Fiji’s limited fiscal capacity to handle potential future challenges continues to raise concerns, according to the Pacific Economic Monitor released by the Asian Development Bank (ADB) last week.
The ADB emphasizes that in order to maintain strong economic growth and boost resilience, the Fijian government needs to focus on enhancing efficiency in spending, improving budget management, and advancing key private investment initiatives.
This includes simplifying immigration and business application processes, which are vital for encouraging new economic activities and enabling the private sector to expand hotel capacity.
While it is essential to prioritize fiscal consolidation to reduce public debt, building fiscal buffers and ensuring macroeconomic stability are also crucial given Fiji’s vulnerability to economic shocks.
The report reiterates that Fiji’s limited fiscal space is a significant concern, underscoring the importance of ongoing improvements in expenditure efficiency.
Encouraging growth-focused spending and improving implementation capabilities are essential for fostering resilient and inclusive economic growth while simultaneously lowering debt levels.
Furthermore, considering the important role of state-owned enterprises within the economy, broadening regulatory and governance standards, enhancing their efficiencies, and setting up a framework to limit guarantees for these enterprises could provide additional fiscal flexibility for productive investments.