you will know why prices rose.

  6. basic Says:

    James you miss the point. Since 2006 Fiji’s exports have been declining whilst imports have continued to rise.

    In effect Fiji has been spending more than she has been making because the lack of exports means that there are less jobs created and more unemployment means oversupply of labour drives low wages.

    Low wages (real wages has fallen massively since 2006) plus less exports and more imports = massive deficit (it now stands at 3.1 billion which is the first time ever in Fiji’s history it has gone so high as in the past it never reached 2 billion as we were making exports sufficient to sustainably cover our imports).

    Massive deficit has to be funded from somewhere i.e loans

    Loans have to be paid from somewhere i.e Taxes on food.

    Food is the easiest thing to tax because people can’t do without food. Its a sure shot money maker when you tax it.

    Hence why VAT collections from consumption accounts for the majority of the Government tax collections. Basically almost 60%.

    Net result ?

    Low wages, high cost of living.

  7. james Says:

    Basic, where did you study economics? Or did you do home economics?

    Let’s get the facts right.

    Fiji’s exports has more than doubled to above $2b in the last 6 years. Imports also rose due to higher commodity prices as well as higher economic activity in the past 4 years.

    Fiji’s trade deficit is $2.3b and not $3.1b. However, what we should look at is the overall balance and not trade deficit. What this means is that tourism earning remmitances and FDI inflows more than offset the trade deficit.

    As for VAT, it did increase from 10 to 15% so it contributed 5% to inflation. The bulk of the increase is due to imported inflation which stated earlier is 50%.

    The govt actually reduced import duty to contain the inflation, otherwise it would have been higher.

  8. kaput Says:

    Stop lying James

    These are the Bureau of Statistics own figures.

    International Merchandise Trade Statistics, Annual 2013

    Provisional data for 2013 was :
    •total imports $5,206.2 million
    •total exports $2,044.9 million.

    Compared to 2012, imports increased by $1,172.2 million (29.1%) while total exports decreased by $146.4 million (6.7%).

    The 2013 international merchandise trade deficit amounted to $3,161.3 million compared to $1,842.7 million a year earlier.

  9. truth Says:

    Trade deficit hits record $3.16 billion
    May 15, 2014 02:56:29 AM

    Fiji’s trade deficit grew again last year to a record $3.16 billion as the country’s imports jumped and exports continued to decline.

    Imports stood at $5,206.2 million while exports were $2,044.9m, according to provisional stats released by Stats Fiji.

    Compared to 2012, imports increased by $1,173.2m while total exports decreased by $146.4m.

    Even accounting for the purchase of the Airbus aircraft for $1.09 billion by Fiji Airways, the 2013 trade deficit was still much higher than $1,842.7m a year earlier.

  10. kaput Says:

    Domestic exports dropped to 976, 490.

    Re-exports was around 1.068 billion.

    See statistics bureau website.

    So where is that “imported inflation” figure from James ?

    Source ?

  11. James Says:


    Sorry, last year’s figures are inflated because of the 3 airbus imports by Fiji airways. This one off large imports is not imported every year so you need to exclude them in your analysis.

    Secondly, compare exports with 2006. If you excluding re-exports from exports, you must adjust imports as well. Why do you ignore this basic and simple thing.

    Lastly, I said look at total or overall balance of payments. You will notice that fiji’s foreign reserve has risen and that means that tourism earning, remittances and FDI offset the trade deficit.

    By just looking at the trade balance, its like making a conclusion on a rugby game when its only half time.

  12. James Says:

    Sorry, so the higher deficit last year, even by your own definition is not bad as it reflects new invesments by fiji airways.

    Secondly, small open economies will see a rise in imports when the economy is growing.

    Maybe, you would like to google that as well

  13. kaput Says:

    James you haven’t accounted for the 20% devaluation.

    That export figure for 2013 when accounting for the 20% devaluation is less then what was exported in 2006 (in real terms).

    And when you break it down to what constituted domestic exports (i.e the real value added manufacturing work component done in Fiji) it is only 900 million which when accounted for the 20% devaluation is actually less in real money terms then what was domestic exports in 1999, which was 900 million as well.

    The 2 billion export figure is inclusive of re-exports, which are essentially re-exports of things like Griffens biscuits from Australia and Toyota spare parts from Japan to the islands and leather shoes from India to the islands etc etc etc. None of it constitutes any sort of manufacturing value added component in Fiji, save for logistics involved with shipping in and shipping out.

