This year’s national budget for Fiji has been designed to adopt an expansionary stance, aimed at mitigating rising global risks and addressing domestic needs, according to Finance Minister and Deputy Prime Minister Professor Biman Prasad. The government proposes to increase its spending, which will result in a deficit rise from 3.5% to 6% of GDP. This strategy is focused on supporting vulnerable households, enhancing infrastructure, and promoting economic growth.
Professor Prasad elaborated that a reduction in Value Added Tax (VAT) is part of this budget, where a 2.5% decrease is intended to stimulate consumer spending and business activity. If businesses pass on these savings, the government anticipates an uptick in revenue for the fiscal year.
The minister highlighted three critical reasons for this fiscal approach: preparation for potential global economic turbulence, improvement of infrastructure and service delivery shortcomings, and increased support for groups like civil servants, pensioners, and rural farmers. He believes that an injection of around $800 million into the economy via pay raises, tax cuts, and relief measures is poised to enhance local consumption and encourage further investment.
Despite the anticipated higher deficit, he assures that public debt will remain manageable, kept below 80% of GDP. Past reforms, as pointed out by Professor Prasad, have fortified fiscal stability, allowing Fiji to collect more revenue than was initially forecasted and to attract robust investment interest, particularly from the Fijian diaspora.
In terms of governance, new measures are being implemented to enhance tax compliance and reduce financial crime, including linking mobile e-wallets to taxpayer identification numbers (TINs). On the borrowing front, 65% of funding is expected to be sourced locally, with the remainder coming from concessional loans from partnerships with entities like the World Bank and Asian Development Bank.
Ultimately, Professor Prasad emphasized that the focus extends beyond merely recovering from current challenges; it is about creating a resilient, inclusive, and growth-oriented economy for Fiji in the long term. This optimism mirrors the sentiments expressed in previous discussions regarding maintaining fiscal discipline while responding to the needs of citizens amid external pressures.
Overall, this budget reflects Fiji’s commitment to resilience, aiming to bolster the wellbeing of its citizens while navigating an increasingly uncertain global economic landscape.
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