RESTRICTED Report No. EA- 1 7 2 a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as. representing their views. INTERNATIONAL BANK POR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE ECONOMY OF FIJI June 10, 1968 Europe Department CURRENCY EQUIVALENTS 1 Fijian Pound (EF) = US$ 2. 296 US$ 1 EF 0. 435 1 EF Estg. 0.957' Estg. 1 = EF 1. 045 TABLE OF CONTENTS Page Basic Data i-iii Summary and Conclusions iiii I. INTRODUCTION The Country 1 History and Government 1 Population and Living Conditions 3 II. STRUCTURE AND GROWTH OF THE ECONOMY National Income, Capital Formation and Employment 5 Land Tenure 7 Sugar 7 Other Agriculture and Livestock 9 Forestry 11 Fishing 12 Mining 12 Manufacturing Industries 13 Tourism l Basic Services 15 III. FINANCE Balance of Payments 18 Money and Credit 20 Government Current Revenue and Expenditure 22 Government Investment Expenditure 22 IV. PROSPECTS FOR ECONOMIC DEVELOPMENT Growth Prospects 24 Development Plan and Outlook for Public Finance 27 Balance of Payments Outlook 29 Some Basic Policy Requirements 30 Eligibility for Bank/IDA Assistance 30 ANNEX A -- Land Tenure STATISTICAL APPENDIX MAPS This report is based on the findings of a mission to Fiji in November 1967, consisting of Elio U. Gonella (Chief) and Martial M. van Gent (Agriculturist). Marinus van der Mel also contributed to the report. BASIC DATA Area: 7,055 square miles Population (mid-1966): 477,500 of which, in percent: Indians 50.5 Melanesians 42.h Europeans 2.2 Others 4.9 Rate of growth, 1956-66: 3.3% per annum Population density: 68 per square mile Political status: British Crown Colony with substantial degree of internal self-government. Gross national product (at factor cost; rough estimates): Average 1963-65: LF 51.5 million 1967: LF 52.4 million Per capita GNP 1967: about US$240 Gross domestic product (rough estimates): Rate of growth per annum (current prices): 1952-62: about 3 percent; 1963-65: about 6 percent; 1966-67: presumably negligible. Average 1963-65 at factor cost: LF 54.h million of which, in percent: Sugar sector 27 Mining 2 Subsistence sector 12 Construction 7 Other agriculture 10 Transportation 8 Other manufacturing 3 Other 31 Percent of GDP at market prices (rough estimates) 1963-65 Gross investment 18.3 Gross domestic savings 19.0 Investment income payments 4.5 Deficit on goods, services and remittances 3.8 Government current revenue 19.0 Resource a/ as percent of investment (rough estimate): 22.6 1/ Difference between gross investment and gross national savings (i.e. after payment of foreign investment income). - ii - Money and credit (Currency Board system) End of 1966 1960-66 (hF million) (Rate of growth per annum) Total money supply 11.9 2.4% Time and savings deposits 7.1 10.1% Commercial bank credit to private sector 5.2 5.0c Other lending to private sector 0.6 7.3% Prices (rate of increase; rough estimates): 1966 1960-66 (Average) Retail prices - 2.65 Import prices 1.7% 0. Public sector operations 1966 1957-66 (bF million) (Rate of growth per annum) Government current receipts 12.5 9.0% Government current expenditure 11.9 7.2% Surplus 0.6 1/ Government capital expenditure 3.9 11.5 (1,F million per annum) Total external assistance to public sector 1.1 0 External public debt (in US$ million) Total debt outstanding (end of 1967) 4.6 Total annual debt service 0.4 Debt service ratio (percentage of total foreign exchange earnings) 0.6% Balance of payments (in US$ million) 1963-65 Domestic exports (f.o.b.) 50.7 Re-exports (f.o.b.) 7.8 Total exports (f.o.b.) 58.5 Imports (c.i.f.) 64.5 Net invisibles 0.2 of which investment income (net) 6.8 Net current account balance -6.2 (Surpluses in all years since 1958. - iii - Commodity concentration of domestic exports 1967 1960-67 Sugar and by-products 70.0% 71.0% Coconut products 9.8% 14.1% Gold 9.3% 8.5% Gross foreign exchange reserves (in US$ million) End of 1966 2! End of 1961 Liquid assets 17.9 0.8 Investments (including currency backing) 17.0 18.2 External financial assistance (in US$ million) 1966 1962-66 (Average) Total disbursements Soft assistance (U.K. grants) 2.8 3.0 Hard assistance (U.K. loans) - 1.1 1/ About 56% of total reserves were government holdings, including currency backing,and were equivalent to 3 months' current payments. SUMMARY AND CONCLUSIONS 1. Fiji, a British colony, is an archipelago in the south-west Pacific, on the main routes connecting Australia and New Zealand with North America. About 90 percent of the land area of 7,055 square miles is taken up by the two largest islands, which are mountainous and culti- vated mainly along the coasts. 2. The population of almost 500,000 is growing at a rate of 3 per- cent per annum. Birth rates have slowed down rapidly since 1961, follow- ing strong government action to control population growth. Health con- ditions are good and mortality rates low. The population is multi-racial. Slightly more than half are of Indian descent, 42 percent are Melanesians (native descendants) and the remainder of European and other origin. Melanesian traditional customs still hinder personal initiative and the building up of individual property. In spite of basic differences in economic position, relations between the two main groups are good, and competition among their members may stimulate social and economic evolution. Literacy is substantial, both in English and in the two standard languages, Fijian and Hindustani. 3. Fiji has attained a considerable degree of self-government. The 1966 constitution introduced a majority of elected members in the Legis- lative Council and full adult suffrage, although not on a basis propor- tional to numbers of voters. A full common roll electoral system, advocated by the predominantly Indian "Federation" Party, is strongly opposed by the multi-racial majority party, now in power. After elections at the end of 1966, the first Council of Ministers was appointed in September 1967. At present, little demand exists for in- dependence. 4. The economy depends largely on a well-organized and highly com- petitive sugar industry, which provides more than two-thirds of exports and over one-fifth of GDP. Coconut oil and gold are the other most important products accounting for about 1 and 9 percent of exports. Bananas, rice, cocoa and tobacco are grown in small quantities. Exploitable forests are limited, but there is a considerable commercial forest potential, up to 3,000 square miles of land having no competing agricultural claims. Subsistence farming accounts for about one-tenth of GDP; its share decreased by one-half since the early 1950's. The economy is very open; exports and imports of goods and services equal each on a trend basis up to one-half of GDP. Net factor income paid abroad was 4.5 percent of GDP in 1963-65. 5. Only one-quarter of the total population is engaged in economic activities. The low share is explained to a considerable extent by the youth of the population. Of this active population, over one-half is employed in agriculture, including about one-fifth in pure subsistence farming. Permanent wage earners are less than one-quarter of the active population. Unemployment is substantial and underemployment wide- spread. Generally low labor productivity results in a preference for labor-saving production methods in industry and construction. - ii - 6. A high proportion of land, nostly of limited agricultural potential, is owned communally under customary tenure by some 6,600 Melanesian clans and is inalienable on a permanent basis. The practice of leasing has proved a satisfactory substitute to transfer of ownership. Some unused freehold land is likely to remain undeveloped unless measures are applied to force it into productive use. 7. From the early 1950's through !962 sugar exports increased only moderately and the growth rate of national output in real terms hardly exceeded that of population (3.2 percent per annum). Domestic product increased sharply together with sugar earnings in 1963 and 1964 and fell slightly to about LF 60 million in 196$. Reduced export earnings in 1966-67 were compensated by increases in tourism, construction and services. In 1963-64, GNP per capita was about one-tenth higher than in 1962. Population growth reduced it to about $240 in 1967, little higher in real terms than in 1962. 8. Fiji's sugar accounts for less than one-half of one percent of world output. Domestic production is regulated to avoid surpluses that would have to be sold on the free market. After the International Sugar Agreement quota provisions were suspended in 1962, Fiji was able to expand exports to its traditional markets and benefited substantially from the reallocation by the United States of the Cuban import quota. Fiji's sugar is sold at differentiated prices, the higher prices being received under preferential agreements with the United Kingdom and the United States. 9. Manufacturing of light consumer goods increased rapidly in the last five years, but is still small. Industrial expansion is handicapped by the small size of the market, a largely unskilled labor force and the lack of local raw materials. 10. Tourism has grown rapidly since 1961, favored by the general increase in visitors to the south-west Pacific area, and is becoming a major factor in economic development. Foreign and local capital is increasingly invested in hotels, with substantial assistance from the Government. 11. In the last 10 years the Government has been able to realize growing budget surpluses on current account. In 1956-65, two-thirds of government investment expenditure was financed from domestic resources and one-quarter through grants from the Uhited Kingdom. Only one external loan of LF 2.2 million was obtained, from the United Kingdom. 12. The Goverent is aiming at diversifying the econony by develop- ing crops and other activities beyond sugar. Prospects for increasing sugar exports are liwited. In the short rtn the test prospects are in tourism, which also offers most promise in providing additional employ- ment and stimulating the development of other industries. In the very long run, forestry can make an important contribution. Agriculture, besides providing food for the growing population while reducing import needs, can contribute to diversification by a rise in the production of - iii - copra and, to a lesser extent, of other export crops. The overall rate of growth of the economy could accelerate to close to 5 percent per annum over the next several years and reach a slightly higher rate thereafter. 13. Under the existing Currency Board system, government investment is kept automatically within the limits of available finance, including Treasury balances and external loans. A sound balance of payments is therefore likely to be assured as long as the confidence in the economy of private investors is maintained. 1h. Fiji's external public debt at the end of 1967 was equivalent to about $4.6 million. The additional external borrowing proposed through 1970 would bring the debt service to 2-2.5 percent of present foreign exchange earnings, and the latter are likely to increase. In view of this low debt service ratio, the country may be regarded as creditworthy for Bank lending, with the guarantee of the United Kingdom. 15. Fiji's past economic policies have been satisfactory. A number of important uncertainties result from the very strong dependence on sugar, the need for continued external assistance, and possible complications, owing to the racial structure, in the process tcward more self-government. A deterioration of racial relations, if it were to ocaur, could have im- portant repercussions on private foreign investment and the balance of payments, including tourism. Another weakness is the already substantial level of unemployment which could create the need for more government spending in the future. In view of these circumstances, and of Fiji's relative poverty, the country may in the future also become eligible for IDA assistance, although it cannot be considered eligible at present. The situation should be kept under review. THE ECONOMY OF FIJI I. INTRODUCTION The Country 1. The British colony of Fiji is an archipelago in the center of the south-west Pacific islands area, on the main routes connecting Australia and New Zealand with North America. About 90 percent of the total land area of 7,055 square miles is taken up by the two largest islands, Viti Levu and Vanua Levu, which are 37 miles apart. The main island, Viti Levu, comprises nearly three-fifths of the total; it is almost as large as Jamaica, and is the third largest in the "open" Pacific, ranking after New Caledonia and Hawaii. 2. Most of the archipelago is of volcanic origin and very mountainous. One-sixth of the land is largely flat, another one-sixth rolling and hilly and the remainder steep. Soils generally have been leached and are of low fertility; cultivation is mainly restricted to the coastal fringes. The agricultural potential is limited; 12 percent of the area is arable, another 20 percent is suitable only for tree crops or intensive grazing, and a further 60 percent only for forestry or extensive grazing. 3. Water is abundant, but difficult to control and use. Minerals -- gold, manganese, copper, bauxite, phosphates -- have not yet been fully explored. Recent geological mapping and prospecting have moderately extended known ore deposits. 4. Climatically the coastal and lower areas are suited to a wide range of crops. Fiji has a tropical climate without extremes of heat and humidity and tempered by south-east trade winds. Maximum temperatures range from 780 to 880 F and minimum temperatures from 650 to 750 F. High central ranges divide the main islands in wet and dry zones. The south- eastern windward areas, with heavy rainfall of about 125 inches a year, are thickly forested. On the dryer north-western leeward lands, with rainfall of about 75 inches, extensive areas have only sparse vegetation damaged by fires, overgrazing and irregular rainfall. Really serious and destructive hurricanes seldom occur, but storms inflict damage to limited areas in about one out of three years. There is no record of volcanic eruptions, but slight earth tremors are not uncommon. History and Government 5. Tasman first sighted the Fiji islands in 1643, but only in 1789 Captain William Bligh recorded most of them. The first significant con- tacts with Europeans came early in the nineteenth century. In 1858, native Melanesian chiefs, desiring to put an end to local strife, made an offer of cession to Great Britain which was declined. Thereafter, the area attracted many settlers, mainly from Australia and New Zealand, and government problems became even more difficult. In 1874, after protracted negotiations, Great Britain reluctantly accepted a second offer of - 2 - cession made by settlers and native chiefs, after they unsuccessfully had tried to govern the country themselves. 6. Fiji's native population is of Melanesian origin.-/ Largely as a result of introduced diseases, it was reduced by more than one-half during the nineteenth century to well below 100,000. Between 1880 and 1920, 90,000 Indian indentured laborers were brought in to satisfy the increased labor demand on European plantations. After the indenture system was abolished in 1920, the majority of Indians elected to remain, taking up small leases. Since then, the natural growth of the Indians has been much higher than that of the Nelanesians, and since 1945 the latter have been outnumbered. The reluctance of Indians to work for wages, together with declining prices and storm damages, caused a massive withdrawal of Europeans from estate farming since the 1920's. The Australian based Colonial Sugar Company, owner of the largest estate (about 75,000 acres), boldly decided to lEase its lands in plots of 10 acres to Indian farmers who would undertake to grow cane. This unique system of small farm cane growing still continues today and proves successful. 7. Fiji was given its first constitution in 107. It provided for a Governor appointed by the Queen, an advisory Executive Council composed of civil servants ex officio, and a Legislative Council, comprising civil servants and representatives of the main ethnic communities (Europeans, Melanesians and Indians). Elected representation in the Legislative Council was granted successively to the European, Indian and Melanesian groups and since 1937 they have been given an equal number of seats. The strong difference between Indians and Melanesians in their economic, social and political position (see paragraph 16) has been an obstacle to granting the country more internal self-government and a common roll electoral system on a proportional basis. 8. Important steps in this direction were made with the 1966 con- stitution, introducing a ministerial system, a majority of elected members (36 out of 40) in the Legislative Council, and the election of nine of them by persons of all communities on a common roll. Nine Melanesians, nine Indians and seven Europeans are elected on distinct rolls for each cominity. Two members of the Legislative Council are elected by the Melanesian Council of Chiefs (see paragraph 11) and four members are public officers. All minority ethnic groups (mainly Chinese.and immigrants from Pacific Islands) have been enfranchised and e- lectoralqualifications concerning property, income and literacy have been dropped, thus achieving full adult suffrage. 