Fiji’s economy, being small, reliant on imports and tourism, and remotely located, makes it susceptible to global economic conditions and climate change. The COVID-19 pandemic significantly impacted the country’s financial state, with government revenues dropping by almost half due to economic contractions of 17 percent in 2020 and 4.9 percent in 2021, according to Deputy Prime Minister and Finance Minister, Professor Biman Prasad.
To help Fijians affected by the pandemic and fund its operations, the government was compelled to borrow heavily, resulting in net deficits exceeding $1 billion throughout the pandemic. In response to the financial strain, the Coalition Government has launched a medium-term fiscal consolidation strategy starting FY 2023-2024. This strategy aims to reduce fiscal deficits, rebuild fiscal buffers, decrease the debt-to-GDP ratio, and enhance long-term debt sustainability.
Professor Prasad pointed out the significance of fiscal risk analysis due to the substantial fiscal deficits and increased public debt during the pandemic, viewing it as a critical tool to assess Fiji’s ability to withstand future shocks. The 2024-2025 National Budget will go under discussion in Parliament next week.