Fiji’s Fiscal Milestone: Lowest Deficit in Years as Revenue Soars

Fiji’s fiscal management has garnered commendation as the government concluded the 2024–2025 financial year with a modest deficit of only 2.4 percent of GDP, significantly lower than initial estimates. This achievement marks the lowest fiscal deficit since the 2016–2017 fiscal year, indicating effective financial oversight and improved revenue generation.

The latest Westpac Wave Fiji Economic Update and Outlook highlights that total government revenue reached an unprecedented $4.05 billion, exceeding both initial and revised forecasts. Notably, tax collections surged by 12.2 percent, reaching $3.48 billion, driven by strong performances in corporate tax, value-added tax (VAT), and personal income tax. Specifically, VAT collections rose by a remarkable $173.4 million compared to the previous year, underscoring the success of tax reforms and enhanced compliance efforts.

Expenditure also stayed well managed, totaling $4.39 billion, which is 1.2 percent lower than the revised estimates. This careful spending strategy, characterized by realistic controls and smart prioritization, reflects the government’s commitment to maintaining a sustainable fiscal environment. As a consequence, Fiji’s debt-to-GDP ratio improved to 77.1 percent, down from 79.0 percent the previous year, showcasing significant progress in debt sustainability.

Despite this positive outlook, Westpac warns of potential challenges ahead. The new budget projects a deficit of $886 million, or 6.0 percent of GDP for FY2025–2026, which is among the highest in nominal terms in Fiji’s history. However, the government’s cash reserves of approximately $900 million as of August 2025 provide a solid liquidity buffer and the flexibility needed for effective debt management.

The report concludes that the recent fiscal success highlights a welcome return to prudence in Fiji’s economic management, establishing a strong foundation for future stability. As the government navigates forthcoming challenges, it remains crucial to maintain fiscal discipline, realistic budgeting, and efficient project execution to sustain this positive momentum. Continued efforts in diversifying revenue streams will also play a vital role in supporting Fiji’s fiscal resilience as it looks toward a hopeful economic future.