1/ Throughout the report, the native population is referred to as lielanesians", although an important strain of Polynesian blood makes them a distinct race - the Fijian race. The term "Fijians" is used to indicate nationality and therefore applies to persons of any race born in the country. - 3 - 9. The outcome of the general elections held at the end of 1966 was a clear party division, reflected in the appointment of a Leader of Government Business and a Leader of the Opposition in the Legislature. The multiracial "Alliance" Party won a large majority and together with the appointed public officers was constituted Government side. The pre- dominantly Indian "Federation" Party became the opposition party. The first Council of Ministers was appointed by the Governor in September 1967. It includes four Europeans, three Melanesians (of which one is the Chief Minister) and one Indian. 10. There is no great demand for independence. The main political issue is the common roll electoral system, advocated by the "Federation" Party. This party finds its leaders and main support among Indian professionals, shopkeepers and money lenders. These groups are far from enjoying the sympathies of many Indian farmers, often heavily indebted to them. Melanesians, with the support of Europeans, Chinese and other minority groups, strongly oppose the introduction of the common roll elec- toral system, fearing it could bring domination by the Indians. These concerns are the basis of the "Alliance" Party, a loose coaliticn of political organizations embracing all races and including also a number of Indians who oppose the leaders of the "Federation" Party. 11. Fiji's central public administration is efficient and well organized. Its civil service, which includes many nationals in high positions, is competent and dedicated. In addition to the central govern- ment there is a special administration with jurisdiction over all native Melanesians set up in 1876 to provide justice and administration locally and in accordance with the customs of the natives. Highest organ is the Council of Chiefs; executing body of this Council is the Fijian Affairs Board. A Commission of Inquiry (the Burns Commission of 1959) felt that the Melanesian administration was inefficient and tended to continue an outdated communal system isolating Melanesians. The Commission recommend- ed gradual replacement of the special administration by a multiracial local government. In 1966 and 1967 a number of reforms were introduced, which represent the first steps in this direction. The reforms intend to bring the Melanesian Magistracy more directly under the Judiciary and to abolish the special Courts as soon as possible. Population and Living Conditions (Tables 3-5) 12. At mid-1966 total population numbered 477,00. Slightly more than half were Indians, almost all descendants of the indentured laborers. Melanesians (native descendants) accounted for 42.4 percent of the total. Europeans represented only 2.2 percent of the total and the other racial groups (part Europeans, Chinese and other Pacific races) are even smaller, Nearly three-quarters of the population live on Viti Levu and 17 percent on Vanua Levu. More than 100 other islands are permanently inhabited. In 1966, the average density was 68 persons per square mile of land and 55 per square mile of arable land. 13. Immigration is restricted severely and emigration is negligible. The rapid increase of population (3.3 percent per year in 1956-66) is therefore almost entirely due to natural causes. The rate of natural growth of total population went up after 1936 because of higher birth rates and a rapid fall in mortality rates. After a peak of 3.4 percent in 1961, the trend was reversed; birth rates decreased, while death rates remained almost constant. Nevertheless, in 1966 the natural growth rate of total population still was nearly 3 percent. The population is remarkably young; 63 percent of the total is under 25 years of age. 1. The decrease in birth rates has been influenced by strong Govern- ment action to control population growth. The crude birth rate reached a peak of nearly 4.2 percent in 1957 and was at 4.1 percent in 1961, when the legal minimum marriage age for all women was brought to sixteen years, thus increasing by two years the legal minimum for Indian women. The birth rate dropped to 3.8 percent in 1963, when the need for family planning was accepted as Government policy. A family planning campaign got under way on a large scale in 1964, and related services have been made available free or at a nominal charge, on a wide geographic basis, by all medical staff. By 1966, the birth rate had gone down to 3.5 percent. The Government's short-run target is a further reduction to 3.0 percent by 1970. 15. Over the years the different growth rates of the Melanesian and Indian groups have caused a radical change in the composition of the population. In 1921, shortly after the abolition of indenture, 61,000 Indians represented 38.6 percent of the total population, while Melanesians numbered 84,000 or 53.7 percent. Through 1966, the Indian group grew at an average annual rate of 3.1 percent against the Melane- sian at 1.9 percent. As a result, in 1966 2b1,000 Indians accounted for 50.5 percent of the population, while 202,000 Melanesians represented 42.4 percent. Differences in age and sex composition between Indians and Melanesians tend to increase the Indian share in total population. 16. There are striking differences in the economic position of the two main communities. Many Indians are prominent in business and in professions, while very few Melanesians have been successful in these activities. Of the most profitable crop, sugar cane, 92 percent is grown by Indian independent farmers, who sometimes employ Melanesians. The Indians developed in Fiji a much more individualistic way of life than in their country of origin, religious and caste distinctions playing a much less important role. The Melanesians are good-natured, well-mannered and extremely generous and there are no reasons to believe that they are sacon& to Indians in intelligence or potential energy. But their social organization, still heavily based on kinship and patriarchal authority, inhibits personal initiative and the building up of individual property. The Melanesians are gradually starting to realize these problems, and special customs are breaking down slowly under the impact of competition, new ideas and growing individualism. This process is favored both by the Government and Melanesian leaders, who are well aware of its importance for Fiji's future social stability. 17. Relations between the two main communities are remarkably good, in spite of the basic differences and the problem of land tenure (see paragraphs 29-30 and Annex A). Melanesians and Indians work well and peacefully together in factories under supervision of members of either race. Agricultural schemes with mixed participation of Indians and Melanesians have proved even more successful than purely Melanesian schemes, since Melanesians easily learn from the more experienced Indians and competition among participants in the scheme is more keen. There- fore, although the presence of two different racial groups complicates government, it also stimulates social and economic evolution. 18. The incidence of major tropical diseases is very low; thanks to an efficient health service and well run hospitals general health con- ditions are good. Fiji has one medical practitioner for every 2,500 persons, a ratio comparing very favorably with that in many other countries. Tuberculosis, with an annual incidence of 1.10 new cases per 1,000 population,continues to be a major problem; the incidence is much higher for Melanesians than Indians. 19. Of the several dialects spoken by the early inhabitants, one became the standard language among Melanesians after the first missiona- ries translated the Bible in it. A form of Hindustani is generally used among Indians. English is taught from the first year in schools. About 72 percent of persons aged 15 and over is literate in the mother tongue (Fijian or Hindustani) and 57 percent in English. The respective percentages are considerably higher for Melanesians (86 and 71) than for Indians (57 and t4). The special administration for Melanesians requires every Melanesian child between ages six and fourteen to attend school. Although this has resulted in a high literacy ratio among the Melanesians, relatively few have higher education, whereas the Indians, with lower average literacy, have a greater proportion of men who are qualified professionally. II. STRUCTURE AND GROWTH OF THE ECONOMY National Income, Capital Formation and Employment (Tables 6-10) 20. A severe scarcity of reliable statistics, especially on national accounts, limits the possibilities of quantitative analysis of economic trends. National accounts estimates are available only for 1951-53 and 1963-65. The former are the result of a special study; the latter are official estimates, but only tentative and still under review. Compara- bility of the two series is limited. Also, 1963 and 196 were exceptional years because of very high sugar prices. 21. Total production has fluctuated substantially over the years, largely owing to changes in sugar output and earnings. Pronouncements on the growth rate of the economy are hazardous, but it appears that from the early 1950's through 1962 the rate of increase in total output in real terms hardly exceeded the annual rate of growth in population of 3.2 percent. During this period income per capita therefore increased little, if anything. - 6 - 22. Since the early 1950's, the relative importance of primary production decreased, while that of the secondary and tertiary sec- tors went up. A related significant trend was the reduction of the share of subsistence output by one-half. The Fijian economy is very open; exports and imports of goods and services equal each on a trend basis up to one-half of the gross domestic product or more. 23. Agriculture (including subsistence output) accounted in 1963-65 for almost h0 percent of GDP and provided directly employment for over one-half of the active population. Subsistence output alone was estimated at over one-tenth of GDP and absorbed about one-fifth of the active labor force. Sugar cane, the predominating crop, represents almost one-half of agriculture's share in GDP and sugar accounts for about 70 percent of merchandise exports. The next most important crop is copra. Manufacturing, to a large extent sugar processing, contri- buted about 13 percent of GDP in 1963-65, construction 7 percent and mining, largely of gold, less than 2 percent. Services, including those related to tourism, accounted for one-third and public administration for 6 percent. 2L. A sharp increase in sugar prices and exports in 1963 (see para- graph 36) raised GDP by well over one-tenth in current prices, followed by a further increase of nearly 7 percent in 1964. In 1965 sugar earnings and total merchandise exports dropped LF 5.3 million, correspond- ing to almost 30 percent of sugar exports in 196h. GDP decreased by only LF 1.3 million to LF 60 million, however, because the contributions of manufacturing (other than sugar processing), construction and services continued to rise. Besides the delayed effects of the sugar boom, the growth of tourist expenditure in 1965 by bF 1.7 million was important. In 1966 and 1967 GDP presumably changed little; the loss in output due to reduced sugar and merchandise exports was probably com- pensated by a further increase in tourism and construction activity. 25. Prices increased moderately in 1963-6h and real GNP per capita was about one-tenth higher than in 1962. Retail prices rose sharply in 1965 and leveled off thereafter, while import prices rose moderately. Altogether, in 1967 GNP per capita, of the order of $240 at factor cost, probably was very little higher in real terms than before the sugar boom of 1963-66. 26. The shares of private and public consumption in GDP were about 68 and 13 percent, respectively in 1963-65, while those of private and public investment were 14 and 5 percent. Gross domestic savings accounted for 19 percent of GDP and net transfers of factor income to abroad were b.5 percent. The resulting external capital needs were about EF 2.5 million per annum or 4 percent of GDP. In 1963-64, the largest shares of fixed capital formation were absorbed by public utilities (36 percent), industry (20 percent, mainly in sugar process- ing), construction (19 percent) and transport and communications (18 percent). 27. In 1966 the active population was 126,000, about one-quarter of total population. Of these, about 68,000 were employed in agriculture, including some 26,000 subsistence farmers. Permanent wage or salary earners were approximately 30,000; total government employment amounted to about 1,000, half of which were permanently employed. The proportion of the active population engaged in subsistence farming fell from 28 to 22 percent during 1956-66. Total employment in primary production decreased from 61 to 58 percent. Unemployment increased nearly five times to more than 5,000 in 1966, equivalent to 4 percent of active population and 15 percent of regular wage earners. These percentages are high for an underdeveloped economy in which surplus labor also exists in the form of widespread underemployment. 28. Daily wages rates for manual workers were 16-20 shillings in 1966. From 1961 to 1967 wages rose on average less than 3 percent per annum, while the cost of living increased almost as much. Within the present wage structure, as it developed through collective agreements, arbitration awards or Wages Council's orders, unskilled labor is relative- ly highly paid, which reduces incentives for workers to improve their skills. This, together with generally low labor productivity, has resulted in a preference for labor-saving production methods. Low pro- ductivity is related to traditional customs and has proved surmountably by careful and patient labor management. However, staff and time available for this difficult task are often inadequate. Land Tenure (Tables 11 and 12) 29. The basic feature of the land tenure situation is the high per- centage of total land (83 percent) owned by Melanesian clans under customary tenure; this land is declared inalienable on a permanent basis. Most of this land has limited agricultural potential. The practice of leasing, mostly to Indians, has for the best lands proved a satisfactory substitute to transfer of ownership. Recent legislation has increased the safeguards for tenants and should correct many of the problems which had emerged in the past. A more serious constraint to full utilization of the relatively scarce good lands is the existence of reserved areas which may not be leased to non-Melanesians (see Annex A). 30. Some high quality freehold land is unused, or inefficiently used, especially outside the sugar cane areas and copra estates. Owners' absenteeism often precludes them from being potential users and they generally are unwilling to grant long-term leases or to sell unoccupied areas. This land is likely to remain undeveloped unless taxation or other measures are applied to force its bringing into productive use. Sugar (Table 14) 31. The sugar industry accounts directly for over one-fifth of GDP, more than one-quarter of total employment and one-third of that in manufacturing industries. Soil and climate are highly suited to cane production, although in restricted areas. Sugar became the major export in the nineteenth century. Output increased fairly steadily from - 8 - 162,000 tons in 1955 to a peak of 311,000 tons in 1965. The acreage under cane fell from 138,000 in 1958 to 126,400 in 1959, when culti- vation of lower quality cane was suspended in eastern Viti Levu. Since then, the acreage rose slowly to 132,000 in 1964, but was pushed up to 152,000 in 1964-65 in view of improved sales prospects. Of the total land under sugar, about 50,000 acres are now owned by the sugar milling company, which cultivates some 2,500 acres itself. Almost 90 percent of the country's cane land is on lease and practically all is cultivated by smallholders (15,600 in 1966) on farms averaging 10 acres. 32. Yields of cane per acre, while fluctuating with the weather, remained well over 20 tons in the last seven years, in spite of increased use of poorer lands. New high-yielding varieties of cane were developed and disease control and fertilizer use intensified. The rate of sugar recovery from cane increased from 11.3 percent in 1959 to 1.2 percent in 1966 and is among the highest in the world. 33. Since 1926, the Australian-based Colonial Sugar Refining Company (CSR) has been the sole sugar company operating in Fiji. In 1962, the CSR created a subsidiary, the South Pacific Sugar Mills Ltd (S3PS), to take over its four large factories. A narrow-gauge railway of 54D miles, operated by SPSM, carries to the mills about two-thirds of cane harvested; one-third is transported by trucks. Milling plants are highly efficient; their yearly output per man rose from 48 tons in 1956 to 83 tons in 1966. A LF 5 million expansion program was carried out in 1962-66. Total milling capacity is now about 380,000 tons of sugar for a normal season and storage capacity 90,000 tons. 34. The sugar industry is well organized. A modern laboratory, a cane breeding and disease control station and an experimental farm, operated by SPSM, carry out technical research, while the services of the Research Department of CSR in Sydney also are available. SPSM advises cane growers through over fifty field officers; these also co- ordinate cane harvesting and transport. The milling company also pro- vides fertilizer and crop finance to farmers. 