Almost a quarter of the national budget is currently dedicated to servicing government debt, an issue that Deputy Prime Minister and Minister of Finance Prof. Biman Prasad has highlighted as a pressing concern. He emphasized the necessity for improved tax compliance in order to diminish the reliance on borrowing. This borrowing not only strains financial resources but also diverts funds away from essential public services, disproportionately affecting the country’s most vulnerable populations.
Prof. Prasad elaborated on the adverse effects of debt repayment on the government’s ability to invest in necessary infrastructure and services. He stated, “Everyone in this country wants better health, better roads, better water supply, better drainage, better services.” He reiterated that continued borrowing is unsustainable, as it results in a significant portion of the budget being consumed by debt repayments, which limits the government’s capacity to support its citizens.
The Deputy Prime Minister pointed out that low-income individuals suffer the most when public services such as healthcare and transportation are underfunded. While wealthier citizens can turn to private healthcare and insurance, it is often the most vulnerable who bear the brunt of deteriorating public services. He asked, “If a health centre deteriorates or if a school in rural areas isn’t fixed, who gets affected? The most vulnerable.”
Furthermore, Prof. Prasad examined Fiji’s tax policies, noting that the country has relatively low personal income tax rates compared to its regional counterparts. In a bid to foster recovery after the COVID-19 pandemic, the government has maintained tax exemptions for individuals earning up to $30,000, which has resulted in approximately 30,000 people being relieved of tax obligations. This measure aims to ease the economic pressure on citizens still recovering from the pandemic’s impacts.
Nevertheless, he asserted the importance of enhancing tax compliance to secure the future of public services. He acknowledged that global economic factors are influencing living costs, underlining that sustainable financial strategies are essential for the well-being of the population.
In summary, the government’s current financial strategies must evolve to focus less on borrowing and more on strengthening tax compliance to ensure that essential public services are adequately funded. This change could lead to improved quality of life for all citizens, especially those who are most vulnerable. Despite the challenges faced, the commitment to reforming tax policies and reducing reliance on debt is a hopeful step towards a more sustainable economic future.
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