Almost 25% of the national budget is devoted to servicing government debt, according to Deputy Prime Minister and Finance Minister Prof Biman Prasad. He emphasized the urgent need for improved tax compliance to reduce reliance on borrowing, which he believes detracts from vital public services and disproportionately affects the country’s most vulnerable populations.
During his remarks about the implications of significant debt servicing, Prof Prasad expressed concern that a large share of the budget allocated to debt repayments restricts the government’s capacity to invest in essential infrastructure and services. “Everyone in this country desires better healthcare, improved roads, and enhanced water supply,” he remarked, highlighting the straightforward logic behind fiscal responsibility.
Prof Prasad pointed out that continuing to borrow means that currently, 25% of the budget goes toward debt servicing, detracting from funds needed to support citizens. He noted that low-income individuals are often the hardest hit by underfunded public services, as they rely more heavily on them than wealthier citizens, who may turn to private alternatives.
Fiji’s personal income tax rates are among the lowest in the region. Meanwhile, to aid recovery from the COVID-19 pandemic, the government has maintained tax exemptions for those earning up to $30,000, freeing 30,000 individuals from taxation. This move is part of a broader strategy to alleviate the financial burden on citizens still feeling the economic effects of the pandemic. However, Prof Prasad underscored the need for greater tax compliance to safeguard the future of vital public services.
In summary, while the reliance on borrowing poses significant challenges for the budget, there are proactive measures being implemented to improve tax compliance and strengthen public services. Addressing these issues could pave the way for a more sustainable future, ensuring that essential services remain accessible to all citizens, particularly those most in need.
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