Fiji, a small island nation heavily reliant on imports and tourism, is extremely susceptible to climate change and fluctuations in the global economy. The effects of this vulnerability have been exemplified during the COVID-19 pandemic, which has led to drastic reductions in government revenues – almost 50%, according to Deputy Prime Minister and Minister for Finance, Professor Biman Prasad. This downturn is due to significant economic contractions of 17% in 2020 and 4.9% in 2021.
Consequently, the Fijian government has had to resort to significant borrowing to support its own operations and those Fijian citizens impacted by the pandemic. This has resulted in notable fiscal deficits of over $1 billion over the course of the pandemic years.
In response to this, Professor Prasad revealed that the Coalition Government has undertaken a medium-term fiscal consolidation strategy beginning 2023-2024. The aim is to decrease fiscal deficits, generate fiscal buffers, reduce the debt-to-GDP ratio, and boost long-term debt sustainability.
“As the pandemic has led to high fiscal deficits and a significant spike in public debt, analyzing fiscal risk is crucial to gauge Fiji’s future shock-absorption capacity,” said Prasad.
Furthermore, a parliamentary debate regarding the 2024-2025 National Budget is scheduled for next week.