Fiji’s Economic Turnaround: How Debt Reduction and Growth Projections Signal a Brighter Future

Fiji’s Finance Minister, Professor Biman Prasad, announced that the nation’s debt-to-GDP ratio is expected to decline to approximately 78 percent by July 2025. This significant reduction is attributed to a robust economic recovery, which has seen inflation decrease to -0.9 percent in April 2025, down from 7.1 percent the previous year. This marks the most favorable inflation rate since May 2021.

Prasad highlighted that this decline is driven by reduced prices in food, non-alcoholic beverages, transportation, housing, utilities, and clothing. Additionally, the country’s foreign reserves remain strong at $3.5 billion, sufficient to cover 5.6 months of retained imports.

The government’s fiscal position continues to improve, supported by a $140 million increase in tax collections in the first nine months of the current fiscal year compared to previous forecasts. As a result, Fiji has successfully decreased its debt-to-GDP ratio from 90.7 percent in FY2021-2022 to 79.4 percent in FY2023-2024 and aims for further reductions.

Key sectors beyond tourism—such as gold production, electricity generation, cement manufacturing, timber processing, and beverage production—have also shown positive growth, prompting an upward revision of the GDP growth forecast for 2024 from 2.8 to 3.8 percent. The original projection for 2025 was set at 3.4 percent; however, caution is being exercised due to potential global challenges.

Prasad reassured that Fiji’s financial system remains stable and resilient, with commercial banks and financial institutions reporting strong balance sheets and rising profitability. As of March 2025, credit growth was at 12.2 percent, with healthy liquidity levels of $1.9 billion.

These positive developments reflect the government’s commitment to effective fiscal management and economic resilience, providing an optimistic outlook for Fiji’s economic future. The strategic focus on diversified sectors and improved macroeconomic conditions offers the potential for sustained growth amid global challenges.