Former Prime Minister and Fiji Labour Party Leader, Mahendra Chaudhry, has criticized Finance Minister Professor Biman Prasad, accusing him of self-delusion by attributing the high cost of living solely to imports.
Chaudhry stated that the high costs are a result of Prof Prasad’s shortsighted decision to raise the Value Added Tax (VAT) to 15 percent a year ago. He warned at the time that this increase would drive inflation across the economy.
While acknowledging that global inflation affects domestic markets, Chaudhry argued it is unreasonable to suggest that the increased VAT and corporate tax have not influenced inflation. He described Prasad’s attitude as dismissive and said it reflects a disregard for the harmful impacts of his policies.
Chaudhry criticized Prasad’s approach to mitigating the harsh impact of inflation by attempting to increase incomes, calling it a superficial effort. He likened it to a dog chasing its tail, suggesting that mitigating inflation after creating it is counterproductive.
Furthermore, Chaudhry pointed out that Prasad’s actions have contradicted his campaign promises to reduce VAT and increase the minimum wage, damaging his integrity and trustworthiness. He suggested that Prasad should have followed the example of his predecessor, Aiyaz Sayed-Khaiyum, who reduced VAT from 15 percent to 9 percent before the 2022 general election.
Chaudhry also disputed Prasad’s claims that the economy is performing well under his fiscal and economic policies. He referenced an independent assessment by economists at the Westpac Bank, which issued a cautious warning with a growth outlook of just 2.5 percent, primarily driven by the tourism sector. This assessment aligns with a subdued forecast by the Reserve Bank’s Macroeconomic Committee, which recently downgraded its growth forecast for 2024 from 3.8 percent to 2.8 percent.
The reasons for the downgrade included high inflation, continued high population out-migration, under-performing primary sectors of the economy, declining construction activity, and regulatory bottlenecks. Chaudhry urged Prasad to acknowledge these realities and take appropriate action.