Fiji’s ability to navigate financial and economic challenges has drawn attention from development partners, particularly noted in the Asian Development Bank’s (ADB) recent Pacific Economic Monitor (PEM). The ADB expressed concerns regarding the country’s limited fiscal space amidst ongoing economic shocks.
To ensure sustained economic growth and enhance resilience, the ADB emphasized that the Fijian government should focus on improving expenditure efficiency, refining budget execution, and promoting significant private investment initiatives. Streamlining immigration and business application processes is also essential for stimulating new economic activities and enabling the private sector to expand hotel capacity.
The PEM serves as ADB’s biannual assessment of economic developments and policy matters in its 14 Pacific developing member countries, including Fiji. While acknowledging the government’s focus on fiscal consolidation to address rising public debt, the ADB highlighted the importance of bolstering fiscal buffers and maintaining macroeconomic stability, especially given Fiji’s vulnerability to economic shocks.
The ADB pointed out that limited fiscal capacity to respond to future disturbances is a concern, underscoring the necessity for continued efforts to enhance expenditure efficiency. Promoting growth-oriented spending and strengthening the capacity for implementation are vital for achieving resilient, inclusive growth while managing debt levels.
The report also recognized the “pivotal role” of state-owned enterprises in fostering productive investments. It encouraged the government to prioritize fiscal sustainability and allocate resources effectively to meet social needs and infrastructure requirements for inclusive growth.
Moreover, the ADB suggested that the government may need to enhance its implementation capacity to tackle issues related to inadequate capital spending execution. The new budget and Medium-Term Fiscal Strategy are aimed at establishing fiscal targets that promote macroeconomic stability and resilient growth.
Looking ahead, the ADB projects a growth rate of 3.3 percent for Pacific economies in 2024 and 4.0 percent in 2025, while reiterating the ongoing need to build resilience.