35. Relations between cane growers and SPSM have been good since the establishment in 1962 of a Statutory Board with an independent chairman. With the authorization of the Board, SPS14 determines yearly the cane and sugar production targets for the next season. The total is allocated among farmers, each fanmer's share being stipulated in individual con- tracts. Marketing by CSR is highly efficient. The price to cane farmers is determined after sugar is sold, making allowance for milling costs and margins. The growers' share in earnings has over the years been around 60 percent; prices per ton of cane compare favorably with those in Jamaica and Mauritius. This system, while assuring a regular supply of high quality sugar, prevents overproduction. 36. Fiji's sugar accounts for less than one-half percent of world output. Up to 1962, the quantity to be exported by Fiji was limited by a quota fixed under the International Sugar Agreement (ISA) for the - 9 - British Commonwealth countries combined, and allocated among them by the Commonwealth Sugar Agreement (GSA). When the latter became effective in 1951, the British Commonwealth's total quota was 2,575,000 tons and Fiji's share 170,000 tons. The quota provisions of the ISA were sus- pended from 1962, enabling Fiji to increase exports to its traditional markets, the U.K., Canada and New Zealand. Reallocation of the export quota of Cuba to the U.S. gave Fiji in 1962 an extra quota of 35,000 tons. Fiji's export quota to the U.S. is now fixed through 1971, but would be reduced about one-half if Cuban exports to the U.S. would be resumed. The CSA quota for Fiji was revised in 1964 increasing it to 235,000 tons from 1966. The increase includes 11,000 tons reallocated from Rhodesia's quota. The new CSA quota is assured until 1974. Japan has agreed to buy from Fiji a minimum of 20,000 tons annually for three years beginning 1967. 37. Fiji's sugar is sold at differentiated prices. The quota of 140,000 tons for the U.K. under the CSA sells at a special price fixed for all dependent territories and defined as reasonably renumerative to efficient producers. This basic price is for 1966-68 L L3.10.0 per ton, f.o.b.; as an underdeveloped country, Fiji receives in addition about 1 4 a ton. The U.K. basic price is equivalent to 4.7 US cents per pound (5.5 cents before the devaluation of the British pound) and compares with the range of 3.25-4.35 cents which was the ISA target price for 1954-61 and of 4-5.5 cents put fonrard as a basis of discussion for a new ISA. The price paid to Fiji by the U.S. is the U.S. domestic market price less import duty (presently equal to L 5 per ton); this price was in 1966 some 10 percent higher than the basic price paid by the U.K. before the devaluation of sterling. The price paid by Canada and New Zealand is the so-called "world" price augmented by a tariff preference. Japan and Singapore, the other main buyers of Fiji sugar, pay the "world" price. During 1956-61 less than half of exports went to the U.K. and none to the U.S.; in 1965-66 about two-thirds of exported sugar were sold to these countries. Despite the impressive deterioration of "world" prices in the latter period, the average price of Fiji's exports remained the same as in 1956-61. Other Agriculture and Livestock (Tables 13 and 15) 38. Coconut Products. After sugar cane, coconuts are the second most important crop. Coconut products (largely coconut oil) accounted for about 1L percent of exports in 1960-67. Fiji's production of copra (before processing) is about one percent of present world output. Coco- nuts are grown on most islands, with a concentration on Taveuni and the southern part of Vanua Levu. Of the 163,000 acres under producing palms, 84,000 acres are owned and famed by some 12,000 Melanesian smallholders; the rest are plantations owned by Europeans and part Europeans (76,000 acres) and by Chinese (3,000 acres). Nearly all coconut farmers are also copra makers. Apart from small quantities used by local soap producers, most copra is purchased by the oil factory in Suva. The factory, Australian-oimed, has an annual capacity of 40,000 tons of oil, twice the current production. - 10 - 39. Copra production fluctuated around LO,000 tons over the last ten years, although it fell in 1965 and 1966 to 30,000 and 25,000 tons, respectively, because of hurricanes and drought. Output of oil export- ed mostly to the U.K., fluctuates around 20,000 tons per annum. Because of lack of care in the past, the coconut groves generally suffer from old age and high density of trees. Average copra output from Melane- sian groves is about four hundredweight (cwt) per acre against five cwt from plantations and eight to ten cut from the few well-run estates. High cost or lack of inter-island shipping has in many instances dis- couraged collection of nuts, contributing to stagnation in output (see also paragraph 66). LO. A government program for planting and rehabilitation of plantations was started in 1963; under it, subsidies of over EF 200,000 a year are given for thinning, clearing and replanting. By the end of 1966 over 40,000 acres had been planted, mainly in land development and settlement schemes. By 1980 copra output is expected to double to 80,000 tons; 20,000 tons of the increase should come from improved yields of existing plantations, 3,500 tons from replantings and 17,500 tons fron new plantings. hl. A Statutory Board assisted by an Advisory Council was set up in 1965, to fix coconut and copra prices on the basis of world prices, and to improve quality by grading. From 1961 to 1967, copra prices fluctuated between IF b7 and EF 70 per ton (Suva basic price). Recent world market prices exceeded bF 100 per ton, corresponding to a Suva basic price of LF 78 per ton. In several countries copra oil meets higher tariffs than copra, and the Board recently made some experimental copra ship- ments to help in finding the most profitable outlets for future increased production. 42. Bananas. At the beginning of the century, bananas were a planta- tion crop as well as a village staple. But output fell strongly due to soil exhaustion, the closing of the Australian market and competition of other crops. Today, export bananas are mainly a cash crop of the interior Melanesian villages of the wet zone of Viti Levu. The main export market is New Zealand. In the last ten years the area cultivated has remained at about 5,000 acres. Exports fluctuated widely because of weather, diseases and insect damage. In good years exports have reached 6,500 tons out of a total production of 11,000 tons, a level significant- ly lower than in the late 1920's when the population was less than half its present size. Low quality of production and difficulties in trans- port from the interior are the main obstacles to increasing exports. Since 1962, plantation scale production has been gradually introduced in south-east Viti Levu, under the management of the Fiji Development Company (see paragraph 91). Two hundred farmers are settled on the scheme, having ten acres each of which four acres are planted to bananas. Since 1965, the Goverment has promoted the establishment of plantations in areas near the port of Suva, to increase yields by technical super- vision and use of fertilizers and to increase quality by grading. - 11 - 3. Rice. Rice production has dropped from almost 20,000 tons in 1956 to about 10,000 tons in 1966 with acreage decreasing from 34,500 to 20,700. Imports of rice increased over the same period and amount now to about 10,000 tons per year. Fragmentation of landholdings, in- sufficient maintenance of drainage facilities, and too great dependence on rainfall result in very low yields (slightly over one-half ton per acre). Development possibilities are considerable but require major improvements on some 25,000 acres. 44. Other Crops. Cocoa of good quality has been grown for a long time, but it never developed into a major crop. Some new plantings have been carried out on settlement schemes. A major extension effort, to accompany the subsidy the Government is giving for cocoa plantings, is needed to interest farmers on a larger scale. Tobacco growing has ex- panded recently and the product is of good quality. Almost all of it is for local consumption, but exports are expected to increase. Passion fruit has had some recent development after two Australian firms started buying the fruits under contract, but marketing problems have developed lately. The acreage planted with root crops, staple of the subsistence sector, remains stable at about 36,000 acres. Production of maize and sorghum is increasing as a result of efforts to provide a substitute for imports; these products are used by a newly established poultry feed factory. 6. Livestock. In 1966 there were 160,000 head of cattle, one-fifth of which were working bullocks and another one-fifth cows and calves kept by cane farmers. In addition, there were 71,000 goats and 26,000 pigs. Most commercial meat and dairy production is in the hands of European farmers and is of high standard. Meat production shows a steady increase and now approximates 2,200 tons per annum. Meat imports (mainly mutton and corned beef) are also rising and are now 2,000 tons per annum. There has recently been some new interest in cattle raising on settle- ment farms and coconut groves. Milk production is also rising; the present level is around 30,000 tons per annum. Annual imports of dairy products have stabilized around 20,000 tons (in terms of liquid milk equivalent). 46. The poultry industry has expanded greatly in the last several years. Broiler chicken production meets local demand, but has some com- petition from imports. Pigs are being introduced by the agricultural services and a sheep research project has just started. Herds have benefited from a recently introduced program of tuberculosis eradication and, due to Fiji's isolated position, there are few other disease pro- blems. Livestock and dairy production have a considerable potential for expansion-and could make an important contribution to import substitution. To this purpose, proper incentives and extension will have to be provided by the Government on a larger scale than up to now. ForestrZ 47. Of the total land area, over one-fifth (1,600 square miles) is covered by exploitable forest, but only 960 square miles still contain - 12 - commercial stands in accessible sites. These could provide an annual production of about 3 million cu.ft sufficient to satisfy present con- sumption, but inadequate in the future. Few of the some 50 saw mills in operation are efficient and a much needed reorganization of the industry is now under way. Timber production is around 2.6 million cu.ft per annum; about 0.3 million cu.ft are exported and imports have been of the order of 0.6 million cu.ft per annum. 8. Preliminary research has indicated that pine and eucalyptus can grow in the dryer parts of the islands and mahogany in the wet areas. A pine and mahogany planting program of 4,000 acres per annum has been under way since 1961. This program, together with natural forest pro- duction, would provide for local timber needs over the next 30 years. There is, however, a much larger commercial forest potential. Up to 3,000 square miles of land unsuitable for crops or pasture, could support an annual planting program of 50,000 acres of soft and hard woods with an export value by the end of the century of at least 3F 20 million as roundwood, and a much higher one in sawn timber and processed wood. A UNDP study, lasting two years, is expected to start by mid-1968, to examine more closely the possibilities for forest planting and wood processing. Japanese and Canadian groups are being sounded out about their willingness to finance and manage new forests. Fishing 49. Fijians do not fish in the open sea, but fish in rivers and coastal waters (lagoons) for their own consumption. About 5 million pounds of fish pass through local markets annually, while imports for local consumption amount to 4 million pounds per annum and areincreasing. Rivers and lagoons cannot sustain much increased fishing and deep-sea fishing should be developed to meet consumption and reduce imports. Since 1963, a Japanese-based company, the Pacific Fishing Company Ltd, has been operating in Fiji from a freezing and storage base on the island of Ovalau. The company, which exports frozen tuna fish to Japan and the U.S., operates under special tax exemptions. Fiji derives only minor benefits from this enterprise. Mining 50. In 1966, the value of mineral production was about LF 2.1 million. The Emperor Gold Mining Company, which employs 1,880 workers, produced gLd and silver worth LF 1.6 million, representing over 9 percent of exports. Owing to rising costs of production and heavy expenses incurred in the exploration and development of goldfields, the company has found it difficult in the past to carry on operations. Governmett policy has been to assist with subsidies. The gold mines' potential is estimated at 25 years of exploitation on the basis of present production of three tons a year. Fiji still has an underdeveloped potential in gold and efforts are being made by the government geological survey department and the mining company to investigate new areas. - 13 - 51. Manganese exports, after a peak of LF 450,000 in 1957, steadily declined with the sharp fall in international prices and accounted for only UF 40,000 in 1966. Exploitation of other mineral resources is still in the stage of development and prospecting is being carried out by foreign companies. The outlook for copper is generally regarded as favorable. A Japanese consortium is engaged in an open-cut mining pro- ject and expects to ship 500 tons of copper concentrate a month to Japan for an estimated exploitation period of five years. Bauxite deposits of probably 10 million tons have been investigated by a Canadian company, but exploitation is unattractive under present market conditions. Phosphate deposits are present in the outer islands, but exploitation is barred by technical difficulties. Bulky and low priced construction materials (pumice, gravels, heavy sand), suitable mainly for domestic use, are available. Reef limestone and mudstone are increasingly used for cement manufacturing. Manufacturing Industries 52. Excluding sugar cane processing, manufacturing accounts for less than 5 percent of GDP and total employment. From 1956 to 1966, employ- ment remained almost stationary in sugar processing, but increased by 5 percent per annum in other manufacturing industries. In the last five years, manufacturing of light consumer goods increased rapidly, but is still very small; production is mainly for the domestic market and based on imported raw materials. The narrowness of the market seriously limits optimum plant efficiency. A cement factory, using local raw materials, was opened near Suva in 1962 and production reached 40,000 tons in 1966. Besides providing employment for about 80 persons, this plant eliminates cement imports which were F 222,000 in 1961. Expansion is planned. Also connected with the growth of the construction sector is the product- ion, recently started, of building components. 53. The Public Works Department carries out a variety of economic activities and is the largest employer with about 3,750 workers. It deals with road and bridge building, housing construction and maintenance, boat building and transport of government supplies to outer islands, vehicle maintenance and engineering work, lighthouse supply, reticulation of water in urban areas and supply of electricity to government services in same of the towns. 54. The Government has assisted industry through the granting of tax- free machinery imports, special depreciation allowances and concessions, tax holidays, some tariff protection and lending by the Agricultural and Industrial Loans Board. (see paragraph 90). In 1967, the latter was converted into the Fiji Development Bank, with considerably wider powers and functions which should allow it a more active role in promoting industry. The constraints on industrial development are, however, many and serious: the absence of local raw materials (apart from sugar, copra, tobacco and cement), the small local market, the relatively high wages in relation to labor productivity and the lack of manufacturing experience outside the few most important sectors. - 114 - Tourism (Table 16) 5$. Travel to Fiji increased steadily in the past two decades, the growth rate accelerating to 15.5 percent per annum since 1958, when jet aircraft were introduced. Tourists staying at least one day numbered 44,600 in 1966 and in that year were 23 percent of total travelers against 16 percent in 1958. The average stay in 1966 was 8.3 days, nearly half of tourists staying less than 4 days. Another 55,400 passengers on cruise- ships or scheduled liners spent ashore many hours. Total tourist spending in 1966 was about IF 5.6 million; net earnings of the tourist in- dustry were about one-quarter of this, the remainder representing imported goods bought directly or indirectly by tourists. The number of tourists grew especially rapidly during 1961-65, on average by 28 percent per annum. In 1966, the rise was 11 percent, affected by an airline strike and tight- ened overseas spending restrictions of New Zealand. The number of cruise passengers in 1966 went up by 33 percent. Incomplete data for 1967 indi- cate a further increase of tourists by 17 percent. 