Fiji’s ability to navigate potential financial and economic challenges is under scrutiny, as highlighted in the recent Pacific Economic Monitor (PEM) published by the Asian Development Bank (ADB).
The ADB emphasized that in order to maintain strong economic growth and bolster resilience, the government needs to focus on improving the efficiency of expenditures, enhancing budget execution, and advancing significant private investment projects. Streamlining immigration and business application processes is critical for stimulating new economic activities and enabling the private sector to expand its hotel capacity.
The PEM is a biannual report assessing economic developments and policy issues across the ADB’s 14 Pacific developing member countries, including Fiji. While acknowledging the government’s current push for fiscal consolidation to mitigate public debt, the ADB noted the importance of strengthening fiscal buffers and ensuring macroeconomic stability given Fiji’s vulnerability to economic shocks.
The limited fiscal capacity to absorb upcoming disturbances remains a significant concern, underscoring the necessity for continued efforts to improve expenditure efficiency. The report advocates for growth-focused spending and enhancing implementation capacity as essential steps towards achieving resilient and inclusive growth while lowering debt levels.
Additionally, the ADB pointed out the vital contribution that state-owned enterprises could make to productive investments. The focus should be on fiscal sustainability and prioritizing resources that address societal needs and infrastructure development for enduring and inclusive growth.
The government may need to enhance its capacity to implement plans effectively and address the shortcomings in capital spending execution. To reach these goals, the new budget and Medium-Term Fiscal Strategy set fiscal targets aimed at fostering macroeconomic stability and achieving sustainable growth.
For 2024 and 2025, the ADB forecasts a growth rate of 3.3 percent and 4.0 percent, respectively, while stressing that building resilience remains a pressing need.