The recent adoption of capital recycling, also known as asset recycling, presents a potential strategy for the Fijian government to enhance public sector capabilities in funding crucial infrastructure projects while minimizing the need for borrowing. Senior economists from the ANZ Group, including Kishti Sen and Tom Kenny, suggest that the government could privatize or lease existing public assets that generate income, using the resulting funds to finance the construction of new infrastructure.
This approach aims to ease the government’s financial load, which is significant given the rising demand for infrastructure improvements. Economists point to Fiji’s ongoing efforts to attract multinationals to establish business process outsourcing (BPO) operations, which necessitates the development of dedicated technology hubs equipped with facilities for retail, accommodation, food, and medical services. However, the scarcity of privately-owned land in key urban centers has slowed progress toward establishing these integrated BPO hubs.
By considering the sale or long-term leasing of valuable government-owned land in urban areas, the Fijian government could secure necessary funding for infrastructure development and maintenance. The ANZ Group economists also highlight the potential for part-privatization of utilities like water and electricity, a strategy that could be carried out in partnership with local investors, including the Fiji National Provident Fund.
A thorough evaluation of government assets is recommended to identify which could be suitable for privatization. This evaluation could lead to the sale proceeds being reinvested into new infrastructure projects or refurbishing aging facilities.
In light of the upcoming fiscal year, Fiji has allocated nearly $1 billion to its capital budget, marking an 8% increase from the previous year. Much of this funding is anticipated to bolster the capital grant budgets of statutory bodies aimed at upgrading existing infrastructure.
Fiji’s strategy to enhance infrastructure through asset recycling could ultimately lead to improved economic conditions, attract foreign investment, and create jobs, fostering sustainable growth in the long run. This proactive stance reflects a commitment to leveraging both public and private sectors, positioning Fiji favorably for future economic advancements.
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