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Tuesday, January 15, 2008

Remittances to Fiji fall in 2007

The Reserve Bank of Fiji has announced that remittances to Fiji fell by almost 30% to F$183.7 million in September 2007, from F$260.7 million in the same period the previous year. This was after remittances had grown dramatically from F$50 million in 1999 to F$320 million in 2006.

The Reserve Bank has not been able to "explicitly ascertain" the reasons for the fall. One of the reasons given is that more remittances could now be coming in through informal channels than the formal ones.

It is interesting to note that the Reserve Bank has not done a bit more to analyse the real causes for the fall in remittances.

Some of the ones I can think of include :
  1. Due to the events of December 2006, more prudent people would be opting to keep their hard-earned funds offshore rather than bringing them into Fiji;
  2. If most Fiji citizens working abroad are being paid in USD which is the most usual currency of payment that people prefer, then given that the USD has been relatively weak, this may have resulted in the reduction in conversion of earnings to Fiji Dollars;
  3. Insufficient data has been collected from all points where remittances could be coming into the country to enable comprehensive analyses;
  4. In the second half of the year when interest rates in Fiji has fallen sharply, again more prudent people would have preferred to keep their funds offshore in countries where interest rates have been higher e.g. Australia, New Zealand;
  5. Rather than send hard cash into the country, people are probably buying items from abroad and sending those to Fiji as the purchase prices offshore maybe more cheaper.

These are just some reasons that can be looked at in more detail.

It would be interesting to look at the actual figures and trends for further analysis.

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