ANZ Pacific economist, Dr. Kishti Sen, has emphasized the importance of government investment in capital projects as a means to stimulate economic growth. This assertion comes ahead of the release of Fiji’s National Budget for 2024-2025. During an interview, he stated that with the sluggish response from private sector investment and the slowing of tourism, the government needs to play an active role in driving the economy.
Dr. Sen suggested the implementation of pro-cyclical fiscal policies including expenditure on infrastructural projects to encourage further private sector investment. He also stated that the government could slowly reduce their borrowing needs by reducing deficits over time.
Decreasing government consumption expenditure while increasing economic growth by 4-5% would help to grow revenue. This, when teamed with expenditure cuts, could pave the way for GDP deficits of around 2-3%, reducing the debt to GDP ratio and providing flexibility for counter-cyclical fiscal policies.
Dr. Sen also called for immediate commencement of approved projects, stating that Fiji needed multiple projects to begin at once. He highlighted the urgency of resolving potential obstacles to this action, such as overseas labor requirements, to prevent cost overruns that would delay investments further.