An International Monetary Fund team led by Alasdair Scott has urged Fiji to shield low-income households from rising fuel costs through targeted social assistance rather than broad fuel subsidies, saying untargeted measures would strain public finances and be less efficient at helping the most vulnerable.
In its latest assessment, the IMF warned that across-the-board subsidies or price caps would be “very expensive for the government and would provide less help to the most vulnerable,” Mr Scott said, urging policymakers to focus on narrowly targeted cash transfers or other social programmes to cushion those hit hardest by fuel-price shocks. The advice comes amid growing global price pressures that have raised concerns about fuel affordability in Fiji and the region.
The IMF team also set out a wider policy package aimed at sustaining growth while safeguarding fiscal sustainability. Fiscal adjustments should be “growth-friendly,” the mission said, prioritising increased investment in development and infrastructure rather than an unnecessary expansion of government size. The Fund underscored the need for clearer prioritisation and sequencing of structural reforms set out in Fiji’s National Development Plan and Vision 2050 to achieve stronger, durable growth.
Monetary policy guidance featured prominently in the assessment. The IMF backed the Reserve Bank of Fiji’s decision to maintain the exchange rate peg, saying it “continues to serve the economy well,” though it called for improvements in monetary-policy transmission to ensure policy actions effectively influence credit and inflation dynamics. The assessment noted that Fiji’s banking sector remains stable, with sound capital and liquidity buffers, but flagged emerging risks: rising credit growth, particularly in housing and unsecured lending, should be closely monitored to avoid future vulnerabilities.
A further priority highlighted by Mr Scott was climate resilience. The IMF recommended boosting investment in climate-resilient infrastructure as critical for long-term economic resilience, echoing longstanding national priorities under Vision 2050. Such investment, the Fund argues, would not only protect the economy from frequent climate shocks but also support sustainable growth and private-sector confidence.
The IMF’s recommendations arrive as the Fijian Government and regulators weigh policy choices to address fuel-price pressures. Earlier reporting this month flagged geopolitical tensions around the Strait of Hormuz as a factor pushing up global oil prices and prompting local scrutiny of fuel supply and pricing. The Fund’s guidance signals a preference for carefully targeted social measures backed by fiscal discipline and reform momentum, rather than short-term universal subsidies that could undermine fiscal space for priority investments.
For policymakers, the assessment reinforces the trade-offs at play: protecting vulnerable households without compromising the country’s capacity to invest in infrastructure and resilience. The IMF’s call for tighter monitoring of credit growth also adds urgency for regulators as lending expands in housing and unsecured sectors. With Fiji progressing its National Development Plan and engaging multilateral partners on financing, the IMF’s latest view provides a framework for balancing social protection, macroprudential oversight, and long-term development priorities.
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