Deputy Prime Minister and Minister for Finance Professor Biman Prasad emphasizes that the Government is committed to a long-term fiscal strategy for the next decade or more, focusing on foundational changes rather than quick fixes. Prof. Prasad underscores that achieving a downward trajectory in the country’s debt-to-GDP ratio will be a significant accomplishment, but not something that can be resolved in just one or two years. This long-term commitment is intended to guide future governments as well.
“The political will and national commitment to get our debt problem under control have been commended by international agencies, financial institutions, credit rating agencies, and all our development partners,” said Prof. Prasad. “We have received positive feedback, which boosts the confidence of investors, including foreign investors, eyeing Fiji.”
Prof. Prasad also addressed the financial implications of reducing the Value Added Tax (VAT) from 15 percent to nine percent, as proposed by the Opposition. He stated that such a move would lead to a revenue loss of $600 million, as a one percent reduction in VAT translates to a $100 million loss in tax revenue.
“Are you going to increase the fiscal deficit to double digits and add $600 million in loans? Technically, this additional $600 million cannot be borrowed, given the current financing availability,” he explained. The 15 percent VAT rate, he noted, was established based on thorough analysis and existing financial data, ensuring that the Government has adequate funding for essential operations.