ANZ Pacific economist, Dr Kishti Sen, has urged the government to maintain a fiscal policy that favours capital projects. She emphasized the importance of these projects in stimulating economic growth and maintaining investment momentum. This, she says, will ensure the government’s continued role as the main driver of economic growth, as private sector investment and tourism have been sluggish.
Dr Sen advised the strategy amid anticipation of the 2024-2025 National Budget. She also stressed that it was not in Fiji’s best interest to overlook capital projects. Additionally, she suggested that the government could feasibly manage a pro-cyclical fiscal policy, continuing to fund infrastructure developments that spur private sector investment.
She advised the government to evaluate its consumption expenditure to ensure that it is running as efficiently as possible. According to Sen, the government can potentially decrease its dependence on loans by delivering smaller deficits. This could be achieved through reduced spending in consumption expenditure and focusing on achieving a 4-5% real-term economic growth.
As the economy grows, so does the revenue. This, in combination with cuts in consumption expenditure, could lead to deficits around 2-3% of GDP, which would rapidly decrease the debt-to-GDP ratio. As a result, the government would have more flexibility to invest into the economy during downturns.
She also stressed the need for approved projects to start immediately. If delay issues like staffing shortages arise, she suggested they be handled with urgency to avoid blown-out project costs and further investment delays.