Fiji’s limited fiscal capacity to manage potential future economic disturbances is raising concerns, according to the latest Pacific Economic Monitor from the Asian Development Bank (ADB). The ADB emphasizes that to maintain strong economic growth and enhance resilience, the government needs to focus on improving the efficiency of expenditures, executing budgets effectively, and advancing significant private investment projects.
The report highlights the importance of streamlining immigration and business application processes, which are essential for stimulating new economic activities and supporting the private sector’s expansion in hotel capacity. While current efforts for fiscal consolidation are vital to reverse rising public debt, the ADB warns that strengthening fiscal buffers and ensuring macroeconomic stability is equally important due to Fiji’s vulnerability to economic shocks.
The report reiterates that Fiji’s limited fiscal space remains a significant concern, stressing the need for continued efforts to enhance expenditure efficiency. It advocates for growth-oriented spending and improving implementation capacity as essential steps to foster resilient and inclusive growth while simultaneously reducing debt levels.
Furthermore, the ADB points out the crucial role of state-owned enterprises in the economy. Recommendations for creating more fiscal space include broadening regulatory and governance standards, enhancing their capabilities, and establishing a framework to limit guarantees for state-owned enterprises, which could generate additional capacity for productive investments.