Former Prime Minister and Fiji Labour Party Leader, Mahendra Chaudhry, claims that Finance Minister Professor Biman Prasad is deluding himself by insisting that the high cost of living is solely due to imports.
Chaudhry stated that these high costs are a result of Prasad’s short-sighted policy 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.”
“While global inflation does impact the domestic market, it is foolish to suggest that increasing VAT and corporate tax had no effect on inflation.”
He continued, “Such a dismissive attitude towards the negative impacts of his failed policies and his attempt to deceive the public is as duplicitous as it is reckless.”
“Prasad is now trying to mitigate its harsh impact by attempting to increase incomes, albeit at tokenistic levels.”
“The problem with Prasad’s income approach is that inflation is like a disease that requires prevention, not cure. Creating inflation and then attempting to mitigate against it is like a dog chasing its tail. Unnecessary and foolish.”
Chaudhry also said, “Furthermore, having promised during his campaign to reduce VAT and increase the minimum wage but then doing the opposite when in office, damages his integrity and trustworthiness.”
“He could have learned from his predecessor Aiyaz Sayed-Khaiyum, who reduced VAT from 15 percent to 9 percent ahead of the 2022 general election, realizing the impact of such a tax on the people.”
Chaudhry claimed that Prasad is equally deluded in continuing to assert that the economy is doing well under his fiscal and economic policies.
“We are told otherwise by an independent assessment from economists at Westpac Bank, who have issued a cautious warning, with a growth outlook of just 2.5 percent based largely on the performance of the tourism sector.”
“Westpac’s concern aligns with a subdued forecast by the Reserve Bank’s Macroeconomic Committee, which last month downgraded its earlier optimistic 3.8 percent forecast for 2024 to 2.8 percent.”
“The reasons given include the downside risks from high inflation, continued high population out-migration, under-performing primary sectors, declining construction activity, and regulatory bottlenecks.”
Chaudhry added that Prasad would do well to remove his blinkers and acknowledge the reality.