The increase in government employees’ pay will boost disposable income, but there are concerns it may exacerbate already high prices, according to Westpac.
In its Westpac Wave Fiji Quarterly Economic Update released today, the bank noted that the 2024-2025 Budget aims to address cost-of-living pressures through pay increments, ensure economic stability, and consolidate the government’s medium-term fiscal position.
Key highlights from the budget include an increase in the national minimum wage from $4 to $5 per hour in two phases and raising sectoral minimum wages. Government employees will see pay increases in the range of 7-10 percent for salaried workers and 10-20 percent for wage earners, with $85 million allocated for these increases, Westpac said.
“While the wage relief will support disposable income, there are concerns it may further contribute towards already high prices,” the update stated.
The update also noted that the Coalition Government expects $3.9 billion in revenue and plans to spend an estimated $4.6 billion, resulting in a fiscal deficit of $635.5 million (4.5 percent of GDP) next fiscal year. The gross deficit is projected at $984.6 million (7.0 percent of GDP), which includes $349.1 million in principal debt repayments.
To finance the deficit, the Fiji Government will borrow $298.3 million from external sources and $686.3 million in domestic bonds and loans.
Gross debt is expected to decrease slightly to 77.8 percent of GDP by July 2025, primarily due to an increase in nominal GDP.