56. New Zealand, American and Australian tourists each account for about one-fourth of the total. Smaller numbers come from the U.K., con- tinental Europe and Canada. Fiji's temperate climate, many natural attractions and colorful and friendly population with a good level of education combine in meeting tourists' demand for both exotism and comfort. Nandi is by air four hours from Sydney and seven hours from Honolulu. The country is centrally located among the South Pacific islands and is one of the main transit points for travelers visiting the area. Fiji's rapid growth in tourism since 1961 was largely spontaneous, resulting from the general increase in visitors in the south-west Pacific area. Although in 196$ the number of visitors to Fiji staying 4 days or more (38,000) was far away from the 600,000 visiting Hawaii, it compared favorably with 17,000 to Tahiti, 13,730 to Samoa and 7,000 to New Caledonia. 57. Since 1965, the Government has taken a major step in assisting new hotel construction by providing a cash grant corresponding to 7 percent of capital expenditure (except land costs), and a special depreciation allowance resulting in tax exemption for income up to the amount of capital expenditure. Foreign private capital (from Australia, New Zealand and the U.S.) and local capital are now being invested rapidly in hotels. The number of rooms presently under construction equals one-half of the country's existing hotel facilities (in 1966, 900 rooms and 1,740 beds) and the pace of development appears more than adequate to meet the ex- pected increase in demand. However, the expansion of complementary facilities such as beach and sporting amenities is lagging. 58. Foreign capital investment is bringing to Fiji much needed know- how, especially at the management level. Local ventures, however, do not directly benefit from this. Lack of training of personnel at the lower levels is widespread and the establishment of formal training in the hotel industry is as yet only in the planning stage. - 15 - 59. In 1953, a Fiji Visitors Bureau was established for promoting tourism, but its activity has been restricted by shortage of funds. The Bureau's main source of funds is a government annual grant, raised in 1967 to LF 60,000. Fiji's expenditure for promoting tou- rism is also modest compared to that of several competing areas like Tahiti. Basic Services 60. Electric Power. Electric power is based on diesel generation. Prospects for the use of hydro-power are poor. About three-fifths of power supply is produced by private companies. The leading sugar and gold mining companies produce their own power, and some small privately-owned systems satisfy general needs. Technical and general management of the latter are generally deficient. In 1966, a statutory body, the Fiji Electricity Authority, was established to take over gradually all production (except for own use) in the western part of Viti Levu, including two public systems with total installed capacity of 2 ITU and the system of Nandi airport. The new system will improve plant utilization and reduce tariff differences. Its output will soon reach 10 million KWH per annum and the Authority is expected to be viable from the start. Power in the capital is supplied by the Suva City Council. This system had in 1966 a firm capacity of 9.6 MW and produced 40 million KWH. 61. Power demand increased by 11.8 percent per annum in the decade through 1966, total output reaching 96 million KWH in 1965. Future demand is expected to rise by 10.4 percent per annum, to reach 160 million KWH in 1970 and 260 million in 1975. The Electricity Authority and the Suva Council intend to invest EF 230,000 per annum during 1966-70, more than half of which will be covered from current income. 62. Transportation. The narrow gauge railway, built to take sugar cane to the mills, for many years provided the only modern means of transport for farm produce. Today the railway carries two-thitds of the cane, the remaining cane and other produce on the main islands being transported by road. Passenger transportation is provided by bus companies, which are supervised by a Transport Control Board and had 20 million passengers in 1966. Because of fragmented operation, there is a strong need for consolidation of bus companies. 63. Roads. There are about 1,400 miles of roads; only 45 miles of these have a sealed surface, 1,200 miles are gravel roads (winding but of good standard) and 155 miles are improved tracks. Traffic exceeds 300 vehicles per day on more than half of the roads and is increasing fast. Vehicle registration doubled since 1957 to 14,000 in 1966. Roads run mainly along the coast. On the main islands, there is need for building links to the interior to open up new agricultural - 16 - and forestry areas. A UNDP mission to study transportation has pre- pared a master plan proposing almost 400 miles of new roads with an annual increase in mileage of about 0.8 percent. 64. In 1965, the Government spent EF 760,000 on new roads and 1nF 55,000 on maintenance. The Plan for 1966-70 provides LF 7M5,000 per annum for road investment and is within the capacity of the Public Works Department. The Plan does not include the reconstruction of the Suva - Nandi road on Viti Levu, regarded of high priority. The road links the two major centers of population, the international air- port and the main harbor, passing through the attractive tourist areas in the south and touching the Singatoka Valley, an area of great agricultural potential. The average daily traffic on the road which rose by 86 percent during 1962-66, is expected to double by 1975 and to continue rising by 10 percent annually thereafter. The project will require about LF h million which will have to be secured from other than Fiji's traditional sources of finance. 65. Ports and Shipping. Port facilities for ocean transport are good and adequate for existing traffic. In 1966, the ports handled 830,000 tons of cargo. Of the three official ports of entry two are on Viti Levu (Suva and Lautoka) and one on the small island of Ovalau. Six other ports have no custom facilities and handling of cargo needs special permission. After major reconstruction completed in 1963 the port of Suva has a total berthing frontage of 2,780 feet. It has pipelines for petroleum and coconut oil. 66. The smaller islands depend to a large extent on inter-island transport carried out by sixteen local shipowners. The fragmentation and lack of coordination of inter-island shipping result in high operating costs, barely covered by equally high rates. A policy on inter-island shipping is being formulated by the UNDP mission. 67. Airports. Six airports are in operation. The international airport at Nandi has the longest runway in the South Pacific (10,700 feet) and its extension to 13,500 feet is under consideration. The airport is administered by the South Pacific Air Transport Council (SPATC), whose members are the U.K., Australia, New Zealand and Fiji. In 1967, seven airlines used the airport on non-regional routes. During 1962-65, flights to and from overseas rose by 29 percent and in 1966 the number of passengers reached 204,000. The expansion of facilities at Nandi will be financed by the U.K., Australia and New Zealand as members of SPATC. A Fijian and three foreign companies maintain air connections between Fiji and other islands in the South Pacific area. The national Fiji Airways Company provides both inter- insular and domestic air transportation. Finance for its expansion is expected to be obtained overseas. - 17 - 68. Water Supply. Twelve water supply systems serve the main urban centers. Water is treated fully by five systems; the other seven chlorinate only. Many small systems serve villages, schools, hospitals and government stations. During the last several years, lack of finance has hampered additional investment. In 1966, approximately F 80,000 was invested in water supply. During 1966-70 capital expenditure will be 6F 1.2 million. The only existing piped sewerage scheme serves part of Suva. Another sewerage scheme commenced in Lautoka in 1967. 69. Telecommunications. In the past limited financial resources have been a constraint in providing additional and improved telecommu- nication services. In the fifteen years through 1959 LF 700,000 was spent on equipment. In the next six years through 1965 bF 1.3 million was spent. Investment proposed for 1966-70 is iF 2.8 million, nearly half of which would be met from current receipts. 70. Education. Literacy is substantial, especially among Melanesians (see paragraph 19). Schools exist in 55 of the 106 inhabited islands. There are LO government schools; 563 other schools receive public financial assistance by building grants (up to 50 percent of cost) and payment of three-quarters of teachers' salaries. Some 50 other schools are without such assistance. Tuition fees, covering about one-quarter of operating costs, are levied in most cases. From 1961 to 1966, government expenditure on education rose from LF 1.13 million to bEF 1.78 million, while the share of education in government current expenditure remained at the high level of 15-16 percent. Additional expenditure on education is met by the Melanesian Administration, the Christian missions and the Indian and other communities. 71. In 1966, primary and post-primary school rolls were, respective- ly, 20.8 percent and 2.0 percent of total population. Of 7h post-primary institutions 47 provide wholly academic courses and the remaining a variety of technical or vocational courses. Only four institutions provide full time training beyond the School Certificate level and in 1966 178 students (of which 72 Melanesians and 82 Indians) held scholar- ships overseas. Following the recommendation of a Higher Education Mission, comprising representatives from Australia, New Zealand and the U.K., a new university for the people of the South Pacific has been established near Suva; the first courses started recently. 72. Compulsory primary education is not expected before the mid-1970's and will require a second government teacher-training college. The 1966-70 Development Plan stresses the need for a more practically- oriented curriculum in primary schools, for strengthening the structure of secondary education and for placing greater emphasis on technical and vocational training. - 18 - III. FINA"CE Balance of Payments (Tables 17-21) 73. Balance of payments estimates are available only for 1963-65 and, as a result of a special study, for 1951-53. In the absence of controls and statistics, data on invisible transactions and private capital move- ments represent only broad guesses. 74. Exports are dominated by sugar which, including its by-products, accounted for almost 65 percent of the total and more than half of total receipts on current account during 1963-65. The two other principal exports are coconut products and gold with shares in total exports of about 11 and 6 percent, respectively. Re-exports account for about 13 percent. The share of sugar in exports went up during the last 15 years, while that of coconut products and gold decreased. During 1951-53, the respective shares were about 51, 16 and 11 percent. 75. Annual exports fluctuate widely, influenced by weather and external market conditions. From 1952, total exports rose at a compound rate of 3.7 percent per annum to LF 15.7 million in 1962. Excluding re-exports, the yearly growth rate was 2.9 percent during this period. Influenced by larger export opportunities for sugar and an exceptional increase in sugar prices (see paragraph 36), total exports in 1963-65 averaged F 23.2 mil- lion, 47 percent higher than in 1962. A maximum of F 26.1 million was reached in 1964. In 1966 and 1967 sugar prices were low and bad weather conditions affected most crops; total exports averaged about F 20 million and in 1967 were 31 percent higher than in 1962. 76. Imports also fluctuate strongly, following the trend of exports with a time lag of about one year. Imports rose on average 3.8 percent per annum since the early 'fifties to F 17.4 nillicn in 1962. The aver- age in 1963-65 was LF 25.6 million, the peak of LF 29.1 million falling in 1965. The fall in export income in 1965-66 induced a fall in imports in 1966 to LF 25.3 million. In 1967 imports rose WF 2.9 million, mainly in relation to increased receipts from tourism and expanding investment in this sector. Since the early 'fifties, imports of capital goods and raw materials increased more rapidly than those of consumers goods, among which the proportion of foodstuffs has diminished. 77. The destination of exports is influenced largely by preferential trade agreements. Three-quarters of the total goes to Commonwealth coun- tries; the share of the U.K. is over L0 percent and that of Australia 10 percent. Exports to the U.S. have risen considerably, to 13 percent in 1966. Commonwealth countries also account for about three-quarters of imports. Australia, with 28 percent, is now the main supplier, after a strong reduction of the U.K. share from 34 percent in 1958 to 21 per- cent in 1966. Japan's share in imports increased rapidly in the past decade, exceeding 14 percent in 1966. - 19 - 78. The trend of world prices has on balance been favorable to Fiji during the 1960's. The index of the terms of trade (export unit value as percentage of import unit value; 1960 = 100) stood at 106 in 1966, having reached a peak of 126 in 1963 and 128 in 1964. Export prices were in 196 28 percent higher than in 1960, but fell by 15 percent in 1965-66. Iport prices were in 1963 almost 5 percent below the 1960 level and then rose 7 percent through 1966. 79. Fiji's customs tariff favors economic development. A substantial number of agricultural and industrial materials and machinery items are admitted free of duty from Commonwealth countries and at a 15 percent duty from cther countries. Other capital goods and materials, representing a considerable share (18 percent in 1965) of total imports, are taxed at special concessionary rates. 80. Among invisibles, important receipts are derived from tourism, which increased rapidly in the 1960's, and at IF 4.4 million in 1965 accounted for 15 percent of total current receipts. In 1966 earnings from tourism reached W' 5.6 million. Tayments overseas of private invest- ment income were at the rate of about IF 3 million annually in recent years, over 9 percent of average total current payments in 1963-65 and up from about 1Y I million annually during the early 1950ts. The other major invisible items are transport and insurance with average annual payments in recent years of about W' 1.9 million and receipts in the order of W? 1.0 million. 81. During 1963-65, there was an average trade deficit of F 2.4 million, equal to 9 percent of merchandise imports, whereas total invisi- bles were about in balance. The trade deficit fluctuated strongly, be- tween a surplus of IF 2.0 million in 1963 and a deficit of IF 7.8 million in 1965. The trade deficit was IF 5.8 million in 1966 and F 7.5 million in 1967. 82. Receipts on capital account from official and private sources were in 1963-65 more than adequate to cover the total deficit on current account. Official capital inflow, in the form of U.K. grants, averaged IF 1.6 million. Repayments on public loans, received from the U.K. and dating from 1934 and 1962, involved only small sums, and net official capital inflow equalled about three-fifths of the current account deficit. Details on private capital inflow and outflow are scarce. A substantial part of company profits and personal savings is in expatriate hands, and an unknown proportion of past savings has been invested in Australia, New Zealand and the United Kingdom. On the other hand, there has been considerable willingness on the part of expatriate residents and non-residents to invest in Fiji, and freedom of capital movements has worked to its advantage. Undistributed profits of overseas companies in 1963-65 are estimated at IF 1.h million annually (about one-half of current external payments of private investment income), and "Unidentified capital movements, errors and omissions," which include a considerable element of net private capital inflow, at about the same amount. These items confirm that a siZeable net inflow of private capital took place. The residual item, however, also accounts for sizeable changes in cash balances of foreign-based companies. - 20 - 83. Short-term foreign assets of the Government and the commercial banks increased from LF 0.6 million at the end of 1962 to LF 6.8 million at the end of 1965 and LF 6.1 million at the end of 1966. Fiji's total foreign assets, including those of the Post Office Savings Bank and other semi-governmental institutions, were F 13.8 million at the end of 1966. About 56 percent of these assets were government holdings, including currency backing, and were equivalent to 3.8 months' merchandise imports and 3 months' current payments. Money and Credit (Tables 22-25) 84. Fiji has no central bank. Its currency, denominated in Fijian pounds, is issued by a Currency Board against deposit of an equivalent amount of pounds sterling in London. Most of the backing of the currency is invested in securities of, or guaranteed by, Governments of Commonwealth countries, including a limited amount of securities issued by the Fijian Government itself. Fijian pounds are fully convertible into pounds ster- ling for all transactions. Transfers outside the sterling area require formal approval. The rate of LF 111 to L sterling 100, in force since 1933, was modified shortly after the recent devaluation of the pound sterling and is now LF 104.5 to L 100. The devaluation of sterling was not followed to the full extent in order to reduce the upward pressure on import prices (Australia, the main source of imports, did not devalue). By guaranteeing full convertibility at a stable rate of exchange, the sterling exchange standard facilitates considerably movements of private capital. However, since the issue of currency is rigidly tied to the balance of payments, there is no scope for an independent monetary policy. 