For the first time in Fiji’s history, the government has inherited a debt of approximately $10 billion. Tackling Fiji’s debt situation is a high priority for the Coalition Government, as evident in its 2024-2025 national budget, presented last Friday.
The Government has developed a Medium Term Debt Management Strategy (MTDS), to guide debt management decisions. It will take into consideration the cost and risks involved with the current debt portfolio.
The Government also has a 15-year fiscal plan, based on assumptions of a three per cent GDP growth, two-three per cent inflation, average domestic interest rates of 10 years and a financing mix of around 70:30 (+/-5).
In 15 years, if all goes as per plan, Fiji’s debt would be 60.2 per cent of the GDP despite reaching around $19 billion. Presently, the total debt of $10.276 billion is 78 per cent of the GDP.
The Government raises funds through a mix of domestic and external borrowings, borrowing from individuals, businesses, World Bank, and Asian Development Bank, among others. It typically issues Treasury-bills or government bonds to raise funds.
A majority of Fiji’s local debt is comprised of government bonds, the largest holder of which is the Fiji National Provident Fund (FNPF), making it the government’s biggest domestic financier. Other debt holders include insurance companies, banks, and various trust funds.
External debt, mostly in loans, was at $3.5 billion as of July 2023. The largest lenders are the Asian Development Bank and the World Bank Group.
The Government plans to borrow $984.6 million in the fiscal year 2024-2025, mostly through the issuance of bonds and treasury bills. The borrowing will help fund its deficit ($635.5m) and make debt repayments ($349.1m).