And it has also revised the outlook on the foreign currency rating from positive to stable.
“We raised the foreign currency rating on Fiji following continued improvements to the country’s external position following the implementation of Standard and Poor’s revised methodology and assumptions for sovereign ratings,” primary credit analyst Kyran Curry said.
“Fiji’s sizeable current account deficits, reflecting large merchandise trade deficits, have improved in recent years. At the same time, the ratings on Fiji reflect the country’s persistent fiscal and current account deficits.”
“They also encapsulate Fiji’s growth prospects, which have been reduced by past political instability, low productivity in the sugar sector and flood damage to both crops and infrastructure,” he said.
Curry said after contracting for three of the past four years, they projected Fiji’s economy to grow 1.3 percent in real terms this year, attributed to a rebounding tourism sector and some boost from government spending.
He said the stable outlook reflected S&P’s expectation that Fiji’s external position would continue to improve, including in the level of foreign exchange reserves, supported by a continuing recovery in the tourism sector.
“We may raise the ratings if there are improvements in one of several areas, including strengthening Fiji’s political institutions, improving donor relations, enhancing growth prospects through labor or market reforms, bettering the external indicators.”
Prime Minister Frank Bainimarama attributed the improved credit ratings to the current economic reforms now in place by government.
“We can expect Fiji’s economic growth prospects to be enhanced, which will further improve the indicators required to raise Fiji’s ratings in the future,” he said.
“This positive rating will instill further confidence in achieving Fiji’s medium term macroeconomic policy goals as well as the key pillars of the Charter, which will lead Fiji to economic prosperity.
“The improved rating will also inspire investor confidence that Fiji is in a better position than some countries that are currently facing economic crisis.”
S&P highlighted the importance of the tourism sector which continues to recover and rebound.
This will further assist Fiji’s external position to improve as the level of foreign reserves increases.
S&P’s positive rating awarded to Fiji comes at a time when the world’s largest economy, the U.S. lost unprecedented ratings from S&P.
