Former Prime Minister and Fiji Labour Party Leader, Mahendra Chaudhry, accuses Finance Minister Professor Biman Prasad of being delusional by attributing the high cost of living solely to imports.
Chaudhry stated that the elevated costs are a result of Prasad’s shortsighted decision to increase 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.
While global inflation does affect the domestic market, Chaudhry believes it is incorrect to argue that increasing VAT and corporate tax have not contributed to inflation. “Such a dismissive attitude towards the negative impacts of his failed policies and his attempt to deceive the public is both duplicitous and reckless,” he added.
Chaudhry criticized Prasad’s efforts to mitigate the impact by attempting to increase incomes, describing these measures as merely 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 mitigate it is like a dog chasing its tail—unnecessary and foolish,” he stated.
Chaudhry also pointed out that Prasad’s actions contradict his campaign promises to reduce VAT and increase the minimum wage, thereby damaging his integrity and trustworthiness. He suggested that Prasad could have learned from his predecessor Aiyaz Sayed-Khaiyum, who reduced VAT to 9 percent from 15 percent before the 2022 general election, understanding the impact of such an imposition on the people.
Moreover, Chaudhry criticized Prasad’s claims about the economy performing well under his fiscal and economic policies. He referred to an independent assessment by economists at Westpac Bank, which issued a cautious growth outlook of just 2.5 percent, mainly driven by the tourism sector. Similarly, a subdued forecast by the Reserve Bank’s Macroeconomic Committee downgraded its earlier bullish 3.8 percent forecast for 2024 to 2.8 percent due to high inflation, ongoing population out-migration, underperforming primary economic sectors, declining construction activity, and regulatory bottlenecks.
Chaudhry concluded that Professor Prasad should remove his blinkers and acknowledge the reality.