Deputy Prime Minister and Minister for Finance, Professor Biman Prasad, recently defended the government’s fiscal policies and tax reforms while addressing criticisms from opposition members during a parliamentary session. He underscored the necessity of the government’s stringent fiscal measures, which he argued were required to navigate the financial crisis left behind by the prior administration.
Professor Prasad highlighted that while these fiscal reforms might result in short-term discomfort, they are crucial for stabilizing Fiji’s economy and promoting future growth. He noted, “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 claims of rapidly rising inflation and a record fiscal deficit, he firmly dismissed the opposition’s allegations as misleading, asserting that the projected fiscal deficit for 2023-2024 stands at 3.4%. He also reported that inflation rates for 2023 are at 5.1% but are expected to decrease to 1.4% by the end of 2024.
To support his position, Professor Prasad has also emphasized a long-term fiscal strategy that aims to tackle Fiji’s debt problems sustainably over the coming decade, rather than seeking immediate resolutions. He addressed the potential financial fallout of the opposition’s proposal to scrap the 15% Value Added Tax (VAT), warning that it could lead to a revenue loss of approximately $600 million.
Emphasizing this point, he remarked, “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?”
The integrity of the current VAT rate of 15% stems from thorough analysis and data evaluation, ensuring that the government possesses adequate resources to maintain its operations effectively. His statements showcase a commitment not only to fiscal responsibility but also to laying a solid groundwork for Fiji’s economic future.
This dialogue highlights the careful balancing act of managing immediate economic challenges while planning for long-term stability. By focusing on these foundational changes, the government seeks a pathway toward improved fiscal health and investor confidence, fostering an environment for sustainable economic growth in Fiji.
Overall, while criticism persists, the government’s proactive and structured approach could bridge Fiji toward a more stable and prosperous economic horizon, promising an eventual stabilization of costs and enhanced living standards for its citizens.
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