Deputy Prime Minister and Finance Minister Professor Biman Prasad has recently defended the government’s fiscal strategies and tax reforms amid criticism from opposition leaders during a parliamentary session. He emphasized that the government’s stringent fiscal policies are essential for addressing the financial crisis inherited from the previous administration.
Professor Prasad acknowledged that these reforms might lead to temporary challenges for the populace; however, he firmly asserted their importance for stabilizing Fiji’s economy and paving the way for future growth. He stated, “We had little option. Without these interventions, our approach would have been irresponsible, leading to even harsher conditions for the public than what the opposition suggests.”
In response to the opposition’s claims regarding increasing inflation and a substantial fiscal deficit, he rejected the allegations as misleading. He noted that the projected fiscal deficit for 2023-2024 is set at 3.4%, and while inflation is anticipated to be 5.1% this year, it is expected to ease to 1.4% by the end of 2024.
Professor Prasad highlighted the importance of a sustainable long-term fiscal strategy aimed at resolving Fiji’s debt issues over the next decade rather than seeking quick fixes. He criticized the opposition’s suggestion to eliminate the 15% Value Added Tax (VAT), warning that such a move could lead to a revenue loss of about $600 million. He pointed out, “Each one percent reduction in VAT equals a $100 million loss in tax revenues. Are we truly prepared to see our fiscal deficit skyrocket and undertake additional borrowing of $600 million?”
He reinforced that maintaining the current VAT rate of 15% is based on comprehensive analysis and data, ensuring that the government can effectively support its operations. His remarks illustrate a commitment to fiscal responsibility while laying a solid foundation for Fiji’s economic future.
This ongoing dialogue underscores the government’s challenge of addressing immediate economic concerns while striving for long-term stability. By concentrating on these fundamental changes, the government is aiming to foster an environment conducive to sustainable economic growth and restore investor confidence in Fiji.
While criticisms linger, the proactive and structured approach of the government holds the promise of leading Fiji towards a more stable and prosperous economic future, with an eventual improvement in living standards for all citizens.
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