Former minister and economist Dr. Mahendra Reddy has warned that declaring a State of Emergency (SOE) in Fiji could deliver a swift and damaging blow to the country’s tourism-dependent economy, undermining visitor confidence, household incomes and foreign exchange inflows. In a statement this week, Dr. Reddy said an SOE “carries consequences far beyond security operations” because it signals exceptional instability both at home and abroad.
Dr. Reddy cautioned that regardless of any internal justifications the government might have, international perception matters for a small, open economy such as Fiji’s. “Regardless of the Government’s internal justification, the international perception will be that Fiji is confronting a significant breakdown in public order,” he said, warning that such perceptions would likely prompt travel advisories from key source markets. “A State of Emergency would almost certainly trigger travel advisories… Even precautionary advisories… can materially reduce tourist arrivals,” he added.
The economist painted a stark picture of immediate fallout should arrivals fall. Reduced visitor numbers, he said, would quickly depress hotel occupancy rates, squeeze tourism receipts and constrain business cash flows across the sector. He emphasised that the shock would be most acute for lower- and middle-income workers in services — hotel staff, taxi drivers, market sellers and small business owners — who have the least capacity to absorb sudden income losses.
Beyond the household level, Dr. Reddy warned of broader macroeconomic risks. A contraction in tourism earnings, he said, would weaken foreign exchange inflows and place downward pressure on the nation’s foreign reserves. “Any sustained decline in visitor receipts would increase pressure on the balance of payments,” he said, noting the potential for knock-on effects on exchange rate stability if the tourism slump were prolonged.
Dr. Reddy also flagged the potential impact on investor sentiment. He warned that foreign investors could read emergency declarations as signs of political or institutional fragility, which could undermine recent gains in investor confidence. That caution comes after high-profile investments and developments earlier in Fiji’s tourism recovery, such as the unveiling of the One&Only resort in the Yasawas, which government officials and industry leaders have pointed to as evidence of renewed international trust in Fiji’s tourism prospects.
As the latest development in an ongoing policy debate, Dr. Reddy urged careful consideration before any decision to declare an SOE, stressing the wide-reaching economic ripple effects such a move could trigger. His comments add an economic dimension to discussions about emergency powers, highlighting how choices framed as responses to security or governance issues can carry immediate consequences for livelihoods, macroeconomic stability and Fiji’s standing with overseas visitors and investors.