Deputy Prime Minister and Minister for Finance Professor Biman Prasad emphasized the Government’s commitment to a long-term fiscal strategy extending over the next decade or more, rather than seeking quick solutions.
Prof Prasad asserted that achieving a stable and sustainable debt-to-GDP ratio is a significant accomplishment for the country, but it cannot be resolved within just one or two years. This fiscal commitment is intended to guide not only the current administration but also future governments.
“The political will and national commitment to manage our debt issue have been praised by international agencies, financial institutions, credit rating agencies, and all our development partners,” said Prof Prasad. “We have received positive evaluations, which boosts confidence among our investors, including foreign investors looking at Fiji.”
Additionally, Prof Prasad addressed the potential revenue shortfall if the Opposition’s proposal to eliminate the 15 percent Value-Added Tax (VAT) were to be implemented. He warned that removing the VAT would result in a revenue loss of $600 million.
“If we reduce the VAT from 15 percent to nine percent, we will lose $600 million in revenue. Each one percent reduction in VAT equates to a $100 million decrease in tax revenues. Are we prepared to increase the fiscal deficit to double digits and borrow an additional $600 million? Practically, it is not feasible to secure this additional funding given the constraints on financing availability,” he explained.
Prof Prasad emphasized that the 15 percent VAT rate was established based on meticulous analysis of available data, ensuring the government has sufficient funding to maintain operations effectively.