Hon. Attorney-General At High-Level Dialogue On Enhancing Macroeconomic Resilience To Natural Disasters

Bula vinaka and a warm welcome to you all.

The Fijian Government is pleased to co-host this high-level dialogue and workshop with the IMF on Enhancing Macroeconomic Resilience to Natural Disasters and Strengthening Fiscal Frameworks in the Pacific Islands. We also thank DFAT for supporting this event.

It is important for our Pacific nations to meet and discuss issues affecting our region. We are small, vulnerable nations with much in common, and our growth, security and development depend in no small part on our ability to work together and help each other.
Of course, one of the most pressing challenges for the region–and the focus of this meeting–is our vulnerability to natural disasters, which scientific research indicates is being exacerbated by climate change. As the Honourable Prime Minister of Fiji continues to emphasise, there is a need for regional solidarity and commitment in addressing these important issues. Timely events such as this shed important light on a critical problem, expose us to strategies that have been used effectively and strategies that have failed in other parts of the world, and help focus and guide national efforts on building resilience.

And I don’t want to lose sight of what it means to build resilience in human terms. When we meet in setting such as this, we used terms like “build resilience” in a mantra-like way. But we must never lose sight of the fact that we are not just talking about budgets and plans and processes. Resilience is about the ability of governments to serve the people when they need help most. It is about the ability of government to cushion the economic and social impact of a natural disaster, a man-made catastrophe, or a health emergency. It is about the ability of governments to establish mechanisms that can be set in motion quickly to help people recover from adversity and resume their lives and their businesses. We talk about nations recovering from disasters, but it is always people who must recover.
Effects of Natural Disasters to Pacific Island Nations.

We all know that Pacific nations are highly exposed to natural disasters, a position made worse by the onset of climate change. Our economies and communities will increasingly become affected. For some of the islands, this is already the reality.

Fiji has suffered its fair share of natural disasters. In the last two decades, no fewer than 19 cyclones have assaulted us, the last one occurring in 2012. The total cost of these disasters was estimated at US$630 million, an average of around US$33 million per disaster. The worst ever to hit Fiji was Tropical Cyclone Evan in December 2012, which caused damages estimated at US$108 million and made flood control a very high priority for us. We have been fortunate enough to have sailed through 2013 and 2014 without any cyclones or major disasters, and we pray that this will continue in 2015.

Agriculture and tourism are critical sources of income and foreign exchange in most of our island economies, but these are also the sectors most vulnerable to cyclones and flooding, which then have a severe dampening effect on on the entire economy. In addition, loss and damage to infrastructure can pose serious financial constraints for governments. Rebuilding damaged infrastructure requires both time and money. Generally, it takes several years for reconstruction, and in most cases, it is fair to say that rehabilitation work causes us either to take on additional debt or postpone other important projects. This adds to the national debt burden, makes it difficult to meet medium- term fiscal targets set by governments, and can have a dispiriting effect on the people, who see their expectations for growth and improved living standards frustrated by events beyond their control.

The Fijian Government has done well to maintain budget deficits relatively low. On average, the budget deficit has been below 2 percent of GDP over the last 8 years. As a result, our debt level, currently at below 50 percent of GDP, remains manageable. We also expect that implementation of public financial management reforms in line with our Public Expenditure & Financial Accountability and Debt Management Performance Assessments, will further strengthen our fiscal framework and yield better performance going forward. These efforts will help create the fiscal space needed to counter the shocks we know will suffer eventually, including those arising from natural disasters. In this regard, I understand that officials have been engaged in a workshop for the past 3 days in which the IMF, World Bank, ADB and other development organisations shared their experience and expertise and offered strong technical advice. This, complemented by the sharing of various country experiences, will certainly help our officials develop more effective macroeconomic policy and more accurately forecast the budgets that will be required for maximum resiliency. The challenge, though, remains in the execution: In the end, we have policies, funds, and logistical infrastructure in place to carry out practical measures that will protect our people when possible, limit the suffering if complete protection is impossible, and help people recover as quickly and effortlessly as possible.

-Government of Fiji’s Financial Tools to Mitigate Disaster Risk-

Natural disasters are risks that Governments need to incorporate into their budget and fiscal framework. In Fiji, we have some existing financial provisions to mitigate disaster risk. On the fiscal front, Government provides yearly funding to a Disaster Rehabilitation Fund that is used to provide immediate relief.

We also encourage the private sector to contribute towards the Disaster Rehabilitation Fund by providing a 150% tax-deduction incentive for voluntary cash contributions by businesses. Further, in the 2015 Budget, the Fijian Government introduced a 200% tax deduction for voluntary cash contributions by taxpayers towards a Farmers Emergency Fund Account, which will be used to assist farmers who are severely affected by disasters. For evacuations that are related to medical and natural disasters, the Service Turnover Tax is exempted.

Budget resources are also allocated towards disaster risk and Climate Change adaptation initiatives, which include the construction of seawalls in small outer islands and relocation of coastal villages to higher ground. We have moved three villages already, at a cost of some 2 million Fijian dollars, but we will need to work with international aid partners to relocate all 45 villages that are in the path of encroaching seas. In addition, we have also set aside funding for the maintenance of our flood early warning system.
Ladies and gentlemen, we know that climate change and sea-level rise are not just crises looming on the horizon. They are with us now. What looms on the horizon is even greater disaster if we do not seriously confront this challenge. We Pacific Island nations are among the most exposed, the most vulnerable. We are specks of land surrounded by the Pacific, not vast continents. Greater resiliency, of course, is important under any circumstances, but resiliency alone is not enough. We welcome the support of the developed nations in helping us become more resilient, but we must insist that they do more to decrease the need for resiliency by committing to the significant reduction of greenhouse gases.

Fiji is doing its part as well as we can. In terms of policy direction, the Fijian Government’s Green Growth Framework has been designed specifically to support environmentally sustainable development. Building resilience to Climate Change and disasters is one of the focal areas of the framework.

-Importance of the Workshop-

We can all recognize the critical challenges that Pacific Island countries face, particularly, the financial constraints and distress caused by natural disasters. Most Pacific islands have few options for securing immediate finance for swift post-disaster emergency response without compromising their long-term fiscal sustainability. Moreover, borrowing capacity and access to international insurance markets is limited, and that compels governments to bear the burden. I hope that we will address some of these critical issues in the course of our discussions today. Peer learning and collaboration is an important aspect of these interactions, and I hope this is an area we can continue to strengthen by working together.

Ladies and gentlemen, sometimes it seems like there is too much work to be done. Our people need a great deal from us, particularly the poorest among us—the people who live in remote rural areas in a subsistence economy, the people who live in informal communities, the infirm and handicapped. We cannot do everything at once, but we must be prepared to shield them as much as possible from natural disasters, epidemics and other catastrophes. Protection and recovery—resilience—are basic functions of government. The people have entrusted us to deliver that for them.

Vinaka Vakalevu

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