Government will borrow $1.488 billion in the 2025–2026 fiscal year to fund operations and refinance maturing obligations under its newly released Annual Borrowing Plan. The program covers an estimated net deficit of $886 million and redemptions of $602 million, comprising $361.3 million in domestic maturities and $240.7 million in external loans coming due.
Financing will be mixed: $928.7 million is targeted from domestic markets and $559.3 million from external sources. Authorities have kept flexibility to adjust the split by increasing the overseas limit while reducing the domestic limit, and vice versa, depending on market conditions.
Domestic issuance will be anchored by Fiji Infrastructure Bonds (FIB) and Viti Bonds, with thematic bonds considered if needed. Treasury bills will continue to roll over existing stock, help build the market yield curve, and cover temporary cash flow gaps.
On external borrowing, new financing of $388.7 million is expected exclusively from multilateral partners. In addition, the plan provides access to an emergency stand‑by facility for disaster recovery and rehabilitation of around $78.9 million from JICA and about $1.8 million from the EIB via reimbursements. The 2025–2026 Budget that underpins the plan was passed by Parliament on July 17, 2025.
Context and continuity
– The approach extends the government’s established medium‑term debt strategy: balancing domestic and external sources, lengthening maturities, and reducing rollover risks. In the prior fiscal year’s plan, most domestic funds were raised through longer‑dated 15‑ and 20‑year bonds, a tactic likely to continue to support market development.
– For 2025–2026, interest costs are projected at around $534.5 million, while principal repayments total $602 million. Overall debt is projected to reach about $11.7 billion by July 2026, or roughly 79.8 percent of GDP.
– A larger external share can introduce exchange‑rate risk; however, multilateral funding typically carries concessional terms and longer grace periods, while the domestic market—supported by major institutional investors—provides stable, local‑currency funding.
What this means
– The plan clearly separates borrowing to fund current needs (the net deficit) from refinancing of existing debt (redemptions). That distinction matters: refinancing maintains continuity of obligations without increasing net debt by the full gross amount.
– Using treasury bills to manage short‑term needs and longer bonds to lock in terms helps build a reliable yield curve, deepen the domestic capital market, and reduce refinancing pressure.
– Access to disaster stand‑by financing is a prudent resilience tool. Pre‑arranged facilities can speed recovery and reduce fiscal strain after shocks.
Constructive outlook
– The mix of concessional multilateral financing and deepening of domestic bond markets can lower borrowing costs over time and improve risk management.
– Transparent publication of borrowing intentions gives investors clearer signals and can attract longer‑term participation, supporting infrastructure and service delivery priorities set out in the budget.
Summary:
– Total borrowing (2025–2026): $1.488 billion
– To fund net deficit: $886 million
– To refinance maturing debt: $602 million (domestic $361.3m; external $240.7m)
– Funding split: domestic $928.7m; external $559.3m
– Domestic instruments: Fiji Infrastructure Bonds, Viti Bonds, treasury bills; thematic bonds if required
– External financing: $388.7m (multilaterals), plus disaster stand‑by around $78.9m (JICA) and about $1.8m (EIB reimbursements)
– Budget supporting the plan passed on July 17, 2025
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