External Institutional Pressures: Role of the World Bank, Asian Development Bank, and International Monetary Fund in Fiji

The World Bank provides assistance by way of funding for development projects in Fiji. It operates an office at the Reserve Bank of Fiji in connection with the United Nations Development Programme (Sharma 2009). The International Monetary Fund (IMF) is a provider of funds or assistance in a like manner if the balance of payments is in deficit. In addition, the Asian Development Bank (ADB) assists the Fijian financial markets by providing staff for market development programs. Their assistance entails certain project funding as well as, or in conjunction with, the World Bank. So, the involvement of international financial organizations is an important aspect of the institutional environment for Fijian society. They have insisted on the implementation of private sector concepts in public sector organizations, as has been the experience in other countries (e.g., Hoque and Hopper 1994, 1997; Sharma and Fawrence 2008, 2009; Nath, Van Peursem, and Lawrence 2011).

The World Bank and ADB are expected to make loans only where there are reasonable prospects of repayment. The loans given out by the Bank have to be expended for productive purposes only. In effect, the only requirement that the Bank imposes is that, before it grants loans, there shall be a clear agreement on how the proceeds of the loan are to be expended and on what the loan is expected to achieve.

After considering the roles of the World Bank and ADB, the next section discusses the state’s public sector reform policy in Fiji. The Department of Public Enterprises, which has been set up in Fiji, is responsible for implementing the public sector reform program. The Department of Public Enterprises (1998) promotes the public sector reform policy as one that increases economic efficiency and reduces the burden that the public enterprise sector currently places on the taxpayer. The Department of Public Enterprises is a source of coercive pressure on public enterprises to invoke reforms in line with the principles of new public management. However, it has to be noted that a consequence of economic efficiency is job displacement. This has worsened the social problems that Fiji has faced in the post-coup years. Prime examples are the workers who have been laid off after the restructuring of the Fiji

Electricity Authority, Airports Fiji Limited, and Telecom Fiji Limited (Ministry of Public Enterprises and Public Sector Reform 2002).

Public Sector Reform Policies/Global Trends

Like other post-colonial societies, Fiji relied on its public sector for nation-building and socio-economic development. The public enterprises offer essential products and services to Fiji: water, electricity, telephone facilities, and ports of entry. It was during the 1980s that the government began to dismantle state controls through a public sector reform policy. Public sector reform is an imperative part of the national policy agenda in Fiji. The government was committed, through the reform program, to selling part of its interests in a number of public enterprises, with the proceeds used to repay debt. The stated rationale behind the reform was that many costly and lossmaking organizations, when reorganized and commercially focused, would appear to be in a position to give the government and the people of Fiji a better reward for the public funds invested in them (Department of Public Enterprises 1998). Sarkar and Pathak (2003, 55) report that the government of Fiji has reformed most of its enterprises intending to enhance “profitability, efficiency and accountability.” The Finance and Public Enterprise Minister, in a newspaper article in 1998, echoed these sentiments and identified public enterprise reform as an avenue for the government to work smarter. He argued that it made sense to allocate resources to those areas that could use them more adequately and render the best returns. He further evaluated the reform program as one in which

we have a win-win situation. We receive value for the portion of our assets sold, yet we still enjoy higher returns on our remaining ownership, and as a bonus, retain those returns within Fiji for more capital developments.

(The Fiji Times 1998, 3)

The Fiji government has further claimed that reforms were intended to ease the burden on the taxpayer. Fiji’s taxpayers have been continually asked to support ailing public sector enterprises making losses. “Losses from public enterprises were around F$20 million a year, including foregone tax revenue” (Department of Public Enterprises 1998, 6). Public sector reforms were aimed at ensuring the government obtained higher returns from its investment and improved productivity by providing quality services to the people of Fiji (Ministry of Public Enterprises and Public Sector Reform 2002). The government expected that the restructuring of enterprises would improve performance. Reformed entities would add more revenue to the government’s coffers in the form of 31% corporate taxes and dividends. The Ministry of Public Enterprises’ annual report (2002, 20) states that the commercialized government entities paid a dividend and taxes amounting to FS3 million in 2002. The next section discusses the functions of the Department of Public Enterprises and Ministry of Public Enterprises and Public Sector Reform.

 
Source
< Prev   CONTENTS   Source   Next >