Fiji’s economic landscape is set to face significant adjustments as the government grapples with fiscal deficits, projected to reach an all-time high of $11.7 billion by July 2026, amounting to 79.8% of the nation’s GDP. In an analysis by ANZ Group international economists Kishti Sen and Tom Kenny, the escalating public debt is attributed to consecutive sizable deficits, leading to a forecasted deterioration of net deficit, which is expected to rise from $505 million in 2024-25 to $866 million in 2025-26.
Despite this, Sen and Kenny are optimistic about a potential turnaround by 2027, as new growth sources driven by private sector involvement in emerging industries, such as business process outsourcing and data warehousing, begin to take effect. They anticipate that towards the end of the decade, more conservative deficit budgets can be introduced, paving the way for fiscal surpluses within the next ten years.
Fiji’s government plans to navigate its financial obligations without issuing foreign currency bonds, relying instead on domestic financing amidst a banking system that boasts near-record liquidity. With a sound credit rating and decreasing interest payments relative to revenue, local debt investors are expected to support government borrowing endeavors. The economic outlook seems to favor infrastructural and public service investments, with an emphasis on collaboration between the government and private sector as a pathway to economic recovery.
In previous discussions, Finance Minister Prof. Biman Prasad underscored the significance of the government’s fiscal strategies, which avoid austerity while continuing to prioritize stability and growth amid global uncertainties. He noted that despite rising deficits, the government remains committed to enhancing public services and infrastructure. Key initiatives have included maintaining essential services, extending support to vulnerable populations, and reinforcing the economy through targeted investments without imposing new taxes—down to a VAT reduction as part of comprehensive fiscal reform.
The gradual easing of inflation—notably projected to fall significantly—signals a potential for stability in Fiji’s economy, fostering hopes for a resilient recovery. With the right mix of policy, investment, and private sector support, Fiji is poised to navigate this challenging economic terrain while laying a foundation for a prosperous future for its citizens.
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