Fiji’s ability to navigate potential financial and economic shocks is under scrutiny by development partners, with the Asian Development Bank (ADB) highlighting this concern in its latest Pacific Economic Monitor (PEM).
The ADB stresses that to achieve sustained economic growth and bolster resilience, the Fijian government should focus on improving expenditure efficiency, enhancing budget execution, and advancing significant private investment initiatives. This includes simplifying immigration and business application processes, which are vital for stimulating economic activities and encouraging the private sector to expand hotel capacities.
The PEM is a biannual analysis by the ADB that reviews economic developments and policy matters in its 14 Pacific developing member countries, including Fiji. While acknowledging the government’s focus on fiscal consolidation to reduce public debt, the ADB also points out the importance of strengthening fiscal buffers and maintaining macroeconomic stability due to Fiji’s vulnerability to economic disruptions.
The limited fiscal capacity to handle potential future challenges raises concerns, underscoring the need for continuous improvements in expenditure efficiency. The ADB emphasizes the importance of growth-oriented spending and enhancing implementation capabilities to promote resilient and inclusive economic growth while lowering debt levels.
Furthermore, the report notes the crucial role that state-owned enterprises can play in generating productive investments. The focus must be on fiscal sustainability, prioritizing resources to meet societal needs and invest in infrastructure for inclusive and sustainable growth. The government may need to enhance its implementation capacity to tackle the challenges of under-execution in capital spending.
To meet these goals, the new budget along with the Medium-Term Fiscal Strategy aims to set fiscal targets that will promote macroeconomic stability and foster resilient growth. In the latest PEM, the ADB forecasts growth of 3.3 percent for Pacific economies in 2024 and 4.0 percent in 2025, while emphasizing the ongoing need to build resilience.