Bangkok--12 May--Moody's
Moody's Investors Service says that it is maintaining its negative outlook for Fiji's B1 rating as poor growth prospects continue to weigh on government finances.
Moody's annual sovereign report on Fiji provides an updated analysis on the rating and does not constitute a rating action.
The report notes that Fiji's B1 foreign currency and local currency ratings were derived from a methodological assessment of low economic resilience and low financial robustness.
The country's small size and lack of diversification have lessened its resilience to shocks, as evidenced by weak growth for much of the past decade. The outlook for growth is further hampered by the dearth of investment spending.
At the same time, institutional quality has been on a trend decline, reflecting weaknesses in governance and the rule of law, despite a business-friendly regulatory framework.
Fiscal consolidation has proceeded slowly and has led to rising debt levels as a share of either GDP or revenues. Although Fiji's debt metrics are expected to further diverge from the B-rated peer median, financing pressures are mitigated by the captive source of financing provided by its superannuation fund.
The long-term actuarial sustainability of this fund, however, represents a key event risk for the rating. In addition, contingent liabilities posed by loss-making public enterprises have grown significantly over the past five years.
A change in the rating outlook to stable would depend on a significant upturn in macroeconomic performance coupled with greater progress on fiscal consolidation. In turn, a more favorable growth outcome may hinge on the restoration of an elected government that would bolster international sentiment and investment spending.
The principal methodology used in this rating was Moody's Sovereign Bond Methodology published in September 2008.
The report is entitled "Credit Analysis: Fiji." It can be accessed at www.moodys.com.
Please see ratings tab on the issuer/entity page on Moodys.com for the last Credit Rating Action and the rating history.