    Even so, without those Airbus planes that Deficit still stands at way above 2012 figures. It still comes out at 2.07 billion for 2013, minus the Airbuses.

    Its not a matter of Google figures. Its a matter of facts, as published by the Bureau of Statistics.

  14. basic Says:

    Bottom-line is decline of domestic exports in real terms means less jobs = high unemployment demand on low supply jobs therefore driving low wages.

    Less domestic exports and high imports means big deficit must be funded from somewhere.

    There’s less of a domestic export manufacturing capacity producing less income and less jobs as needed to sufficiently grow a broad tax base

    So you tax food.

    Tax food with VAT.

    900,000 plus people have to eat.

    Tax consumption and make it 60% of your Government income base via VAT.

  15. james Says:


    Its seems you don’t get the full picture. A trade deficit is not a bad thing. Imports of aircraft or investment goods is not a bad thing.

    Secondly, if you discount the exports by 20%, than do the same thing to imports. Our imports are twice the value of exports. Hence, a 20% adjustment to imports would significantly lower imports relative to exports (check check check).

    My point that I have said over an over again is pls do not make conclusions based on the trade deficit alone. You must look at the current account and the overall balance. And once you look at these 2 accounts, you will note a reversal of the trade deficit.

    By the way, Prof Biman quoted Vat collection as 70% of total govt revenue in one of his recent publications. This was absolutely wrong. You figure of 60% is still on the higher side (check check check).

  16. kaput Says:

    FRCA sets down two figures in its 2013 revenue collection statement. One for VAT and one for Trade taxes. They both apply to the cost of goods (and food) coming into the country. Add them up 751 million plus 442 million = 1.193 billion.

    I don’t need to set out the percentage to show that 1.193 billion is 64% of 1.86 billion do I ?

    That is why I stated that 60% rounded off figure. VAT as a consumption tax plus Customs duties on imports.

    The figures are at this site You can check and verify.

    You can see clearly VAT standing at 751 million of that 1.193 billion. In other words we are looking at consumption as driving this deficit and not growth in productivity or exports because that’s decreased between 2012 and 2013.

    The reason why these figures are important is twofold. They show the state of the value adding components of the economy (i.e the value adding manufacturing sector which drives exports) and they give a picture of why unemployment is not coming down.

    And ultimately they explain why the Government can’t repair the bridge smack bang in the centre of the Suva CBD for lack of funds.

    Do I have to make it any clearer ?

  17. james Says:


    You really kaput. Use your brains.

    The components of taxes are:

    Vat (domestic and import)

    Import duty

    Personnel taxes (paye)

    Corporate taxes

    Frca collected $2b in taxes last year.

    Check check your %.

    Go read their press release.

  18. Wingles Says:

    James. Where do you suggest we see the current account and overall balance?

  19. james Says:


    FBOS, IMF, ADB and reserve bank

  20. Truth and Nothing Else But The Truth Says:

    basic truth james
    what a bunch of morons all of you
    the basic truth is Bai is a traitor who used guns to rob us, bribe the people with goods he stole and now after bribery wants the beneficiaries of bribery to vote him.
    Know sure why you morons waste time with economic theory when the truth is the truth

  21. kaput Says:

    Bureau of Statistics shows National average CPI per annum was the highest in 2011 at 7.3%.

    Since then it has reduced to 3.4% in 2012 and then to 2.9% in 2013. So where is James getting his “imported inflation figure” from ?

    Bureau of Statistics own figures show that the CPI averages have come down which means that the reason why people are concerned about the cost of living is because wages have regressed in real terms (and unemployment has not come down) so that even as inflation has come down it hasn’t made a difference to the cost of living in real terms.

    Cannot blame “imported inflation” for the high cost of living. That is not supported by the facts.

    And it is also borne out by the heavy loading on consumption taxes which the Government now relies on to fund itself.

    High unemployment and low productive export sector simply means a narrower income generating base for income tax.

    So you shift the tax loading to consumption. Everybody has to eat. Tax food. Tax consumption.

  22. basic Says:

    The fact that there has been no adjustment for inflation in relation to wages since 2007 is significant.

    In 2009 the CPI average rise was 3.2%. In 2010 it was 3.7%. In 2011 it was 7.3% and in 2012 it was 3.4% and in 2013 it was 2.9%.

    During that whole period between 2009 and 2013, and even going all the way back to 2007 there has been no adjustment for cost of living done for wages.