85. The commercial banks are able to accommodate to some extent their customers' needsby borrowing from headquarters abroad; this introduces some flexibility in money supply, but only in the bank's specific sectors of lending. Money supply (currency and deposit money) increased to LF 8.9 million at the end of 1962; it reached _F 12.3 million in 1964 and fell to LF 11.9 million at the end of 1966. Demand deposits represented 57 percent of money supply in 1963-65. For five consecutive years (1954-56) the foreign headquarters of commercial banks supplemented the country's money supply with short-term loans to their branches in Fiji, with net balances reaching a peak of LF 2.5 million at the end of 1956. 86. Four foreign commercial banks (three based in Australia and New Zealand; one in India) operate in Fiji through 24 branches or agencies. Their pattern of activity is that of ordinary branches rather than of autonomous banks and no specific ratios appear to be maintained of cash or other assets to total liabilities or to deposits. Since 1956, deposits grew at 7.7 percent per annum to LF 10.9 million in 1966, and their share in total liabilities rose from 63 percent to 87 percent. This increase was overcompensated by a fall in finance from headquarters abroad, which in 1956 had reached a peak of 30 percent of total liabilities. In the decade through 1966 loans and advances fluctuated between LF 5.3 million at the end of 1956 and LF 3.4 million at the end of 1963. At the end of 1966 loans and advances were LF 5.0 million or 40 percent of total assets, against 65 percent in 1956. During the same period the share of balances - 21 - with banks abroad and of other assets rose from 11 percent to 48 percent of total assets, showing a relative shortage of short-term investment opportunities in the country. The item "'local investments" remained unchanged at LF 0.9 million. 87. Each comercial bank runs a savings bank. In addition, there is a Post Office Savings Bank with over 115,000 accounts. Since 1961 depo- sits with the savings banks bave almost doubled, those with the eotnerial savings banks rising much faster than those with the Post Office Savings Bank. In 1966, over one-third of deposits were invested in loans to Fiji's central and local governments and statutory bodies. The remainder was kept in more liquid form, as deposits with commercial banks (by commercial savings banks only) or as investments in securities of the U.K. Government or guaranteed by it. Total bank deposits, including commercial and Post Office savings banks, increased since 1961 by 5.3 percent per annum to IF 14.2 million in 1966. About 86 percent of total deposits in 1966 were with commercial banks or their savings banks. 88. While the lack of trained staff has hampered the growth of cooper- ative credit societies, credit unions have been highly successful among Melanesians; started in 1954, they now exceed 250 with membership of over 25,000. The almost exclusive dependence on a single annual crop and large yearly fluctuations in income give rise to considerable credit needs of sugar cane farmers. The estimated total debt of 11,000 farmers by mid-1967 was - F 5.6 million, equivalent to 0 Tercent of their gross annual income. One-half of the total accounted for investment expendi- tures. An important scurce of credit for productive purposes to cane faners is the sugar miling company, -which had 1? 300,000 outstanding at the and of K-arch 1967, and over IF I million cre year before. M1iddle- men and other small money lenders are, however, the main source of credit to farmers and small business, for both production and consumption. Interest rates exceed in many cases the legal naximum of 12.5 percent, though seldon go above 20 percent. 89. Besides the commercial banks, three recognized institutions provide medium- and long-term finance: the Government-sponsored Fiji Development Bank (until mid-1967 called Agricultural and Industrial Loans Board, established in 1952); the Fiji Development Company, a wholly-owned sub- sidiary of the Commonwealth Development Corporation; and the Home Finance Company, a building society jointly sponsored by the Government and the Fiji Development Company. 90. Finance available to the Agricultural and Industrial Loans Board amounted to TF 1.3 million by mid-1967 and consisted of Government grants and interest-free loans (5h percent of the total) and loans from the Sugar Price Stabilization Fund Board (30 percent) and the Bank of New South Wales (16 percent). From its inception through September 1967, the Board approved almost 6,500 loans totaling IF 3.0 million. By mid-1967, active loans were over 2,000; of the total outstanding of LF 910,000, 10 percent was for cane farming, 48 percent for other agricultural activities, 30 percent for the tourist industry and the remaining 12 percent for other industries. Interest rates on loans ranged from 5 to 7 percent and periods from 1 to 20 years, - 22 - the average being 5 years. The Board operates efficiently. Problems raised by lack of financial knowledge on the part of the borrowers have been largely overcome. The Board manages Government-sponscred agricultural development schemes. In 1966, the Board also started providing farmer credits for annual crop production, repayable from crop sales proceeds. By mid-1967 the Board was converted into the Fiji Development Bank, with more extensive powers and functions, following the recommendations of an official survey. The Government provided the Development Bank with an additional IF 500,000. 91. The Fiji Development Company was set up in 1960 to investigate and formulate development schemes and as a channel for the Commonwealth Develop- ment Corporation's investments. At the end of 1966 the Company had an issued capital of U 150,000 and held investments in a saw milling company, a building society and two agricultural schemes (bananas and oil palm trial). Government Current Revenue and Expenditure (Tables 26 and 27) 92. In the last 10 years, the Central Government has increasingly been able to realize a surplus of current revenue over current expenditure; this surplus was used to finance development expenditure and increase Treasury balances. In 1963-65, Government savings amounted to 15 percent of current revenue; tax revenue equalled 73 percent of total revenue and 16.3 percent of GNP. Custom duties are the major source of revenue (41 percent in 1963-65); they are revenue producing rather than protective, the average level on imports being 17 percent. The second major source of revenue is the income tax (24 percent in 1963-65), to which the company tax contributes slightly over one-half. 93. The growth in current expenditure has been limited, despite an increasing burden of public debt resulting from the rise of capital expen- diture. During 1960-67, the shares in total current expenditure taken by administrative, social and economic services changed little on balance, although there was some relative fall in health and welfare expenditure. Defense expenditure was in 1966 only one percent of total current expen- diture. Spending on public debt service increased from !.9 percent of the total in 1960 to 9.6 percent in 1964, and was 8.1 percent in 1967. Government Investment Expenditure (Table 28) 9h. In 1956-65 a total of F 22 million was spent on investment. This anoxnt and an increase of IF 2.5 million in Treasury balances were financed mostly from internal resources; public revenue represented 31 percent of the total and domestic borrowing 35 percent. Slightly over one-quarter was financed by grants from the U.W. Only one external loan was obtained, from the U.K., contributing 9 percent of total finance. During 1961-65, the annual rate of expenditure (F 2.59 million) was much higher than in the previous five years (IF 1.80 rillion), additional resources coning particularly from local revenue and U.K. grants. - 23 - Investment Expenditure and Its Financing (LF millions) 1256-60 1961-65 total average total average Investment expenditure 9.02 1.80 12.94 2.59 Financing: local revenue 1.82 0.36 5.69 1.14 internal loans 3.18 0.64 5.29 1.06 external loans - - 2.22 0.44 United Kingdom grants 1.06 0.21 5.19 1.04 Total 6.06 1.21 18.39 3.68 Change in Treasury balances - 2.96 - 0.59 + 5.45 + 1.09 95. In the period 1945-65, four programs (partly overlapping) of public investment expenditure were prepared. A comparison of planned and actual expenditures indicates,along with an increasingly realistic assessment of the physical capacity and financial resources of the country, a pro- gressive shift of emphasis from social services in 1945-49 to infrastructure in the 1950's and 1960's and to directly productive activities toward the end of the period. Nevertheless, there remained a considerable shortfall in the fulfilment of some targets, especially for spending for directly productive purposes. Of the F 29.5 million spent for development in the postwar period through 1965, the sector of communications received the highest share (45.6 percent), mainly for ports and water transport (20.7 percent) and roads (14.8 percent). About one-fifth of the total went to social capital exenditures, including water supply (8.1 percent), educa- tion (7.5 percent), medical facilities (3.7 percent) and housing (1.0 percent). Among the directly productive outlays (14.7 percent of the total), land settlement and irrigation (6.6 percent) and other agriculture (3.0 percent) were the major items. 96. In the 1960's the discrepancies between planned and actual capital expenditure were relatively small. Actual capital expenditure in 1961-63 was LF 7.3 million, almost equal to the amount planned for the first three years of the 1961-65 plan. The plan for 1964-68 estimated the sustainable minimum level of spending at LF 2.5 million a year. To maintain this level, a somewhat larger program (LF 3 million per year) was laid out. Actual expenditure during 1964-65 reached LF 2.8 million per year, leaving Treasury reserves of L 5.8 million at the end of 1965. - 24 - IV. PROSPECTS FOR ECCN0MIC DZTELOfEIT Growth Prospects 97. Economic growth depends in a large measure on the Government's efforts to diversify the economy by developing crops and other activities beyond sugar. In the short run the best prospects are in tourism, which also offers most promise in providing additional employment and stimula- ting the development of other industries. Forestry can also make an important contribution to diversification, but only in the very long run. Agriculture, besides providing food for the growing population and redu- cing import needs, can contribute to diversification by a rise in the production of copra and, to a lesser extent, of other export crops. Against this background, it is a not unrealistic prospect that over the next several years the rate of growth of the economy could accelerate to close to 5 percent per annum, and reach a slightly higher rate thereafter. This would require growth in primary production of about 3 percent per annum and expansion of the secondary and tertiary sectors, stimulated by tourism, at slightly more than double this rate. 98. Sugar. Even with successful diversification, the economy will remain heavily dependent on sugar for many years to come. Fiji would be able to produce much more sugar by increasing productivity without using less productive lands. New hybrids can raise present cane yields by 25 percent or more and there is still scope for wider use of fertilizers and better general husbandry. Market prospects, however, are uncertain and do not justify a rapid expansion in output. 99. A first uncertainty is the future of the International Sugar Agree- ment, ineffective since 1962. If present discussions would lead to a re-activation of the Agreement in 1969, Fiji's total export would probably be very near to the 1965-66 average. In the light of past experience and consumption trends, the rise in Fiji's overall quota in subsequent years would be unlikely to surpass some 1.5 percent per annum through 1975. Exports would thus reach around 275,000 tons in 1970 and 300,000 tons in 1975. Domestic consumption is a minor factor; it might grow from 18,500 tons in 1966 to some 23,000 tons by 1975. Assuming the U.K. and U.S. quota prices (about LF 50 and LF 56 per ton, respectively) to remain unchanged and otter exports to be at LF 43 per ton (based on a floor price under the ISA of L US cents per pound), the total value of sugar exports could reach, on a trend basis, some LF 13 million by 1970 and LF 1 million by 1975. 100. If the ISA would not become effective, Fiji could presumably sell considerably more sugar than under its present "overall" and U.S. quotas. This would not affect international prices in view of Fiji's small share in world markets. However, prices would in this situation no doubt be lower and total export proceeds not higher than the estimates given above. Other uncertainties affecting the longer term sugar outlook are the sus- pended trade relations between the U.S. and Cuba, the possibility of the U.K. joining the European Economic Community, its consequences for the extension of quotas under the Commonwealth Sugar Agreement (presently in - 25 - force through 1974) and Fiji's chances of obtaining a special status in relation to the EEC. The annual Conference of Commonwealth sugar producers, held late in 1967, did not extend by one year the CSA, as it had normally done in the past. 101. Other Airicultural Products. In the coconut sector, the replanting and groves rehabilitation program (see paragraph 40) will give rise to increased output only four to five years from now. Production will also need considerable time to recover from hurricane damage in 1966; at best, therefore, only by 1970 will exports have regained the level of 1962-64 of about 40,000 tons of copra equivalent. Without further serious hurri- cane damage, production could rise rapidly thereafter, and in the long run copra might make an important contribution to diversifying agricultural exports. Inadequacy and high cost of transport seriously hamper crop collection in many areas. The inter-island transport system has much scope for improvement. 102. Bananas might gain in importance as an export crop as a result of the current government policy of improving quality by expanding production of farmers organized in plantation schemes. However, marketing outside the present main export outlet, New Zealand, presents many difficulties and attempts to enter the Japanese market so far have proved unsuccessful. Yields and economics of cocoa, oil palm and other plantation tree crops have not yet been fully assessed and it seems that at least for a while they will remain minor crops. Exports of canned fruit (pineapple and passion fruit), already attempted in the past, seem to find a major obstacle in marketing problems. A similar situation exists for tobacco. 103. Domestic demand for rice would justify a strong increase in pro- duction. In 1966, without weather damage to production, about 10,600 tons of rice worth F 740,000 were imported, to cover more than half of domestic demand. A large scale change-over from dry to wet rice would be needed in the Nausori and Navua areas of southeastern Viti Levu. This would require carrying out drainage and irrigation schemes on some 25,000 acres of land. There is also considerable scope for increasing production of vegetables, fresh fruit meat and dairy products for local consumption. The Government faces a major task in encouraging these various lines of production. Land is not a major limiting factor in the near future, nei- ther in the sugar cane areas nor elsewhere. The main constraints seen to be a lack of adequate interest in mixed crop farming by peasants in the sugar cane areas, the generally widespread lack of know-how outside cane growing and insufficient marketing facilities. 104. Forestry and Mining. In the forestry sector, the planting program currently under way will substantially reduce import needs by 1975 and increasingly thereafter. The development of the large additional forestry potential is still being assessed, and in any case would bear results only in the very long run. On the basis of available indications the mining industry would play a minor role in the development of the country. - 26 - 105. Tourism. The next several years are likely to see a steady and rapid growth of tourism. Fiji will become increasingly attractive to foreign visitors and can benefit from the continued growth in interna- tional travel in the Pacific. The large number of transit passengers at Nandi airport represents a considerable and until now inadequately tapped tourist potential. The introduction of larger and faster aircraft on international lines will reduce fares and travel time and may be expected to bring a further increase in passengers and tourists. A consultants' study on tourism in Fiji, made in 1965, forecasted 85,000-90,000 tourists by 1970, corresponding to an average increase from 1964 by 18-20 percent per annum, and a further growth by 90-100 percent in total over the follow- ing five years. Actual figures for 1965-67 were slightly above the fore- cast. Although the further rise estimated for the coming years cannot be taken for granted, there is every reason to believe that prospects are excellent, assuming more vigorous promotion and publicity and provision of suitable facilities. 