Dr Kishti Sen, an economist for ANZ Pacific, has made a case for the government to maintain its investments in capital projects in order to foster economic growth. His comments come in anticipation of the government’s announcement for the 2024-2025 National Budget. In an interview with a local newspaper, Sen insisted that ignoring capital projects is not the solution for Fiji’s economy.
Faced with challenges posed by a slow private sector, a declining tourism industry, and a high debt-to-GDP ratio, the government is pressed to act as the propellant of economic growth. Sen recommends the adoption of a pro-cyclical fiscal policy, that is, consistent governmental spending on infrastructure to further boost private sector investments.
However, Sen also advised the government to revise its consumption expenditure and check if it can be more streamlined, thus reducing the need for borrowing. Furthermore, by focusing on growing the economy by 4-5% in real terms, government revenue would increase. Coupled with decreases in consumption expenditure, this could result in a deficit of about 2-3% of the GDP, reducing the debt-to-GDP ratio more swiftly.
Sen also highlighted the urgency for the government to initiate approved projects immediately, bolstering a prompt economic revival. He stressed the significance of timely project implementation to prevent unnecessary cost overruns, which can deter further investments.