The Fijian government plans to borrow a total of $1.48 billion in the fiscal year 2025-2026 to cover its budget deficit, with approximately $960 million sourced from the domestic market and the remainder of $520 million to be obtained from international lenders. This decision was disclosed by Deputy Prime Minister and Minister for Finance Prof. Biman Prasad following the announcement of the national budget.
In crafting the budget, the government emphasized a focus on expansionary spending, which includes investments in critical sectors such as education, health, infrastructure, and security, all aimed at alleviating the cost of living without imposing substantial new taxes—a 2.5 percent reduction in Value Added Tax is also part of the strategy.
This borrowing strategy will result in a projected total government debt of approximately $11.7 billion by July 2026, equivalent to 79.8 percent of the country’s GDP. The government is making a conscious effort to ensure a sustainable debt management approach; notably, major borrowing will come from the Fiji National Provident Fund, which has historically been a significant holder of government bonds, accounting for a substantial portion of its investment portfolio.
Prof. Prasad indicated that Fiji is also securing loans on very favorable terms from various international financiers, such as the Asian Development Bank and the World Bank. These institutions often provide concessionary financing options—including low interest rates and extended grace periods—that support Fiji’s economic policies.
The government’s strategy is designed not only to manage its fiscal obligations but also to articulate a clear economic vision to both local and international stakeholders, indicating a commitment to sound economic governance.
Overall, while increasing government debt poses challenges, such borrowing can be a strategic move if directed towards investments that yield long-term economic benefits. The proactive approach to blending local and international funding enables the government to navigate fiscal pressures while enhancing service delivery and infrastructure development.
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