    So the 10% increase in salaries of the civil service announced earlier this year is still short of a few saqamoli considering the CPI trend since 2009.

    In fact that 10% comes nowhere near breaking even with that CPI rate of growth – and this explains why even with the “pay rise” there is still discontent with the cost of living.

    Its a significant distortion.

  23. ex-RBF Says:

    This is all bullshit debating on the basis of very flimsy data and information.

    IMF, ADB and WB all largely rely on FBOS, MOF, FIRCA and RBF data as official sources of the authorities. Read their reports carefully, it is always qualified with a reliability caveat. They are not stupid to take all this crap manipulated data from these incompetent, spineless and bumsucking authorities in the regime. It is no rocket science that Fiji has fallen far below the trajectory built up pre-2007, and this is in no small measure attributed to the deliberately manipulated information and advice (to save their big arses, rather than offer professional ones) given by these incompetent authorities in RBF, MOF, FBOS and FIRCA.

  24. james Says:

    Kaput, Basic and ex-rbf

    You are looking at average inflation rate rather than the components of inflation.

    Look at the different categories and the goods in those categories.

    Anyway, where was the price of crude oil in 2006? Around US$50. Where is it now? Above US$100. It peaked at almost US$200. So oil prices have increased by more than 100%. When oil prices increase, what happens to the price of other goods? I donhave to telll youi that price of taxi, bus fare and electricity goes up. When trasportation cost goes up, price of most if not all goods go up.

    Check the food price index, you will note if you can check the right index that this has risen as price of cereal, wheat, dairy products have all gone up.

    With regards to inflation vs wage increase. Govt increased the tax threshold from $6000 in 2006 to $16500.

    M sure you can calculate the savings or higher income. Secondly, govt gave a 23% pay rise this year plus 3% last year so when you add this to the reduction in tax payable, people net pay has risen by approx 50%.

    Lastly, pls check the import tarrif in 2006 which was around 27% on food and now is 5% or less.

    But if you chose to see half empty cup, that’s your choice.

    However, the choice for the election is very clear. It Fiji First first and foremost.

  25. basic Says:

    “So oil prices have increased by more than 100%. When oil prices increase, what happens to the price of other goods? I don’t have to tell you that price of taxi, bus fare and electricity goes up.”

    As a general proposition that is valid but as an evidence based assessment in relation to the Fiji Government’s own CPI figures for the last 4 years it is not borne out James.

    So how do you explain that ?

    The Government has had fuel price control orders in place James – which means that the margins on fuel pricing are calibrated so as to prevent inflation within the economy. That is what the Government has been doing with the Commerce Commission since 2009.

    Check it out

    Read up and update yourself James. Blaming it on the fuel is a convenient pretext for avoiding the fundamental questions (and issues) surrounding these fiscal distortions, but the evidence speaks for itself.

    Facts not propaganda James.

  26. basic Says:

    “Check the food price index, you will note if you can check the right index that this has risen as price of cereal, wheat, dairy products have all gone up.”

    James you have to look at the import price index to work that out.

    The high point for cereals was in 2011 – at 109.7 but since then its come down – been reducing as a matter of fact. As at 2013 it was 102.7 which is 0.2 above the September quarter of 2008 100 points baseline

    So where is that parity you are referring to ? Those cereal prices are coming down, not going up. So the price of the flour going into making Jone’s parcel of roti should be going down, not up.

    Sure Diary prices are going up. That’s true and which is why most homes in this country drink tea draunimoli today. Its gone up 68.2 points about the 100 baseline of 2008 but as a weight of the total 1000 weight in that basket its only 19.6 barely a blip.

    The heavy loading comes from aviation fuel and the industrial diesel. Those go into the Airbuses and the FEA generators. Unleaded petrol is only 37.7 of the 1000 weight in that basket while automotive diesel is 24.6 of that 1000 weight. So figure it out – where’s the real loading on the economy ?

  27. kaput Says:

    “With regards to inflation vs wage increase. Govt increased the tax threshold from $6000 in 2006 to $16500.”

    You are working from a devalued baseline James.

    Factor in that 20% devaluation and the fact that this is a heavy import economy because those are two key variables to determining the real impact of that rise in the minimum tax threshold.

    Factor in also the wage cuts of 15% which took place in 2007 plus the 2.5% rise in VAT from 12.5% to 15%.

    Lay it out James – lets not be selective with facts. If you want to do it go the whole hog.

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