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 the high costs are a result of Prasad’s short-sighted decision to raise Value Added Tax (VAT) to 15 percent a year ago.
“Labour had warned him that raising VAT would cause inflation across the entire economy,” Chaudhry stated.
“While global inflation does affect the domestic market, it is foolish to suggest that his policies of increasing VAT and corporate tax have had no impact on inflation,” he added.
Chaudhry criticized Prasad’s attitude towards the negative impacts of his policies, describing it as both duplicitous and reckless. He further accused Prasad of attempting to mitigate the harsh effects of these policies by trying to increase incomes, but only at tokenistic levels.
“The problem with Prasad’s income approach is that inflation requires prevention, not cure. To create inflation and then attempt to mitigate it is like a dog chasing its tail—unnecessary and foolish.”
Chaudhry also accused Prasad of breaking campaign promises to reduce VAT and increase the minimum wage, actions that he believes damage Prasad’s integrity and trustworthiness.
“He could have followed the example of his predecessor, Aiyaz Sayed-Khaiyum, who reduced VAT from 15 percent to 9 percent before the 2022 general election, recognizing the impact of such an imposition on the people.”
Chaudhry asserted that Prasad is deluded in claiming that the economy is thriving under his policies.
“Independent assessments by economists at Westpac Bank offer a cautious warning, with a growth outlook of just 2.5 percent, primarily based on the tourism sector’s performance,” said Chaudhry.
“Westpac’s concern aligns with a subdued forecast by the Reserve Bank’s Macroeconomic Committee, which last month downgraded its earlier bullish 3.8 percent forecast for 2024 to 2.8 percent.”
The reasons cited include high inflation risks, continued high population out-migration, under-performing primary sectors, declining construction activity, and regulatory bottlenecks.
Chaudhry concluded by urging Prasad to remove his blinkers and acknowledge the reality.