For the first time in its history, Fiji’s government has inherited a debt of $10 billion. According to the national budget for 2024-2025 announced last week, managing this debt is a high priority for the coalition government, which is predicted to reach $10.276 billion by July 2024. They plan to handle this through a Medium Term Debt Management Strategy (MTDS).
The MTDS will guide government borrowing for programs and infrastructure projects while considering the cost of debt and minimizing the associated risks. A 15-year fiscal plan is also in place, aiming to reduce the debt to 60.2% of GDP, or around $19 billion, by 2040.
Currently, the total debt of $10.276 billion represents 78% of Fiji’s GDP. To fund its spending, Fiji’s government borrows both domestically and externally, from individuals, businesses, institutions like the World Bank and Asian Development Bank, and even other governments. Most commonly, this happens through the issuance of Treasury-bills and government bonds.
The largest holder of Fiji’s domestic debt is the Fiji National Provident Fund, which holds over 67% or $3.99 billion worth of government bonds. Fiji also owes money to insurance companies, commercial banks, the Reserve Bank of Fiji, and other local organizations.
Externally, most of Fiji’s debt is in loans, standing at $3.5 billion as of July 2023. The largest lenders are the Asian Development Bank and the World Bank Group, accounting for $1.41 billion and $1.08 billion, respectively. For the upcoming fiscal year of 2024-2025, the government plans to borrow $984.6 million to fund its deficit and meet its debt repayments, mostly via domestically issued bonds and treasury bills.