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.
In a statement, Chaudhry said that the high costs are a result of Prof. Prasad’s short-sighted decision 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,” Chaudhry said.
“While global inflation does affect the domestic market, it is foolish to claim that his policies of increasing VAT and corporate tax have had no impact on inflation,” he continued.
“Such a dismissive attitude towards the negative effects of his failed policies and his attempt to mislead the public are both duplicitous and reckless,” Chaudhry added.
“He is now trying to mitigate the harsh impact by attempting to raise incomes, although at tokenistic levels.”
“The problem with Prasad’s approach to income is that inflation is like a disease that needs prevention, not cure. To create inflation and then attempt to mitigate it is like a dog chasing its tail. Unnecessary and foolish,” he argued.
“Moreover, having promised during his campaign to reduce VAT and increase the minimum wage but doing the opposite while in office undermines his integrity and trustworthiness,” Chaudhry said.
“He could have followed the example of his predecessor, Aiyaz Sayed-Khaiyum, who swiftly reduced VAT from 15 percent to 9 percent before the 2022 general election, having realized the impact of such a tax on the people.”
Chaudhry further claimed that Prof. Prasad is deluded in continuing to assert that the economy is doing well under his fiscal and economic policies.
“We are told otherwise in an independent assessment by economists at Westpac Bank, who have issued a cautious warning with a growth outlook of just 2.5 percent, largely based on the performance of the tourism sector,” Chaudhry said.
“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 are: the downside risks from high inflation, ongoing high population out-migration, underperforming primary sectors of the economy, declining construction activity, and regulatory bottlenecks,” Chaudhry explained.
He added that Prof. Prasad would do well to take off his blinkers and acknowledge reality.