106. It is not likely that substantial changes will take place in the type of visitors to Fiji and their average length of stay. Fiji, as other countries in the South Pacific area, will mainly remain a stop-over for people interested in visiting many places in the region. A growth in foreign visitors by 18 percent per annum could bring about an increase in expenditure from LF 5.6 million in 1966 to LF 11 million in 1970 and LF 22 million in 1975. The net contribution to domestic product will probably continue to represent not much more than one-quarter of gross receipts. 107. Foreign private enterprise should continue being responsive to opportunities for investment and local capital should increasingly appre- ciate the favorable prospects in this sector. Developments in Fiji will be closely related with those throughout the South Pacific. Competition of other countries in the area will be keen, to induce tourists to allo- cate to their country a higher share of time and expenditures. Aggressive promotion will therefore be needed, extending to the countries which already now supply most tourists. Hotel capacity has the prospect of growing adequately to satisfy demand. But there is an immediate need for improving and expanding entertainment in existing tourist areas, up- grading management techniques, providing staff training and meeting infra- structure requirements. The road connecting Nandi airport and the capital by way of the tourist areas in the southern part of Viti Levu is of primary importance. In the longer run, it will be necessary to increase passenger handling capacity at Nandi and to modernize and develop the internal air transport system. 108. An orderly development of the tourist sector will also require the preparation of a sector plan, to avoid uncoordinated and dispersed ini- tiatives prompted by the pressure of immediate needs and the ready avail- ability of land. One of the immediate tasks of a survey, presumably to be undertaken by professional consultants, would be to define more accu- rately the areas with the best potential for tourism development. Also, - 27 - the Government will have to take early action to make the areas avail- able in time by agreeing with the Native Land Trust Board on long-term leasing conditions and, if necessary, by starting procedures for excluding areas from native reserves. 109. ManufacturingL,construction and other service industries. Existing manufacturing industries other than for sugar and copra processing, together with ccnstruction and service industries, will benefit considerably from a rapid expansion of tourism. The cement industry, which can rely on local raw materials and a rapidly expanding domestic market, may soon reach levels of production and economies of scale enabling it to compete in the western South Pacific islands. Other existing industries do not seem to have imme- diate possibilities of widening significantly their sales beyond the domestic market. In the longer run, however, if labor productivity increased sub- stantially and a process of economic integration were to take place among the islands of the southwest Pacific, Fiji could be in a favorable position as the most advanced country in the area of participating islands. Prospects for the development of new industries are now seriously limited by the small size of the market, the unavailability of local raw materials and the dis- tance from foreign sources of supply. Low productivity for the time being offsets the advantages of comparatively low labor costs. Developments in timber processing could in the long run accelerate industrial expansion, but the establishment of an export timber industry is still in the surveying phase. Development Plan and Outlook for Public Finance (Tables 29 and 30) 110. The 1966-70 Development Plan provided in addition to targets for public spending a first review of the econonyts problems and prospects, the aim being to set expenditure targets compatible with the expected expansion of the economy. GDP was assumed in the Plan to grow by 5.3 percent annually. The Plan limited the growth of government current expen- diture to 6.3 percent a year at 196$ prices, from LF 10.5 million in 1965 to LF 14.3 million in 1970. Capital expenditure was planned to average LF 4.1 million annually. A surplus of current revenue over five years of LF 2.8 million was expected to be available for financing capital expendi- ture. The spending proposals reflect the Government's long-term policies of developing agriculture and forestry by bringing new land into production, increasing productivity and diversifying crops; of giving increasing support to industrial development, mainly by strengthening the Development Bank; and of providing adequate infrastructure, especially by expanding transport and telecommunications facilities. These priorities appear to fit well the country's future economic and social needs. Agricultural development and settlement schemes will not only support diversification of output and the balance of payments, but also be important in improving basic skills and technical knowledge of farmers outside sugar cane growing. 111. Government current revenue in 1966 and 1967 was considerably higher than the estimates in the Plan; current expenditure also went up, but less. As a result, in both years the balance of current budgetary transactions was more favorable than planned. - 28 - Government Current Revenue and Expenditure (LF millions) 1966 1967 196d Estimate Actual Estimate Revised Estimate Estimate Current revenue 11.30 12.50 12.81 14.06 14.34 Current expenditure 11.00 11.88 13.14 13.7 1h.29 Balance 0.30 0.62 - 0.33 0.32 0.05 Investment expenditure targets have been revised, but deviations from the original Plan are minor. The five-year total is now LF 21.0 million against IF 20.5 million originally and appears realistic in the light of experience. The Government is aware of the need, for reasons of finance, to slow down the growth of its current expenditure, since the rate of growth of the economy is bound to remain lower than in the boom years 1963 and 1964. The contribution of the current budget to investment expenditure is now estimated at IF 2.9 million, compared to LF 2.80 million previously. The revenue forecastsseem to be in line with the expectation of a moderately expanding econony; it is unlikely that taxation could contribute substan- tially more since existing rates are already fairly high. The internal loans forecast is also consistent with past developments and the pcssible contribu- tion from an increased ratio of public sector loans to deposits with com- mercial savings bank would be very moderate. Investment Expenditure and Its Financing (F millions) 1961-65 1966-70 1966-70 Actual Development Plan Revised Plan Investment expenditure 12.94 20.50 21.06 Financing: local revenue 5.69 aJ 2.80 a/ 2.94 internal loans (net) 5.29 5.55 5.85 external loans 2.22 4.45 4.56 United Kingdom grants .19 _70 6.50 Total 18.39 20.50 19.85 Changein Treasury balances +5.45 - -1.21 a/ The difference between 1961-65 and 1966-70 is due to a large extent to the inclusion in the current budget of salaries concerning develop- ment schemes previously shown in the capital budget. - 29 - Of the total finance required for 1966-70, the U.K. contribution in the form of grants has already been committed. The financial strength of Fiji would in principle permit external borrowing. In the past, however, Fiji received only two loans -- bF 360,000 in 1934 and IF 2.2 million in 1962 -- both from the U.K. If the present situation of international capital markets remains unchanged, Fiji has little chance to enter as a new competitor. In view of Britain's economic difficulties it is also unlikely that more than marginal amounts of Fiji's prospective borrowing needs, if any, could be covered from this source. With the encouragement of the U.K. Government, Fiji has approached Australia for covering part of its financial needs, in view of, inter alia, the strong Australian economic interests in the country. A loan of TF 2.2 million with a coupon yield of 7 percent is expected in 1968. If this would be the only source of external borrowing, a gap in finance of !F 3.6 million would remain (including IF 1.2 million of expected reduction in Treasury balances). Treasury balances were LF 5.7 million at the end of 1965. A Fiscal Review Committee in 1964 suggested to keep reserves at least equivalent to three months' revenue. This would correspond to about LF I million at the end of 1970. Treasury balances therefore could only contribute F 1.7 million in 1966-70 without going below a reasonable minimum. Over the longer run, a large element of uncertainty surrounds Fiji's traditional sources of external finance. The needs for external borrowing however are, if any- thing, likely to increase. Balance of Payments Outlook 112. Given the very open nature of Fiji's economy, the trends in exports and imports may be expected to follow closely those in domestic output. As discussed above, merchandise exports are expected to increase only moderately in the next several years, while invisible earnings from tourism are likely to rise much faster. On the import side, a special factor is the rise in unit costs by 2.5-3 percent caused by the recent change in parity of the Fijian pound. 113. Fiji's balance of payments movements are largely self-balancing. Imports other than those of capital goods are determined by the trend in domestic incomes which in turn depend heavily on exports. A rise in private investment in tourist facilities would be accompanied by a con- siderable inflow of foreign private capital. If this would result in a further building up of factor income payments there would be a parallel growth of foreign exchange earnings. The burden of the external public debt is low, and the planned amount of new borrowing through 1970 would raise the external debt service to no more than 2-2.5 percent of current account earnings. Under the Currency Board system, government investment is kept automatically within the limits of available finance, including Treasury balances and external loans. A sound balance of payments is therefore likely to be assured as long as the confidence in the economy of private foreign investors is maintained. - 30 - Some Basic Policy Requirements 114. Population policy. Although prospects for economic growth are not unfavorable, control of population growth will be needed to alleviate the pressure on limited economic resources. The Government is fully aware of this problem (see paragraph 14). According to an official estimate, Fiji's population could increase from 480,000 in 1966 to 1.2 million in 2000. The estimate is based on a moderately declining birth rate (by 0.8 percent per annum) and declining mortality (by 1.4 percent per annum). The natural rate of growth would slow down from 3 percent to 2.4 percent per annum. Although in view of the encouraging results of the recent population con- trol measures the growth rate may well be somewhat lower, at least a doubling of population by 2000 appears realistic. 115. One disquieting aspect of the rise in population is the growth in open unemployment, already severe now (see paragraph 27). According to the above-mentioned estimate the active population would by 2000 double from its present level of 125,000. If employment opportunities would rise insufficiently, social unrest could develop which, in conjunction with the special racial structure, could raise difficult problems. 116. Advancement of the Native Population. The economic and social advancement of the Melanesians will require increasing attention in the years to come. The agricultural development and settlement schemes spon- sored by the Government will play a basic role by increasing know-how and productivity outside the sugar sector, by absorbing some underemployed labor from the sugar cane areas, and by gradually increasing the role of lelanesians in the monetized sector of the economy. Gro-th of the tourist sector and related services will equally create new opportunities for RMelanesians. Increased experience in economic and financial matters appears essential for the evolution of the Melanesian social framework and, in the long run, for making the land tenure system more flexible than at present. 117. Private Investment Climate. Private investment, especially foreign, will have to make an important contribution to future economic growth. Conditions favorable to private investment are therefore of primary importance. The present freedom of international financial transactions, tax concessions for investors and lack of excessive government interference in the establish- ment and management of private enterprises are among these conditions. The Government is well aware of the need to maintain a favorable investment climate. Elivibility for Bank/IDA Assistance 118. Fiji has enjoyed stable political conditions for a long time, in spite of the special racial composition of its population. Prospects for maintaining political stability are favorable, but could worsen if economic development were to progress too slowly to avoid more serious unemployment. After the recent steps, on the basis of the 1966 constitution, towards a larger degree of self-government, there is at present no great demand for further action in this direction. - 31 - 119. Fiji's external public debt is low. The total outstanding by the end of 1967 was about US$ 4.6 million. Debt service absorbs less than one percent of foreign exchange earnings on current account. The external loans expected to finance part of capital expenditure during 1966-70 would bring the debt service to a level corresponding to 2-2.5 percent of present current foreign exchange earnings and the latter are likely to increase. In view of this low debt service ratio, the country may be regarded creditworthy for Bank lending with the guarantee of the United Kingdom. 120. Fiji's past economic policies have been satisfactory. The country's potential for development is good, but a number of important uncertainties bear on its economic future. These mainly result from the very strong dependence on sugar and the need for continued external assistance. More- over, the possibility cannot be excluded that Fiji's racial structure would cause complications, especially if political developments would take a too rapid pace. A deterioration in racial relations, if it were to occur, could have important repercussions on private foreign investment and the balance of payments, including tourism. Another weakness is the already substantial level of unemployment which could create the need for more government spending in the future. In view of these circumstances and of Fiji's relative poverty, the country may in the future also become eligible for IDA assistance, although it cannot be considered eligible at present. The situation should be kept under review. ANNEX A page 1 LAUD TENURE 1. Out of a total of 4,525,000 acres of land, the Crown holds some 319,000 acres (over 7 percent). Crown land may be sold only in very special circumstances. About 47,000 acres (almost 10 percent of the total) is freehold land, bought from natives before the Cession. Free- holds include much of the land of easy access and higher agricultural potential, and are mostly owned by Europeans and part-Europeans on the basis of titles issued by the Crown shortly after the Cession. Melane- sians hold communally 83 percent of total land, mostly steep country with limited agricultural potential. This land was recognized as belonging to Melanesians in the Deed of Cession, and was declared by law inalien- able to non-Melanesians, to avoid that natives would deprive themselves and their descendants of their main asset. Settlement on this land of people of other races was made possible by permitting lease. 2. Melanesian-owned land is held under customary tenure by more than 6,600 clans (matangali), officially recognized as land owning units. Quality and size of the land owned by each clan vary considerably, with- out relation to the clan's size. Every member of a clan takes part in communal work under the directions of the clan's chief on land without individual title. He is entitled to a share in the proceeds from crops communally grown and a share in rents received from the clan's leased land. Most crops other than tree crops are grown under a system of bush fallowing around the village. A Melanesian can be freed from his commu- nal obligations with the permission of his chief and against an annual payment to the clan. In the past it was fairly difficult to obtain exemp- tion from comunal duties to work in independent farming on either com- munal or leasehold land. But since 1961 the Government has actively encouraged independent farmers. 3. Leasing of Melanesian land proved a satisfactory alternative to transfer of ownership. Although the Indians (50.1 percent of total popu- lation) own as freehold only 75,000 acres (1.6 percent of total land) they occupy and farm 350,000 acres, of which 230,000 acres are leased by Mela- nesians and 50,000 acres by the sugar-milling conpany. This acreage includes nearly all the best land where the most remunerative crops, sugar cane, can be grown. Availability of communal land for rent to those able and willing to use it and security of tenancy have been improved in 1967 by an Agricultural Landlord and Tenant Ordinance, introducing a minimum leasing period of ten years with the possibility of two extensions of at least ten years at the option of the tenant. The Ordinance also obliges the landlord to reimburse the tenant at the end of a lease for land improvements. 