Former Prime Minister and Fiji Labour Party Leader, Mahendra Chaudhry, has criticized Finance Minister Professor Biman Prasad, accusing him of self-delusion for blaming the high cost of living solely on imports.
Chaudhry argued in a statement that the increased living costs are a result of Prasad’s short-sighted decision to raise the Value Added Tax (VAT) to 15 percent a year ago. “Labour had warned him that raising VAT would spike inflation across the entire economy,” Chaudhry said.
He added that while global inflation does impact the domestic market, it is misleading to assert that Prasad’s policies of increasing VAT and corporate tax have had no influence on inflation. Chaudhry described Prasad’s dismissive attitude towards the negative consequences of his policies as reckless and misleading, aiming to deceive the public.
Chaudhry further criticized Prasad’s efforts to mitigate the impact of inflation by attempting to raise incomes, calling these efforts tokenistic. “The problem with Prasad’s income approach is that inflation is like a disease that requires prevention, not cure. Creating inflation and then trying to counteract it is unnecessary and foolish,” he stated.
He also pointed out that Prasad’s failure to fulfill his campaign promises to reduce VAT and increase the minimum wage dents his integrity and trustworthiness. Chaudhry suggested that Prasad could have followed the example of his predecessor, Aiyaz Sayed-Khaiyum, who reduced VAT from 15 percent to 9 percent before the 2022 general election, understanding the impact on the people.
Chaudhry criticized Prasad for continuing to claim that the economy is performing well under his fiscal and economic policies. He cited an independent assessment by economists at the Wespac Bank, which issued a cautious warning with a growth outlook of just 2.5 percent largely based on the tourism sector’s performance.
“Westpac’s concern aligns with a subdued forecast by the Reserve Bank’s Macroeconomic Committee, which last month downgraded its earlier bullish 3.8 percent forecast for 2024 to 2.8 percent,” Chaudhry noted. The reasons cited for this downgrade include high inflation, ongoing high population out-migration, underperformance in primary economic sectors, declining construction activity, and regulatory bottlenecks.
Chaudhry advised Prof Prasad to remove his blinkers and recognize the reality of the situation.