A senior economist at the University of the South Pacific says the Fiji government should rein in public sector expenditure and control growth in domestic credit.
The Fiji Times reports the warning has come from Dr T.K. Jayaraman who says mounting pressures on the exchange rate, if left uncontrolled in a fixed exchange rate regime, will only fan fears of a devaluation.
He says this would give rise to speculative attacks on the Fiji currency and devaluation would become a self fulfilling prophecy.
Dr Jayaraman says Fiji cannot afford to lose the gains of a fixed regime over the past decade through unwise policies amounting to fiscal indiscipline and lack of attention to the maintenance of political stability.
He says Fiji's currency has been experiencing severe pressure in recent months.