4. A Native Land Trust Board was set up in 1940 to protect the interests of Melanesian owners by securing their land tenure and by obtaining adequate rents, based on the unimproved capital value of the lands. At the same time the Government decided to reserve for future use by Melanesians 200,000 acres which were declared unleaseable to people of other races. Delays in ANNEX A page 2 the demarcation of reserved lands resulted in uncertainties about tenan- cies by non-Melanesians, and hampered land maintenance and improvement. Some formerly leased areas reverted to bush after being declared reserved. But the main disadvantage of this system lies in the virtual sterilization of valuable land which could otherwise be developed. 5. Owing to communal holding of land, Melanesians are unable to offer it as security for loans for land development. An important step to ease this constraint was the creation in 1961 of a Land Development Authority, to establish resettlement schemes for the development of vacant land and to rehabilitate settled agricultural areas. The Authority assists primary producers through loans, keeping an efficient control on their use by issuing purchase orders instead of disbursing money, and ensuring repay- ments by controlling the sales of the produce. By the end of 1966, devel- opment schemes comprised more than L,000 farms covering 87,100 acres and served by 90 miles of especially built roads. STATISTICAL APPENDIX Table No. External public debt 1 Estimated service payments on external public debt 2 Population by racial groups 3 Growth of population Population projections by age groups and races 5 Origin of gross domestic product 6 National product and expenditure 7 Active population by sectors 8 Employment in manufacturing industries 9 Price and wage indices 10 Land ownership and land leased to Indians 11 Distribution of land by tenure and potential 12 Estimated acreages of principal crops 13 Sugar cane and sugar L Copra and oil 15 Tourism 16 Principal exports 17 Composition of imports 18 Direction of trade 19 Balance of payments 20 Foreign assets of government, public institutions and commercial banks 21 Money supply and related factors 22 Assets and liabilities of commercial banks 23 Assets and liabilities of savings banks 2L Operations of the banking system 25 Government current revenue 26 Government current expenditure 27 Financing of government investment expenditure 28 Public sector development plan 1966-70 29 Financing of development plan 1966-70 30 Signs and symbols -- = zero = not available or unknown * = figure too small to be expressed Note: Figures may not add to totals on account of rounding. Table l FIJI - EXTERNAL MEDIUM- AND LONG-TERM /1 PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF JUNE 30, 1967 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Debt Outstanding June 30, 1967 Item Disbursed Including only undisbursed TOTAL EXTERNAL PUBLIC DEBT 5,360 5 6o Publicly-issued bonds /2 292 292 Loans from United Kingdom Government 5,068 5,068 /1 Debt with an original or extended maturity of one year or more. T Net of accumulated sinking funds of $62h,000. There is also a supplementary sinking fund ($239,992 at June 30, 1967), the proceeds of which will be used to retire the bonds. Statistical Services Division Economice Department May 20, 1968 Table 2: FIJI - ESTIMATED CONTRACTUAL SERVICE PAYMENTS DUE IN FUTURE ON EXTERNAL MEDIUM- AND IONG-TERM PUBLIC DEBT OUTSTANDING INCIDDING UNDISBURSED AS OF XUNE 30, 1967 /1 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 1 DEtiT QuTST (BFGIN OF PERIOD) PAYMFNTS DURING PERIOD INCLUDIcG AORTI*. YEAP UNDISBURSED ZATIO, INTEREST TOTA,L GRANT TOTAL 19t7 5,360 L 141 364 505 1968 4#580 122 313 435 1969 4e441 129 365 435 1970 4r294 285 298 58) 1971 3p991 134 266 399 1972 3,858 14p 27 399 1973 3#7i5 152 247 399 1974 3,563 162 237 399 1975 3,),j 173 .226 399 1976 3,229 184 2j5 399 1977 3.144 197 203 399 1978 4 21n 19 399 1Q79 2,636 224 6 399 19Sn 2,414 239 191 399 19P1 2P176 254 145 399 DEST OUTSTANOING YEAR (EGIN OF PERIOD) PAYMENTS DURING PERIUu GROSS NET AMORTI* INTEREST TOTAL ZATION PUBLICLY-ISSE0 8ONDS 916Z- 292 L 21 20 41 1968 785 236 12 24 35 196t 785 207 12 24 3r 1971 75 17P 159 24 183 Table 2: FIJI - ESTIMATED CONTRACTUAL SERVICE PAYMENTS DUE IN FUTURE ON EXTERNAL MEDIUM- AND LONG-TERM PUBLIC DEBT OUTSTANDING INCUDING UNDISBURSED AS OF JUNE 30, 1967 /l (cowr.) Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 2 DE'iT QjTST (BEGIN OF OERIO0) P4YMENTS UURING PERIOD INCLUDING AMORTI. EAR U'N0ISBURSED ZATIOm INTEREST TOTAL LOANS FROM Us.ITED KINGOOM 1907 5,068 / 120 344 464 )968 4,344 11 289 399 1969 4,234 117 282 399 1979 4,117 125 214 399 1971 39991 134 266 399 1972 3,898 142 257 399 1973 3.715 152 247 399 ,974 3,563 162 23? 399 1975 3*4 173 226 399 1976 3,229 184 215 399 1977 39144 197 203 399 1978 2,848 21i 190 399 1979 2,638 224 176 399 1990 2,414 23q 1 399 191 2#176 254 145 399 Al Includes service on all debt listed on Table 1 prepared May , 1968 77 Amount outstanding is as of June 30, 1967; payments are for the entire year 1967. Note: All figures on this table except the amount outstanding and service payments for 1967 are converted to dollars at the rates established by the November 1967 devaluation. Statistical Services Division Economies Department May 20, 1968 TABLE 3 -- POPULATION BY RACIAL GROUPS Population ( 000) 1/ Index 1921 = 100 Percentage composition Year Melanesian Indian Other Total Melanesian Indian Other Total Melanesian Indian Other 1881 115 -- 12 127 136 -- 104 81 90.0 -- 10.0 1891 106 7 8 121 125 12 65 77 87.3 6.2 6.5 1901 94 17 9 120 112 28 71 76 78.6 14.2 7.2 1911 87 40 12 139 103 66 100 89 62.4 28.9 8.7 1921 84 61 12 157 100 100 100 100 53.7 38.6 7.7 1936 98 85 15 198 116 14o 129 126 49.2 42.9 7.9 1946 117 120 23 260 139 198 181 165 45.3 46.2 8.5 1956 148 169 29 346 175 279 232 220 42.9 49.0 8.2 1966 203 242 38 483 242 396 317 308 41.6 50.1 8.3 1/ At end of year. Sources: For 1881-1956: Report of the Burns Commission, Council Paper No. 1, 1960 For 1966 : Fiji Annual Report 1966 TABLE 4 -- GROWTH OF POPULATION 1/ Crude Birth Rate Crude Death Rate Rate of Natural Increase Year Population Total Melanesian Indian Total Melanesian Indian Total Melanesia/ Indian (thousands) (per 1,000 of mid-year population) 1953 316.7 41.4 .. .. 9.4 .. 32.0 . 1954 328.3 40.2 ** *. 9.5 .. .. 30.8 .. .. 1955 339.8 38.6 .. .. 8.2 .. .. 30.4 .. 1956 351.5 4o.o .. .. 7.4 .4 32.7 .. 1957 354.2 2/ 41.9 39.3 45.6 7.5 8.7 6.4 34.4 31.1 40.0 1958 367.7 4o.3 35.9 45.4 7.0 7.7 6.7 33.2 28.7 39.5 1959 381.0 41.8 36.9 47.6 7.6 7.7 7.9 34.2 29.6 40.3 1960 394.3 40.0 37.4 43.8 6.7 7.2 6.5 33.3 30.7 37.9 1961 407.4 40.9 37.4 45.5 6.4 7.1 6.2 34.4 30.8 4o.o 1962 420.9 39.6 37.8 42.6 6.3 7.5 5.5 33.3 30.8 37.9 1963 434.5 38.0 37.8 40.2 5.8 6.4 5.4 32.2 31.8 35.4 1964 449.2 37.8 37.4 39.8 6.1 6.8 5.6 31.8 31.1 34.9 1965 464.2 35.9 36.2 37.3 5.1 5.5 5.1 30.8 31.1 32.8 1966 477.5 34.9 36.9 34.6 5.2 5.0 5.4 29.7 32.4 29.7 1/ Estimated mid-year population. 2/ Following the 1956 Census of Population, the population estimate for 1957 was adjusted for under-registration of deaths during the earlier years. 3/ Per 1,000 of population on January 1. Source: Registrar-General's Annual Reports and Bureau of Statistics. TABLE 5 -- POPULATION PROJECTTOINS BY IiE GROUPS AND RACES thousands Projections 1 Census 1966 1976 1986 Age Groups o - lb 222.7 300.8 399.9 15 - 59 235.7 323.5 L34.7 60 and over 18.3 22.6 34.8 Total [76.7 646.9 869.4 Race Melanesians 202.1 27h.3 368.7 Indian 2b1.0 333.5 656.9 Others 33.6 39.1 h3.8 Total L76.7 6h6.9 869.4 Average annual increase of total population: 1966-76: 3.1% 1976-86: 3.0% 1/ Conservative estimates, assuming birth-rates declining very slightly. Source: Bureau of Statistics TABLE 6 -- ORIGIN OF GROSS DOMESTIC PRODUCT InF millions (at current prices) Percentage Percentage 1951 1952 1953 composition 1963 1964 165V composition 1951-53 1963-65 Agriculture, forestry and fishing 9.86 11.81 13.17 50.3 22.23 21.03 19.05 38.2 Mining and quarrying 0.93 0.81 0.75 3.6 0.80 0.79 0.90 1.6 Manufacturing 1.79 2.21 2.16 8.9 6.64 7.38 7.72 13.3 Construction and engineering 1.16 1.26 1.36 5.4 3.19 3.57 4.41 6.8 Transport and communications 0.72 0.75 0.93 3.5 3.92 4.43 4.39 7.8 Wholesale and retail trade 2.48 2.53 2.90 11.4 4.18 5.38 4.56 8.7 Professional and personal services 1.42 1.46 1.59 6.5 4.49 5.o 5.54 9.2 Banking and insurance 0.43 0.52 0.53 2.1 0.86 1.00 0.96 1.7 Public administration 0.88 0.94 0.95 4.0 2.94 3.12 3.28 5.7 Ownership of dwellings 0.97 0.95 1.05 4.3 3.60 3.71 4.oo 7.0 Gross domestic product (at factor cost) 20.64 23.34 25.39 100.0 52.85 55.41 54.31 100.0 Note: Because of limitations of data, many figures in this table are only rough approximations. Also, comparability for the two periods (1951-53 and 1963-65) is limited. 1/ Provisional estimates. Sources: For 1951-53: Loughlin - The Pattern of the Fiji Economy, 1956 For 1963-65: Bureau of Statistics. TABLE 7 -- NATIONAL PRODUCT AND EXPENDITURE ---_EF millions (at current pices) Percentage 1/ Percantage 1951 1952 1953 composition 1963 1964 1965- composition 1951-53 1963-65 Private consumption 16.21 17.68 18.26 69.7 37.89 41.03 42.4o 68.0 Gov rnment consumption 2.15 2.60 2.70 9.9 6.71 7.22 8.56 12.6 Gross capital formation 5.93 5.01 3.33 19.1 8.76 11.40 12.45 18.3 Private 2/ 5.23 h.o 2.51 15.7 6.12 9.14 9.03 13.6 Government - 0.70 1.00 0.82 3.4 2.64 2.26 3.42 4.7 Exports of goods and services 8.49 13.36 15.21 49.6 26.24 31.63 28.40 48.3 Imports of goods and services -10.42 -13.52 -12.19 48.3 -22.29 -30.07 -31.85 47.2 Gross Domestic Product 22.36 25.13 27.31 100.0 57.31 61.21 59.96 100.0 Net factor income from abroad - 0.66 - 0.80 - 0.61 2.8 - 3.13 - 3.06 - 1.89 4.5 Gross National Product (at market prices) 21.70 24.33 26.70 97.2 54.18 58.15 58.07 95.5 Indirect taxes minus subsidies - 1.72 - 1.89 - 1.93 7.4 - 4.47 - 5.80 - 5.65 8.9 Gross National Product (at factor cost) 19.98 22.44 24.77 89.8 49.71 52.35 52.42 86.5 Note: Because of limitations of data, many figures in this table are only rough approximations. Also, comparability for the two periods (1951-53 and 1963-65) is limited. 1/ Provisional estimates. T/ Central Government. Sources : For 1951-53: Loughlin - The Pattern of the Fiji Economy, 1956 For 1963-65: Bureau of Statistics TABL 8 -- ACTIVE POPULATION BY SECTORSV 1956 1966 Change Percentage composition % 1956 1966 Agriculture, forestry and fishing 53,260 67,500 26.7 58.8 56.6 of which, subsistence farming (25,237) (26,284) ( 4.1) ( 27.9) (22.0) Mining and quarrying 1,990 1,900 - 45 2.2 1.6 Manufacturing 6,380 8,850 38.7 7.0 7.4 Construction 6,500 7,300 12.3 7,2 6.1 Commerce 6,210 8,650 39.3 6.9 7.2 Transport, communications and storage 3,420 5,470 59.9 3.8 4.6 Electricity, water and sanitary services 740 900 21.6 0.8 0.8 Other services 12,010 18,750 56.1 13.3 15.7 Sub-total 90,510 119,270 31.8 100.0 100.0 Unstated industries and unemployed 2,750 6,54o 137.8 Total 93,260 125,810 34.9 1/ Persons aged 15 years and over, engaged in any form of economic activity, including subsistence farmers and excluding housewives. Source: Population Censuses, 1956 and 1966 TABLE 9 -- EMPLOYMEC IN. MANUFACTURING INDUSTRIES 1l56 1966 Change Percentage composition % 19956 1966 Sugar processing 2,698 2,880 6.7 42.3 32. Food and beverages 467 700 69.9 7.3 7.9 Tobacco 6o 200 233.3 0.9 2.3 Chemicals and coconut oil processing 170 250 47.1 2.7 2.8 Lime and cenent products 18 240 1233.3 0.3 2.7 Iron and steel engineering and maintenance ) 2,010 ) ) 22.7 1,367 ) 68.3 ) 21.4 Ship and boat building, motor body building ) 290 ) ) 3.3 Wood oroducts 345 730 111.6 5.4 8.3 Paper manufactures -- 33 -- -- 0.3 Printing and publishing 252 420 66.7 4.o 4.8 Rubber nroducts -- 30 -- -- 0.3 Clothing and footwear 849 830 - 2.2 13.3 9.4 Textiles 15 80 L33.3 0.2 0.9 Jewelry 105 110 4.8 1.7 1.2 Other manufactures 3L 50 47.1 0.5 o.6 To: al 6,380 8,E50 38.7 100.0 100.0 Source: Population Censuses, 1?56 and ]66 TABLE 10 -- PRICE AND WAGE INDICES 1960 = 100 Year Index of retail prices 1/ Male adults 2/ All items Food only basic wages - 1960 100.0 100.0 100.0 1961 100.8 103.1 103.6 1962 103.0 105.9 101.7 1963 103.8 106.7 105.3 1964 107.1 111.1 107.4 1965 115.6 127.9 109.7 1966 115.2 119.6 117.7 1967 116.7 119.6 118.8 1/ Average of quarterly values 2/ At mid-year, including value of free meals and quarters. Not including clerical, professional and technical workers, domestic servants, and intermittent workers, such as stevedores and cane cutters. Source: Bureau of Statistics. TABLE 11 -- LAND OWNERSHIP Percentage of Percentage of Form of ownership Area (000 acres total area total popu- and owning group 1958 1966 1958 1966 lation (1966) Crown land 293.4 319.0 6.4 7.1 Freehold land Colonial Sugar Refining Co. 75.1 .. 1.7 Europeans and part-Europeans 246.2 .. 5.5 ..3 Indians 75.8 .. 1.7 .. 50.1 Melanesians 7.- .. 0.2 .. Other races 29.b .. 0.7 .. L.0 Total 43b.0 hb6.8 9.8 9.9 Native customary tenure Melanesians 3,797.6 3,759.2 83.6 83.0 h1.6 T a t a 1 4,525.0 4,525.0 100.0 100.0 100.0 LAND LEASED TO INDIANS (1958) (000 acres) In cane belts Elsewhere Total By Melanesians 150 80 230 By the Crown 7 33 40 By the Colonial Sugar Refining Co. 50 -- 50 By other freeholders 15 15 30 Tota 1 222 128 350 Sources:For 1958: Burns Commission C.P. No. 1, 1960 For 1966: Ministry for National Resources TABLE 12 -- DISTRIBUTION OF LAND BY TENURE AND POTENTIAL Class 1/ Ia Ib II III IV Main Islands " Total area (000 acres) 778 438 1,397 1,576 Percentage composition: Crown land 7.5 9.3 4.8 10.8 7.6 Freehold land 28.1 8.4 23.7 10.0 4.8 Leased native land 16.1 9.2 9.6 7.6 2.3 Unleased native land 48.3 73.1 61.9 71.6 85.3 Total 100.0 100.0 100.0 100.0 100.0 Fiji total area (000 acres) 879 h77 1,450 1,735 1/ Class I land (potential arable, Ia; potential pasture, Ib) is suited to permanent agriculture without improvement. Class II land is suited to permanent agriculture after minor improve- ments. Class III land is suited to permanent agriculture after major improve- ments. Class IV land is largely unsuited to agriculture. 2/ Viti Levu, Vanua Levu, Taveuni Group. Source: R.G. Ward -- Land Use and Population in Fiji,1965 TABLE 13 -- ESTIMATED ACREAGES OF PRINCIPAL CROPS thousand acres 1956 1957 1958 1959 1960 1261 1962 1963 1964 1965 1966 Coconuts 168.0 168.0 168.0 168.0 168.0 168.0 168.0 169.0 170.0 172.0 227.0 2/ Sugar cane 116.1 124.0 137.7 126.4 126.4 126.4 128.0 129.0 132.1 151.3 152.7 Root crops-/ 38.9 35.7 35.9 36.0 36.0 36.0 36.0 36.1 36.3 36.5 36.2 Rice 34.5 34.8 31.2 31.2 33.0 31.5 32.0 32.0 36.0 25.0 20.7 Bananas 5.2 6.0 5.0 5.0 5.0 5.0 5.0 5.0 4.0 5.o 4.6 Yaqona 4.2 4.3 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 Cocoa 1.0 1.2 1.5 2.0 2.0 2.0 2.0 2.0 3.2 5.0 3.7 Pulses 1.6 1.8 1.9 2.0 2.5 2.5 2.5 2.4 2.4 2.5 2.4 Vegetables 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 2.0 .. 2.0 Tobacco 0.2 0.3 0.3 0.3 0.6 0.6 0.6 0.8 0.8 .. 0.8 Maize and sorghum 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.5 0.6 0.5 1/ Mainly dalo and tapioca T/ Re-assevsment of areas Source: Depaxltment of Agriculture, Annual Reports TABLE 1b -- SUAR CANE AND SUGAR Sugar cane Ra w su gar Area harvest- MIlled Price per ton FrodctIonpor_ tsPree ed (thousand 'thousand to grower Thousand Tons oTTT ae Value Value as % Value market Ecport of Molasses acres) tons) (sh. F.) tons used per ton Thousand f.o.b. of domestic per ton price (LF Thousand Value Year ------ season ------- (season) of sugar tons (L? million) exports (LF) per ton)!! tons LF million 1956 58 985 74/9 13? 7.2 129.9 5.3 54 41 30.9 20 * 1957 6h 1,488 79/1 221 7.4 173.6 B.5 63 49 46.9 35 1956 77 1,531 69/1 2E2 7.6 185.: 7.8 63 42 31.1 48 - 1959 88 2,447 64/4 283 6.7 183.4 7.4 65 40 26.5 65 D.1 1960 .. 1,166 73/3 147 8.0 217.5 8.7 68 40 27.9 55 3.1 1961 61 1,148 64/1 164 6.0 135.5 5.9 57 44 25.9 57 0.1 1962 .. 1,824 69/11 268 7.4 200.4 8.5 68 42 26.6 36 0.1 1963 88 2,337 98/- 299 7.8 271.5 14-h 75 43 73.6 60 0.2 1964 103 2,319 72/- 3C8 7.5 311.2 17.8 77 57 51.6 73 0.2 1965 106 2,171 67/- 311 7.0 305.2 12.5 70 41 18.8 65 0.2 1966 107 2,192 64/10 303 7.2 238.9 10.8 67 44 16.6 84 0.2 1967 i.l .... . 1 .6 ......0.2 1/ 1956-6D: New York No. 4 Contract, f.a.s.: Cuba 1961 and after: New York No. 8 Contract, f.o.b. and stowed, Greater Caribbean area. Average of daily prices until 1964i of weekly prices thereafter. Sources: &xport figures from Trade Reports Cane and sugar production figures of S.P,S.Y. Ltd. Department of Agriculture, Annual Reports TABLE 15 -- COPRA AND OIL Copra deliveries Average annual Disposal of copra crop (thousand tons) Year (thousand tons) copra price 1 Exported Crushed2/ Meal and cake (bP per ton) as copraV locally- Oil exported exported 1956 41.2 .. 4.1 33.3 22.7 9.7 1257 38.3 0.8 37.5 25.1 11.4 1958 30.3 .. 0.7 31.6 21.8 9.5 1959 28.9 .. 0.1 28.9 14.9 7.1 1960J 31.6 .. 2.5 31.6 18.0 6.4 1961 34.7 48.15.0 4.9 34.7 21.2 9.5 1962 39.5 46.18.3 7.0 32.5 18.2 7.7 1963 41.2 54. 3.0 6.0 35.3 20.1 7.8 1964 41.2 57, 2.3 7.1 34.1 22.8 9.5 1965 30.0 69.18.5 6.2 23.6 14.8 5.4 1966 25.4 55. 4.1 2.3 23.1 16.7 5.5 1/ 1961-65: Suva basic pricc of hob air dried copra. 1966 : Suva basic price of Grade I copra. 2/ Exports of copra and amounts crushed locally do not necessarily add up to deliveries due to shrinkage and carry overs. Source: Department of Agriculture, Annual Reports TABLE 16 -- TOURISM 1957 195851959 1960 1961 1962 1963 1964 1965 1966 (in thousands) Total arriving passengers 52.5 73.5 79.4 92.2 92.0 108.3 140.9 155.6 178.6 192.9 Total number of tourists .. 