Fiji’s capacity to respond to financial and economic challenges has caught the attention of development partners, particularly noted by the Asian Development Bank (ADB) in its latest Pacific Economic Monitor (PEM).
The ADB highlighted that in order to maintain strong economic growth and bolster resilience, the government should prioritize improving the efficiency of spending, enhancing budget implementation, and advancing significant private investment projects. This includes optimizing immigration and business application processes, which are vital for stimulating new economic activities and supporting the private sector’s expansion in hotel capacity.
The PEM serves as ADB’s biannual assessment of economic trends and policy challenges among its 14 Pacific developing member countries, Fiji included. While acknowledging the government’s current focus on fiscal consolidation as essential to reversing rising public debt, the ADB emphasized that strengthening fiscal buffers and ensuring macroeconomic stability is equally important given Fiji’s vulnerability to economic shocks.
The report points out that the limited fiscal capacity to handle possible future disturbances is concerning, underlining the necessity for continuous efforts to enhance spending efficiency. The ADB also encouraged growth-oriented spending and capacity building as crucial for achieving resilient and inclusive growth while lowering debt levels.
Moreover, it referenced the significant role that state-owned enterprises can play in fostering productive investments. The ADB stressed the importance of prioritizing fiscal sustainability and allocating resources effectively to meet societal needs and improve infrastructure for sustainable growth.
The government may need to improve its implementation capacity to tackle the challenges posed by under-execution of capital expenditures. The objectives laid out in the new budget and Medium-Term Fiscal Strategy aim to establish fiscal targets that promote macroeconomic stability and foster resilient growth.
In its latest report, the ADB projects that Pacific economies will grow by 3.3 percent in 2024 and 4.0 percent in 2025, highlighting the ongoing need to build resilience.