Fiji, a small and remote economy, highly dependent on tourism and imports, is highly susceptible to climate change and shifts in the global economy. COVID-19 seriously harmed the country’s economy, with government revenues dropping by approximately 50% due to economic contractions of 17% in 2020 and 4.9% in 2021, according to Deputy Prime Minister and Minister for Finance, Professor Biman Prasad.
As a result of the financial fallout from the pandemic, the Fijian government had to borrow extensively to support its operations and assist citizens affected by the crisis. This led to net deficits totaling over $1 billion during these tough pandemic years.
Recognizing these challenges, the Coalition Government is implementing a medium-term fiscal consolidation strategy commencing in the fiscal year 2023-2024. The main aim is to decrease fiscal deficits, rebuild fiscal buffers, lower the debt-to-GDP ratio, and improve long-term debt sustainability.
Professor Prasad emphasizes the importance of a fiscal risk analysis due to the substantial fiscal deficits and public debt incurred during the pandemic. Such an analysis is critical to gauge Fiji’s capacity to bounce back from potential future shocks.
Finally, a debate on Fiji’s 2024-2025 National Budget is scheduled to occur in Parliament next week.