12.0 12.6 14.3 14.7 18.3 24.2 31.6 40.1 44.6 Nationality of tourists New Zealand .. .. .. 3.2 2.3 3.6 5.7 7.8 11.2 12.3 United States .. .. .. 3.4 4.3 5.4 6.0 7.8 9.5 10.2 Australia 2.2 2.1 2.7 4.8 7.5 9.1 10.1 United Kingdom .. .. .. 1.5 1.0 2.0 1.9 2.2 3.0 4.0 Other .. .. .. 3.9 4.2 4.5 5.9 6.3 7.3 7.9 Tourists as percentage of arriving passengers .. 16.4 15.9 15.5 16.0 16.9 17.2 20.3 22.5 22.8 Source: Fiji Visitors Bureau, Annual Reports TABLE 17 -- PRINCIPAL EXPORTS 1950 1953 1956 1960 1961 1962 1963 1964 1965 1966 1967 Values f.o.b. (Tn' millions) Total domestic exports 7.11 12.01 9.68 12.78 10.44 12.49 19.39 23.12 17.81 16.13 16.81 Sugar products 3.77 7.75 5.31 5.77 6.06 8.57 14.62 18.o 12.65 11.09 11.76 Coconut products 1.55 2.54 2.60 2.40 2.58 2.03 2.43 2.94 2.44 1.73 1.65 Gold 1.42 0.99 0.94 1.00 1.20 1.19 1.56 1.39 1.54 1.52 1.56 Bananas 0.10 0.33 0.21 0.21 0.24 0.18 0.25 0.15 0.07 o.16 0.07 Other 0.26 0.40 0.62 0.41 0.36 0.53 0.54 0.63 1.10 1.64 1.77 Re-Exports 0.71 1.17 1.86 2.74 2.69 3.25 2.78 2.99 3.44 3.33 3.87 Total 7.81 13.18 11.54 15.52 13.13 15.74 22.17 26.11 21.25 12.46 20.68 Percentages of total dorestic exports Sugar products 53.0 64.5 54.9 68.6 58.1 68.6 75.4 77.9 71.3 68.8 70.0 Coconut products 21.8 21.1 26.9 18.8 24.7 16.3 12.6 12.7 13.7 10.7 9.8 Gold 20.0 8.3 9.7 7.5 11.5 9.5 8.0 6.0 8.7 9.4 9.3 Bananas 1.5 2.8 2.2 1.6 2.3 1.4 1.3 0.7 0.4 1.0 0.4 Other 3.7 3.3 6.3 3.2 3.4 4.2 2.7 2.7 6.2 10.1 io.5 Source: Bureau of Statistics TABLE 18 -- COMPOSITION OF IMPORTS 1950 1953 1956 1960 1961 1962 1963 1964 1965 1966 1967 Values c.i.f. (bF millions) Food, beverages and tobacco 2.02 2.96 4.38 4.21 4.21 4.31 4.88 6.20 7.22 6.87 7.20 Raw materials 0.19 0.23 0.76 0.51 0.33 0.33 0.24 0.54 o.68 0.30 0.33 Fuels, lubricants etc. 0.74 1.06 1.72 2.11 2.09 2.24 2.19 2.82 2.84 2.72 3.10 Chemicals 0.59 0.78 1.08 0.79 1.14 1.29 1.44 2.08 2.29 1.92 1.96 Machinery and transport equipment 1.09 1.78 2.90 2.70 3.19 3.51 4.44 7.01 6.50 4.99 6.06 Other manufactured goods 2.04 3.23 5.42 5.75 5.96 5.36 6.76 8.66 9.19 8.00 9.19 Other 0.29 0.52 0.16 0.34 0.29 0.26 0.25 0.32 0.37 0.48 0.31 Total 6.96 10.55 16.43 16.41 17.23 17.39 20.20 27.63 29.08 25.27 28.15 Percentages Food, beverages and tobacco 29.0 28.0 26.7 25.7 24.5 24.8 24.1 22.4 24.8 27.2 25.6 Raw materials 2.7 2.1 4.6 3.1 1.9 1.9 1.2 2.0 2.3 1.2 1.2 Fuels, lubricants etc. 10.7 10.1 10.5 12.8 12.2 12.9 10.8 10.2 9.8 10.8 11.0 Chemicals 8.5 7.4 6.6 4.8 6.6 7.4 7.1 7.5 7.9 7.6 7.0 Machinery and transport equipment 15.7 16.9 17.7 16.4 18.5 20.2 22.0 25.4 22.4 19.7 21.5 Other manufactured goods 29.3 30.6 33.0 35.1 34.6 31.3 33.4 31.3 31.6 31.6 32.6 Other 4.1 4.9 0.9 2.1 1.7 1.5 1.4 1.2 1.2 1.9 1.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Bureau of Statistics TABLE 1' -- )TRECTI0N OP TPADE Values (iF millions) Percentages 1956 1963 196 195 1966 1967 1956 1963 1964 1965 1966 1967 Total LImports (c.i.f.) 16.43 20.21 27.63 29.08 25.2? 28.15 100.0 LOO.0 100.0 100.0 130.0 100.0 Australia 4.19 5.78 7.99 8.29 7.00 7.66 25.5 28.6 28.9 28.5 27.7 27.2 United Kingdom 5.04 4.73 5.9b 6.59 5.18 b.83 30.7 23.4 21.5 22.7 20.5 17.2 Japan 0.37 2.04 3.75 3.59 3.61 4.32 2.2 10.1 13.6 12.4 14.3 15.3 New Zealand 1.45 1.43 1.91 2.28 1.98 2.22 8.8 7.1 6.9 7.8 7.8 7.9 USA 0.94 0.67 0.99 1.11 1.38 1.60 5.7 3.3. 3.6 3.8 5.5 5.7 Malaysia/Singapore 0.03 0.58 0.68 0.60 0.99 1.31 0.2 2.8 2.5 2.1 3.9 4.6 Other 4.42 4.99 6.35 6.61 5.13 6.21 26.9 24.7 23.0 22.7 20.3 22.1 Total Exports (f.o.b.) 11.54 22.17 26.12 21.25 19.46 20.68 100.0 100.0 100.0 100.0 100.0 100.0 United Kingdom 3.96 9.30 10.00 8.83 8.80 8.67 34.3 42.0 38.3 41.5 45.2 41.5 USA 0.33 2.57 2.27 2.57 2.56 2.67 2.9 11.6 5.7 12.1 13.2 12.9 Australia 1.23 1.94 1.86 2.05 2.26 2.61 10.7 8.7 7.1 9.7 11.6 12.6 Canada 2.06 3.41 2.94 1.85 1.21 1.23 17.8 15.4 11.3 8.7 6.2 6.0 New Zealand 2.01 0.58 3.41 1.35 0.65 1.10 17.4 2.6 13.0 6.3 3.4 5.3 Tonga/W.Samoa o.63 0.69 0.70 o.61 0.58 0.79 5.5 3.1 2.7 2.9 3.0 3.6 Other 1.33 3.68 4.93 3.99 3.39 3.71 11.4 16.6 18.9 18.8 17.4 17.9 Source: Bureau of Statistics TABLE 20 -- BALANCE OF PAYMETS LF millions Yearly averages 1951 1952 1953 1963 1966 1965 1951- 1963- 1953 1965 Current account Merchandise exports (f.o.b.) 1/ 7.29 10.85 12.96 22.17 26.12 21.26 10.36 23.18 Sugar products 2.65 5.66 7.75 14.62 18.01 12.65 5.35 15.10 Coconut products 1.12 1.80 2.08 2.43 2.94 2.t 1.67 2.61 Gold 1.30 1.17 0.99 1.56 1.39 1.54 1.15 1.50 Other 2.22 2.22 2.12 3.56 3.78 6.62 2.19 3.98 Services exports 1.21 2.51 2.28 4.08 5.52 7.1L 1.99 5.58 Tourism 0.12 0.20 0.26 1.80 2.68 6.35 0.19 2.96 Transport and insurance 0.75 1.68 1.35 0.77 1.11 1.19 1.19 1.02 Government services 0.34 0.53 0.68 1.01 1.03 0.73 0.51 0.93 Miscellaneous services -- 0.30 -- 0.50 0.70 0.86 0.10 0.69 Exports of Goods and Services 8.49 13.36 15.21 26.24 31.63 28.40 12.35 28.76 Merchandise imports (c.i.f.) 1/ 9.31 11.95 10.46 20.08 27.56 29.06 10.57 25.57 Services imports 1.11 1.57 1.73 2.21 2.51 2.79 1.67 2.50 Tourism 0.28 0.26 0.67 0.36 0.37 0.39 0.36 0.37 fransport and insurance 0.66 1.22 1.19 1.68 1.89 2.11 1.02 1.90 Government services 0.15 0.05 0.05 0.17 0.25 0.29 0.09 0,23 Miscellaneous services 0.02 0.04 0.02 .. ., ., 0.02 Imnortsof Goods and Services 10.62 13.52 12.19 22.29 30.07 31.85 12.04 28.07 Balance of Goods and Services -1.93 -0.16 3.02 3.95 1.57 -3.45 0.31 0.69 Trade balance -2.03 -1.10 2.48 2.09 -1.46 -7.80 -0.22 -2.39 Services balance 0.10 0.96 0.55 1.57 3,01 6.34 0.53 3.07 Remittances receipts -- 0.08 0.04 0.31 0.30 0.15 0.04 o.26 Remittances payments 0.10 0.11 0.12 0.49 0.74 0.93 0.11 0.72 Balance including Remittances -2.03 -0.19 2,96 3.78 1.13 -4.23 0.24 0.23 Investment income receipts 0.17 0.31 0.33 0.65 0.53 0.76 0.27 0.58 Private -- 0.13 0.12 0.03 0.03 0.02 0.08 0.03 0overnment 0.17 0.18 0.21 0.62 0.50 0.74 0.19 0.55 Investment income payments 0.83 1.11 0.94 3.58 3.59 2.65 0.96 3.27 Private -- 1.08 0.92 3.46 3.47 2.50 0.67 3.16 Government 0.83 0.03 0.03 D.12 0.12 0.15 D,29 0.13 Net Factor Income -0.66 -0.80 -0.61 -3.13 -3.06 -1.59 -0.69 -2.69 Current Account Balance -2.69 -0.99 2.33 0,65 -1.93 -6.12 -0.45 -2.47 Capital account Official long-term caDital 0,12 0.10 0.10 1.72 1.12 1.42 0.11 1.42 Official grants 0.12 0.10 0.10 1.90 1.30 1.61 0.11 1.60 Official loans -- -- -- -- -- -- -- -- Repayment of official loans -- -- -- -0.19 -0.19 -0.19 -- -0.19 Private long-term capital .. .. .. 2.06 1.30 1.00 .. 1.45 Unidentified capital movements, errors and omissions .. .. .. -1.24 6.24 1.13 .. 1.38 Changes in assets .. .. .. -3.19 -6.73 2.56 .. -1.78 Bank short-term . .. .. -1.91 -0.69 0.58 .. -0.60 Government abort-term .. .. .. -2.05 -2.56 1.22 .. -1.12 Government long-term .. .. .. 0.77 -1.71 0.77 .. -0.06 Capital Account Balance 2.69 0.99 -2.33 -0.65 1.93 6.12 0.65 2.47 Note: Because of limitations of data, sany figures in this table are only rough approximations. Also, comparability for the two periods (1951-53 and 1963-65) is limited. 1/ Trade figures 27/ Minus sign indicates net increase in assets held abroad. Assets calculated at nominal values. Sources: For 1951-53: Loughlin - The Pattern of the Fiji EconorW, 1956 ,or 1963-65: Bureau of Statistics TABLE 21 -- FOREIGN ASSETS OF GOVERNMNT, PUBLIC INSTITUTIONS AND COMMERCIAL BANKS1 LF million 1961 1962 1963 1964 1965 1966 Investments Government 4.33 4.13 4.02 5.0 5.21 4.86 Semi-governmental institutions 1.80 1.79 1.73 1.67 0.63 0.63 Post Office Savings Bank i.o8 1.19 1.11 1.32 1.24 1.26 Total 7.21 7.11 6.86 8.o4 7.08 6.75 Liquid Assets 3- Government -1.44 0.42 2.46 5.00 3.78 2.58 Semi-governmental institutions 1.62 1.87 1.39 1.24 1.17 1.04 Post Office Savings Bank - - - - - - Commercial banks 0.14 0.14 3.12 3.60 3.02 3.48 Total 0.32 2.43 6.97 9.84 7.97 7.10 1/ As of December 31 T/ Including currency backing 5/ Cash and call money TT/ Including exceptional deposit of EF 1,000,000 by Currency Board Source: Central Plannirg Office TABLE 22 -- MONEY SUPPLY AND RELATED FACTORS I UF millions 1951 1952 1953 196o 1961 1962 1963 1964 1965 1966 Currency in circulation 3.32 3.41 3.90 4.40 4.44 4.01 4.49 5.69 4.86 4.77 Demand deposits 3.48 4.20 4.22 5.90 4.80 4.64 6.30 7.16 6.63 7.09 Total money supply 6.80 7.61 8.12 10.30 9.24 8.85 10.79 12.85 11.49 11.86 Deposits with commercial banks2 3.91 4.65 4.72 7.28 6.90 7.18 9.55 11.16 10.31 10.93 Loans and advances2 commercial banks- 1.50 1.54 2.15 3.89 4.10 3.76 3.43 3.68 4.76 4.97 Overseas balances of commercial banks 0.25 0.94 0.59 0.86 0.14 1.21 3.12 3.60 3.02 3.48 Advances as percentage of deposits 38 33 46 53 59 52 36 33 46 45 1/ As of December 31. 2/ Excluding commercial savings banks Source: Bureau of Statistics 1/ TABLE 23 -- ASSETS AND LIABILITIES OF COMMERCIAL BANKS- EF millions 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 Liabilities Deposits 5,20 5.58 6.42 6.59 7.28 6.89 7.18 9.55 11.16 10.31 10.93 Banks abroad 2.52 1.77 0.57 0.30 0.17 0.42 0.35 0.50 0.48 0.33 0.29 Other o.60 0.40 0.20 0.14 0.38 0.46 0.71 0.83 1.33 1.20 1.29 Total 8.32 7.75 7.27 7.03 7.83 7.77 8.24 10.88 12.97 11.84 12.51 Assets Cash 1.17 1.01 0.87 0.85 1.03 1.18 0.89 0.86 1.95 0.94 0.75 Banks abroad 0.32 0.11 o.16 0.64 1.03 0.56 1.56 3.62 4.08 3.35 3.77 Loans and advances 5.39 4.90 4.21 3.21 3.90 4.09 3.76 3.43 3.68 h.76 )4.97 Local investments 0.88 0.84 0.83 0.78 0.79 0.83 0.67 0.76 0.75 0.76 0.85 Other 0.56 0.89 1.20 0.85 1.08 1.11 1.36 2.21 2.51 2.03 2.17 Total 8.32 7.75 7.27 7.03 7.83 7.77 8.24 10.88 12.97 11.84 12.51 1/ As of December 31 Source: Statements supplied by commercial banks TABLE 24 -- ASSETS AND LIABILITIES OF SAVINGS BANKS - iF millions 1959 1960 1961 1962 1963 1964 1965 1966 Liabilities Deposits 2.91 3.35 3.69 4.02 4.91 6.52 6.38 6.71 Other 0.01 0.01 0.02 0.01 0.03 0.02 0.03 0.06 Total 2.92 3.36 3.71 4.03 4.94 6.54 6.41 6.77 Assets Deposits with commercial banks o.61 0.81 1.08 1.37 109 2.86 2.50 2.49 Central government loans 0.56 0.53 0.85 o.84 1.28 1.'1 2.14 2.28 Local government and statutory bodies 0.14 0.31 0.37 0.38 0.34 0.22 0.24 0.39 Overseas investments 1.40 1.41 1.08 1.19 1.11 1.32 1.24 1.26 Other 0.21 0.30 0.33 0.25 0,22 0.23 0.29 0.35 Total 2.92 3.36 3.71 b.03 L.94 6,5 6.41 6.77 1/ Consolidated data of commercial savings banks and Post Office Savings Bank; as of December 31. Source: Statements supplied by commercial savings banks and Postmaster-General TABLE 25 -- OPEATIONS OF THE BANKIG SYSTEI bF rtillions i960 1961 1962 1263 164 1965 1966 Deposits Commercial banks 1 June 30 7.86 8.21 8.16 9.20 12.37 12.37 12.69 December 31 8.32 7.95 8.29 10.83 12.87 12.29 12.25 Post Office Savings Bank December 31 1.54 1.56 1.54 1.68 1.85 1.95 1.92 Total December 31 9.86 9.51 9.83 12.51 14.72 1M.24 14.17 Loans and Advances Commercial banks June 30 3.88 3.82 4.00 3.82 3.54 5.12 5.08 December 31 3.90 4.11 3.83 3.76 4.07 4.99 5.23 (of which for agriculture June 30 (0.29) (0.27) (032) (0.30) (0.32) (0.62) (0.61) and dairying) December 31 (0.27) (0.28) (0.36) (0.38) (0.5o) (0.68) (0.63) Development bank June 30 0.40 0.48 0.47 0.46 0.46 0.47 0.61 Total June 30 ,2? 0 .30 1.47 4.28 L.00 $.59 5.69 1/ Including commercial savings banks deposits, after deduction of their deposits with commercial banks. Source: Bureau of Statistics TABLE 26 -- GOVERNMENT CURRENT REVENUE LF millions 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 19671/ 196817 Import duties 2.03 2.30 2.37 2.43 2.67 2.49 2.89 3.73 3.83 3.39 3.89 4.13 Port and customs tax: on imports -- 0.14 0.51 0.48 0.51 0.51 0.64 0.88 0.91 0.78 )1. ) 1.47 on exports 0.16 0.15 0.14 0.15 0.12 0.22 0.35 0.42 0.33 0.27 ) ) Excise duty 0.20 0.24 o.41 0.46 0.46 0.58 0.60 0.69 0.74 0.77 1.08 1.13 Income tax 1.47 1.55 1.53 1.83 1.47 1.67 2.01 2.84 3.26 3.49 3.60 3.70 Other 0.23 0.19 0.22 0.21 0.23 0.14 0.18 0.28 0.21 0.21 0.28 0.24 Total Tax Revenue 4.09 4.57 5.18 5.56 5.46 5.61 6.67 8.84 9.28 8.91 10.35 10.67 Non Tax Revenue 1.65 2.03 1.83 1.85 1.98 2.48 2.62 3.16 3.30 3.59 3.77 3.67 Total Revenue 5.74 6.60 7.01 7.41 7.44 8.09 9.29 12.00 12.58 12.50 14.06 14.34 Import duties and taxes in percentage of merchandise imports: 13.3 13.9 17.1 17.7 18.4 17.3 17.4 16.7 16.3 16.5 1/ Revised estimate 27/ Estimate Source: Annual Reports on Fiji's Accounts and Finances TABLE 27 -- GOVER?NMENT CURRENT EXPENDITURE BF millions 1960 1961 1962 1963 1-64 1965 1966 1967kg Adninistration 1.42 1.41 1.50 1.57 1.69 1.95 2.26 2.80 General 0.23 0.2) 0.23 0.27 0.29 0.37 0.42 0.80 Financial 0.32 0.34 0.39 0.36 0.38 a.24 0.52 0.50 Justice, police, prisons, defense 0.62 0.59 o.61 0.66 0.72 0.81 0.89 0.91 Other 0.24 0.25 0.26 0.28 0.30 0.33 0.43 0.59 Economic Services 1.88 2.09 2.12 2.25 2.43 2.64 3.31 3.77 Agriculture, forestry and fishing 0.31 0.30 0.31 0.35 0.38 0.42 0.51 o.88 Surveys 0.08 0.08 0.07 0.09 0.10 0.10 0.21 0.25 Trade and industries 0.09 0.10 0.11 0.12 0.12 0.13 0.15 0.20 Post and telecommunications 0.24 0.27 0.32 0.33 0.39 0.42 0.48 0.57 Transport 0.07 0.08 0.09 0.08 0,09 0.11 0.16 0.22- Other 1.08 1.26 1.22 1.28 1.35 1.45 1.80 1.65 Social Services 2.04 2.13 2.23 2.34 2.74 2.95 3.27 3.56 Education 1.09 1.16 1.20 1.27 1.58 1.72 1.92 2.14 Health 0,84 0.87 0.92 0.95 1.05 1.22 1.35 1.41 Welfare 0.11 0.10 0.11 0.12 0.11 0.01 0.01 0.01 Financial Commitments 0.66 0.72 0.86 1.01 1.43 1.45 1.51 1.66 Pensions and gratuities 0.33 0.34 0.36 0.32 0.50 0.50 0.52 0.59 Public debt 0.33 0.38 0.50 0.69 0.93 0.95 0.99 1.07 Miscellaneous 0.73 1.07 1.22 1.19 1.43 1.72 1.53 1.35 Total 6.72 7.41 7.93 8.36 9.73 10.71 11.88 13.14 1/ Approved estimates. Since 1967, salaries concerning development schemes previously shown in the capital budget, are included in the current budget. 2/ Includes Marine department previously under Financial Administration Source: Accountant General's Financial Reports and Estinates. TABLE 28 -- FIANCING OF GOVERNMNT TIVSTMENT EXPENDITURE ;,F millions 1957 1958 1t59 1d60 1961 1962 1963 1964 165 1966 19671/ 1968 / captal e pnditure 1.45 2.35 1.88 2.64 2.09 2.53 2.64 2.26 3.42 3.87 3.60 4.43 Current revenue 5.74 6.60 7.01 7.41 7.45 8.09 9.29 12.00 12.58 12.50 14.26 14.34 Current expenditure 6.38 6.50 6.15 6.72 7.41 7.93 8.36 9.73 10.71 11.88 13.74 14.29 Durrent account balance -0.64 0.10 0.86 0.69 0.03 0.16 0.93 2.27 1.88 0.62 0.32 0.05 Miscellaneous income -- 0.4323 0.22 0.08 o.o6 o.o6 0.07 0.10 0.11 0.13 0.10 0.10 Overall deficit 2.09 1.82 0.80 1.87 2.00 2.31 1.64 -0.11 1.43 3.12 3.18 4.28 Domestic loans 1.23 0.98 0.98 -- 1.43 0.1c 2.00 0.77 0.90 1-13 1.22 1.25 External loans -- -- -- -- 222/ -- -- -- -- -- 2.42 C.D.f.W. grants 0.o6 0.25 0.14 0.39 0.42 1.45 1.13 0.85 1.33 1.10 1.03 1.47 Total financin 1.29 1.23 1.12 0.39 1.85 3.86 3.13 1.62 2.23 2.23 2.25 5.14 Change in Treasury balances -0.80 -0.59 +0.32 -1.4i -s.15 +1.53 +1.49 +1.74 +0.72 -0.89 -0.93 +0.86 Current surplus as percentage of current revenue -11.1 4.1 14.1 9.3 0.4 2.0 10.0 18.9 14.9 5.0 2.3 0.3 1/ Revised estimate. Since 1967, salaries concerning development schemes previously shown in the capital budget, are included in the current budget. 2/ Estimate. 5/ Includes as exceptional item LF 0.20 million derived from Government Vessel Depreciation Account. U/ Exchequer loan. Source: Central Planning Office TABLE 29 -- PUBLIC SECTOR DEVELOPMENT PLAN 1966-70 Revised estimate 1966 Estimate 1967 Estimate 1966-70 h, millions $ of total hF millions $ of total EF millions of total Economic services 1.2 26.1 0.8 17.7 3.3 16.o Agriculture V 0.9 19.1 0.6 13.6 2.6 12.7 Forestry 0.2 3.8 0.1 2.1 0.4 1.9 Other Li 0.1 3.3 0.1 2.0 0.3 1.4 Infrastructure 1.9 41.2 2.0 43.2 8.4 41.0 Public works and marine 1.1 23.7 1.1 24.2 4.4 21.5 Water 0.1 2.3 0.3 5.9 1.3 6.1 Transport and civil aviation 0.1 1.4 0.1 1.8 0.4 1.7 Posts and telegraphs 0.6 13.8 0.5 11.3 2.4 11.7 Social services 0.7 16.3 1.1 24.3 5.6 27.3 Education 0.1 3.2 0.4 9.7 2.1 10.1 Medical 0.3 7.4 0.5 10.0 2.5 12.3 Other 3/ 0.3 5.8 0.2 4.7 1.0 4.9 Administration 0.7 16.4 0.7 14.8 3.2 15.6 Total 4.5 100.0 4.6 100.0 20.5 100.0 1/ Including land settlement and development and agricultural subsidies. 2/ Surveys, cooperatives etc. Y/ Low-income housing and miscellaneous. Source: Central Plannirg Office TABLE 30 -- FINANCIN0 OF DEVELOPMENT PLAN 1966-70 EF million Revised Actual Estimate Estimate Estimate Estimate 1966 1967 1968 1969 1970 Total Capital expenditure 3.87 3.95 4.43 4.94 3.87 21.06 to be financed from: Local resources Recurrent budget contribution 0.62 0.32 0.05 0.60 0.70 2.29 Thternal loans 1.13 1.23 1.00 1.15 1.34 5.85 Miscellaneous 0.10 0.04 0.05 0.20 0.26 0.65 External resources Colonial Development and Welfare grants 1.10 1.03 1.48 1.30 1.35 6.26 Other grants 0.03 0.07 0.o 0.05 0.05 0.24 External loans -- -- 2.00 1.25 1.31 4.56 Total resources 2.98 2.69 4.62 4.55 5.01 19.85 Change in Treasury balances -0.89 -1.26 +0.19 -0.39 +1.14 - 1.21 Source: Ministry of Finance THIKOMB1A 1 FIJI ISLAN DS ROUMA A0LambosO RAMBI VANUA LEVU ag Savusavu TAVEUNI 0 VANUA ' Vatia Wharf g Ellington Wharf KORO MBALAVU AMANUTHA OVALAU GROUP Oloutakm Levuka ENnd VITI LEVU Nusou NGAU Singatokc 0 oKoolevu o 5 E A LAKEMBA Novua MBENGGA VATULELE MOALA 0 90 TOTOYA 9e0 KANDAVU --- MATIUKU -- AIR ROUTES han 1rnic nee NUn \ JET AIRPORT A[RPORT £ A1RSTRIP ONO-I-LAU IN-w PORT OF ENTRY * OTHER PORTS AUSTRALIA IJI Tohi2110' _ 006 co ¯¯ 50 NEW ZEALAND not to sccle JuNE 1968 18RD-2224R VANUA LEVU SOUTH PACIFIC OCEAN VITI LEVU SO7 AC C¶ F -. i -Bç VUrban areas SAUTHTUlCSFINOCEAN ~ \DVAL Urbanarcn~ALTITUDIEIS l,' F1.kT Roads kailways * sugar mills . Sugar cane - :. 250 - 1000 B B a s over 1000 C0conuts C tlMILES mARCH 1068 JBRD - 7750R